International Production And Governance Essay Example | Topics and Well Written Essays - 1500 words

International Production And Governance - Essay Example As a result, a steady increase got registered in the output of world trade. The above situation presents a similar case to one of the pillar causes of the Financial Crisis of 2008: mortgage lending in the United States of America. According to Murphy (2010), the availability of credit with low rates of interest encouraged people to seek loans. The upward trend in prices of houses further prompted them to invest in houses and homes. This trend, coupled with standards of lending that seemed relaxed encouraged the exploits. As such, when the financial crisis hit, a lot of lending institutions suffered. The genesis of the crisis, as thus, lay in the marketing policies of the mortgage market. The freestyle and casual manner in which the mortgage financing options and paperwork got done exposed the financial markets to high levels of risk. The lowered standards of accessing and the use of the word of mouth in confirming ability to repay the mortgage led to many people buying houses they could not afford (Murphy 2010). As thus, when the financial crunch descended the financiers suffered. This affected the ways in which international governance and production got looked at, in matters financial. The handling of financial affairs got a wake-up call. All the procedures and paperwork got a thorough look up before issuance of not only mortgages and loans, but also other financial transactions. Tangible, and in some cases physical property, got attached as evidence of the ability to repay loans, Murphy (2010). According to Nayyar (2006), the last half of the past century underwent unprecedented expansion and growth in flows, in international trade. World exports experienced astronomical increases, from $61billion in the 1950s to $883billion (1975) and $6338 billion at the turn of the century. Through this epoch, more growth got observed in world trade than in output. This explains the trend that results when the conditions that favor economic