Light

Economic Interdependence

Definition

Economic interdependence refers to the interconnectedness and reliance between different nations or regions in terms of their economic activities, such as trade, investment, and production. It signifies how changes in one nation's economy can have significant impacts on other nations.

Analogy

Think of economic interdependence as a game of Jenga. Each block represents a country's economy, and when you remove one block (make a change), it affects the stability and balance of the entire tower (global economy).

Related terms

Globalization: Globalization is the process by which businesses and organizations develop international influence or operate on an international scale.

Trade Agreements: Trade agreements are formal agreements between countries that aim to reduce barriers to trade and promote economic cooperation.

Foreign Direct Investment (FDI): FDI refers to investments made by individuals or companies from one country into businesses located in another country.