Economics

In preparing to write this paper a lot has flashed in my mind. A century is as wide as a hundred years and to identify a specific and identical item to settle on as the most important effect in the economy can be very difficult. Think of it, the various wars within the 21st century, the tumultuous and insurgent technological improvements that left various organizations at crossroads, the various depressions yes I believe this is the answer to the first bit of this question, the great depression (1929  1939). However, in the current century one cannot avoid the current depression (Dec 2007  current) which emerged and is affecting every economy irrespective of who was involved directly. In the following sections I will go into depths of explaining how economically these have been internalized, but first let me explain what an externality is and how it can be internalized.

economics.about.comcseconomicsglossarygexternality.htm defines an externality as an effect of a purchase or use decision by one set of parties on others who did not have a choice and whose interests were not taken into account. They are of different categories thus those whose effects are beneficial to the third parties are termed positive externalities while those whose impacts are not beneficial to the non participating parties are called negative externalities. From the ensuing definition I believe to internalize an externality is to engage in economic transactions that will minimize as much as possible the negative spillover on the third parties while maximizing the positive spillover on them i.e. it is the process of converting private costs (or benefits) so that they are identical to the social costs (or benefits).

This is a very critical decision that every institution must engage in order to survive in the ever changing world andor economy.

Considering the 20th century, much of discussions were based on environmental pollutions, bad leadership that made a lot of economies to drown andor the struggle to cope with the technological advancements. However my discussion will take a closer look at the Great Depression (1929-1939) whose effects were felt all over the wide world and economies suffered from its various devastating effects including unemployment and low personal income, dropping tax revenues and profits, low productivity, price declines, and negative social effects. International trade also plunged by a greater margin. These effects were to roll over again given time and efforts of the various economic stakeholders to internalize them. Various administrative input and collective bargains enabled a growth back.

In the current century, various issues have been frequently discussed including globalization, war and terrorism, global warming, technological developments diseases and their effects on non participating parties are numerous, however, the most significant economic externality is the just ended depression. Thanks to the forces we are receding from that trough. The effects of this are very evident as various institutions went on knees and are only now trying to pick up their pieces back to their upright position. We all know this may take time but our hopes are high.

In conclusion, depressions are very critical times in any economy and all the stakeholders must device ways of internalizing all the externalities brought as a result.