Lecture 14

The world economy and its evolution

The plan:

• 1. Formation, stages of formation and the basic lines of the world economy.

• 2. The international division of labour and manufacture internationalisation.

• 3. Processes of globalisation and geoeconomy formation.

• 4. Role НТП and the transnational capital in economy internationalisation.

• 1) the World economy – historically developed set of a national economy of all countries of the world connected among themselves by the world economic relations.

• Historical stages of formation of a world capitalist economy:

• The first – occurrence of the world market as a result of internationalisation processes (an exit for national borders) exchange relations, trade in the goods and services. Since XVI century in the big geographical opening, among themselves the national markets of the separate countries actively co-operate, and on the basis of it in XVII century the international division of labour trading agreements between the separate countries were which form of realisation has started to be formed.

• The second – actually formation of a world capitalist economy as a result of internationalisation of processes of manufacture and reproduction (capital export in loan and enterprise forms, migration of labour, national economy "coupling" in integration communities).

• Historically the world market was generated basically to the beginning 19 century, and a world capitalist economy – in the end of 19 – the beginning 20 century

• World economy structure:• - The world market of the goods and services• - The world market of capitals• - The labour world market• - The international currency system• - The international credit and financial system

• Subjects of the world economy: • - The states with their economic complexes• - Transnational corporations• - The international organisations and institutes• - Firms of all sectors the economy which have

left for national borders

• 2) as the Economic basis of a modern world economy manufacture internationalisation – development of such organizational-economic forms which connect manufacture of one countries with consumption by its result in others serves.

• International contacts become constants when there is an international division of labour (МРТ) – isolation of the separate countries in manufacture of those or other goods and services with a view of their realisation in other countries

• МРТ develops in two directions: • The industrial direction is subdivided on:• Vertical division of labour – when various manufacturers

form an one-linear technological chain and carry out a number of consecutive industrial operations in which course the product of each previous stage is not complete product and becomes an object of the labour for each subsequent stage.

• Horizontal division of labour assumes manufacturing by separate manufacturers of components from which then gathers technically or technologically difficult product.

• Both horizontal, and vertical МРТ break up already at the international level on:

• - The general (between large groups of branches)

• - Private (disintegration of large groups of branches on less aggressive branches and подотрасли)

• - Individual (intrabranch division)

• In territorial aspect the international specialisation of manufacture assumes specialisation of the separate countries, groups of the countries and regions on manufacture of separate products and their parts for the world market.

• Manufacture internationalisation is an economic form of development of the international division of round and the international nationalisation of manufacture.

• Internationalisation represents development of steady economic interrelations between the countries (first of all on the basis of МРТ) and a reproduction exit for frameworks of a national economy.

• The major indicators МРТ are factor of relative export specialisation (КОЭС) and an export quota.

• By means of КОЭС it is possible to define approximately a circle of branches and, accordingly, a circle of the goods and the services which are for the given country international-specialised.

• The export quota of manufacture shows degree of internationalisation of economic activities (the share of production made for export) is fixed

• The export quota is a reference point characterising level of an openness of the national industry for a foreign market.

• Marketability index – an indicator which also characterises a measure of participation of a national economy in МРТ:

• t = e + i / p * 100 %

• Where: е – export to a current of year; р – annual gross national product; i – export to a current of year.

• 3) Globalization is a process of internationalisation of manufacture and the capital, supported with mature institutional relations and corresponding information technology.

• Internationalisation is a development of steady economic relations between the countries. The term "internationalisation" concerns a situation when there is an increase in operations in foreign markets while "globalisation" means the increasing and big integration of national economies, including the financial markets that, finally, conducts to creation of the uniform market. Т.о., internationalisation concerns expansion of the international markets, and globalisation – to creation of a common market without borders.

• World economy globalisation is characterised:• First, an exit of interests of national subjects of economic

activities for frontiers in the form of expansion of a field of activity of trans-national structures in world scales.

• Secondly, an exit of national economic problems on the global world level demanding for their decision mobilisation of world resources.

• Thirdly, development of an economic situation in the leading countries influences other states.

• Fourthly, globalisation demands coordination in universal scales national, economic and financial the politician and dictates necessity of uniform world development.

• The world economy current state is characterised by development of accelerated processes of globalisation, system integration of the world markets and regional economy that promotes realisation of modern technologies and methods of macroeconomic management, geoeconomy formation.

• The developed states use globalisation fruits basically. The countries of other world, in a smaller measure involved in world economic communications, in many cases remain «behind a board» world scientific and technical and social and economic progress.

• Internationalisation inseparably linked with transition of the international division of labour from private to the individual. The general division of labour is based on specialisation of spheres of a social production, private – on subject specialisation of separate branches, and individual – on подетальной, пооперационной specialisations of separate producing units.

• The multinational corporation (transnational corporations) – the enterprises (financial and industrial associations) to which belong or which supervise the manufacture or service complexes which are outside of that country in which these corporations are based, having an extensive network of branches and branches in the different countries both coming to the forefront in manufacture and realisation of these or those goods.

• The multinational corporation has a number of advantages before the national enterprises:

• The resource of one enterprise acts as the factor for another;

• The technology is developed in one country, and applied in another;

• Management of the foreign enterprises is carried out from one centre;

• The parent companies finance branches; there are favourable contracts with other enterprises.

• Multinational corporation role. The multinational corporations have transformed world economy into the international manufacture, have provided development НТП in all directions: technological level and quality of production of % of production efficiency; perfection of forms of management, management of the enterprises.

• Multinational corporation formation inseparably from interstate moving of the capital. Creation of branches, affiliated societies, representations, joint ventures is there are direct foreign investments.

• Trans-nationalisation – process взаимопереплетения economy of the different countries, thanks to activity of corporations on acquisition of the enterprises in other countries, establishments of the foreign branches working on the multinational corporation within the limits of specialisation and cooperation.