Major Reasons of Global Economic Crisis of 2008 – 2010: brief literature review
There is a large volume of published studies analysing major reasons of the global economic crisis of 2008-2010. Excessive risk taking by financial institutions in the US combined with inefficiencies with US housing regulations is shown as primary causes of global recession by Roberts (2009) and Heng (2010).
Heng (2010) offers detailed account of the issue and effectively demonstrates that US-based financial institutions have encouraged individuals with no adequate credit history to own homes and rapid decline of house prices, phenomenon known as ‘housing bubble’ has given start to a severe global financial and economic crisis.
A study conducted by Sobel (2012) confirms excessive risk taking and inefficiencies with housing regulations as reasons behind the economic crisis and also discussed additional factors not mentioned by many other authors. Specifically, according to Sobel (2012), inadequacies in formulating interest rate policies, as well as, policies to suppress inflation in the US have also played major role in creation of environment that led to the global economic crisis of 2008-2010.
Globalisation is perceived by Tan (2010) as one of the major enabling factors of the global economic crisis of 2008-2010. The topic of globalisation is addressed by Samson and Daft (2012) in great details. Specifically, Samson and Daft (2012) divide globalisation into four stages and cultural sensitivity and managerial assumptions in each stage in the following manner:
| 1. Domestic | 2. International | 3. Multinational | 4. Global | |
| Strategic orientation | Domestically oriented | Export-oriented, multi-domestic | Multinational | Global |
| Stage of development | Initial foreign involvement | Competitive positioning | Exposition of international operations | Global |
| Cultural sensitivity | Of little importance | Very important | Somew hat important | Critically important |
| Manager assumptions | ‘one best way’ | ‘many good ways’ | ‘the least-cost way’ | ‘many good ways’ |
Four stages of globalisation
Source: Samson and Daft (2012)
However, while linking financial crisis and globalisation, Tan (2010) fails to provide concrete examples and case studies. In other words, Tan’s (2010) paper would have been more convincing if he had included more in-depth explanations of the ways in which globalisation forces have contributed to the global economic crisis of 2008-2010.
References
Heng, M.S. (2010) “The Great Recession: History, Ideology, Hubris and Nemesis” World Scientific
Roberts ,M. (2009) “The Great Recession” Lulu Enterprises
Samson, D. & Daft, R.L. (2012) “Management” Cengage Learning
Sobel, A.C. (2012) “Birth of Hegemony: Crisis, Financial Revolution, and Emerging Global Networks” University of Chicago Press
Tan, C. (2010) “How stimulus packages have helped in the recession”