Opposition

Globalisation is seen as contributing to economic welfare by most economists – but not all. Professor Joseph Stiglitz of the Columbia Business School has advanced the infant industry case for protection in developing countries and criticised the conditions imposed for help by the International Monetary Fund. Professor Dani Rodrik of Harvard has noted that the benefits of globalisation are unevenly spread, and that it has led to income inequalities, and to damaging losses of social capital in the parent countries and to social stresses resulting from immigration in the receiving countries. An extensive critical analysis of these contentions has been made by Martin Wolf, and a lecture by Professor Jagdish Bhagwati has surveyed the debate that has taken place among economists.

2.GE indicators

Statistical information; comparability of indicators

Indicators are characterizing economy effectiveness: spending of resources and materials consumption, the indicators of logistic, science potential. Thereby, there’re the next indicators: energy-, resource-, material-, science-, transport-, capacity.

Main macroeconomy indicators are: the indicator, characterizing economic development which is GDP: value of all final wealth, which includes not only goods, but services, produced in the world, macro-region or in country for some period. According to UN methodology, GDP calculates as the sum of incomes: salary, all kinds of profits and amortization.

National income (or cleared product) – differ from GDP on quantity of fixed assets amortization (i.e. wear and tear production compensation for year). National income is the sum of all economic agents incomes: owners of living labor (salary), capital (profit and percent) and land (rent). National income divided into: personal consumption, state consumption and accumulation (investment and production expansion).

The dynamics and correlation changes of GDP primary elements represents level and rate of social production development, direction of state’s economy policy.

The personal consumption indicator per capita is the one which represent social progress. (Personal consumption – is the prevailing part of national income)

Therefore, national income differs not so much than GDP.

One of the problems is the correlation of nominal and real GDP. Nominal GDP expressed in current prices, real GDP is the value of final wealth, represented in stable (for some year) prices.

Nominal GDP assigned to real GDP is the deflator and the most basic price index.

When to country’s GDP international activity is added we’ll get more full characteristics of economic activity it called GNP. The difference between GDP and GNP is small: GDP is concentrated on activity inside the country, but GNP includes also international trade and investments.

But neither GDP, nor GNP can fully characterize scale of county economy, because illegal activity is not registering and never includes to official indicators. Done work without payment – in household, by volunteers in hospitals and schools is not also included to these indicators.

Although these indicators aren’t perfect, they’re the best among majority of tools for economy estimation and for different counties economy compare.

GNP per capita preferably characterizes welfare of the country. It estimates overall goods and services capacity, produced in terms of population. For example: in 1988 GNP per capita in Japan was 23 300 USD, 18 500 USD in the U.S.: although the U.S. is production more goods and services.

GE as another kind of object has its own structure: totality of functional, sectorial, territorial areas, interacting each other. Now GE is transforming into holistic and integrated economic system.

Functional elements of GE are: science-technological area, production and investment activity, area of international exchange (trade), monetary and finance international relations.

Sectorial elements are: braches, global sectorial, inter-sectorial complexes.

Territorial elements are: regions, regional unions.

Let’s examine functional elements. Science and technology relations are relations between national economies of the countries in sphere of development and transfer of technologies, patents and another valuable information, which form global market of technologies, innovations, patents, licenses, information services at all. Production improvement in all countries strengthens value on technological components, requires usage of new technologies and know-how during production processes. This improved by next data: amount of science information and activity grows 2 times faster each 10-15 years, but quantity of personal science has grows 4 times faster for the last 50 years. Hence forecasts in XXI century to science work will be implicated to 20% of working-age population. This will help intellectualization of production and effectiveness of resources usage, which will grow too.

Germination of international technology transferring related to XIX century. During its history international technology transfer passed 3 stages:

1. The end of XIX – middle of XX century: national economies were united in spheres of production, science and technology; as the result Trans National Corporation (TNC) appeared. TNC is the international companies according to their activity (TNC are monopolies with assets, branches and subsidiary abroad (not less than 25% of realization, assets, profit and employment). In 1993 17 000 of TNC have 200 000 branches and controlled the third of worlds production and trade

2. 50-70 years of XX century – the International Labor Division was extending, as international specialization and cooperation of production on the level of firms and companies were developing too. The activity of TNC as their quantity, value of sales and production were grown too, their role in GE grew also. The character and geography of foreign investments have changed; it mainly was directed to the developed countries. International technology activity appeared in creation of common enterprises, license agreements, contracts in sphere of management and marketing, agreements technological assistance. Especially, knowledge and know-how became essential.

3. From the end of 70^th – the International Labor Division had complicated, and covered not only production activity but science-technological. The form of international transfer is: licenses sells; more stable becomes international cooperation in area of research and development works. The complex strategic international agreements became strategic alliances which appeared.

Transfer operations – operations among situated in different countries related companies of international monopolies.

The trade with licenses on this stage covers the next sectors of industry: electronics, machinery, aerospace, automotive industry, biotechnology technologies. The trade with licenses starts to cover sectors of computes. On the global license market prevalence of inter-departments of big firms and TNC agreement is observed, where mostly 80% of science and technological potential of developed countries are concentrated.

Production of investment activity is the second element of GE function elements. Nowadays economic life becomes more and more globalized and it unites national and international forms of production. The international manufacturing is developing: single production process, where different resources and factors take part. More fully it appears in TNC activity, Joint Venture, during international investment processes realization, within Free Trade Zones. In general such kind of international production forms takes 30-50% of physical, finance and technological turnover of GE.

In science and educational literature it’s possible to meet international production theory, where 5 types of production are selected, according to determined factors (Daining theory):

1. Productions which are based on resources, common usage of capital, technologies, natural resources, infrastructure and markets

2. Market based productions, which also together own capital, information and technology. Moreover, modern management is used as reconstruction and modernization, which are taking place, enacting another kinds of power; excluding the economy effect in result of production expansion; the benefits of reducing material and workforce outgoings, measures of state policy are realized also.

3. Productions which are based on rational specialization of goods or technological processes. They’re combined in character features of first two types of international productions, also in wide access to markets, economy in scales and geographical diversity.

4. Productions which are related with trade and products distribution. The source of economy are outgoings reducing and access to local markets, proximity to customer and after-selling service.

5. Combined productions consist of different types of named higher combinations, which use market benefits and portfolio investments.

Synthesis of different types of international production gives the possibility of realizing three main benefits groups: they’re ownership, placing of production and internationalization. Additional types of benefit are related with common usage of assets and transaction activity.

The investment activity is the important type of international production. There’re two forms of international investments: portfolio and direct.

Portfolio investments are only finance assets such as bonds, shares, which are denominated into national currency unit. Particular development of this form of international economic relation took place before the WWI (Great War). Great Britain was the main investor, which was interested in getting such kind of additional natural resources from less developed countries and colonies. Buying shares and bond, investor is claiming only for company’s net profit. Portfolio or finance investments are carried out by using banks or investment funds.

The direct investments are more widespread, which are the real investments into enterprises, land resources or implements or carrying out via export investment goods or technology transfer, good practice experience, where investor is saving control under invested capital. As a rule, direct investments are used for new enterprises creation or for control establishing under active company by controlling interests. In international practice, direct investments are used by TNC in finished industrial good production, raw material production, services widening. They’re also important channel of international private capital transfer.

Considerable role in forming and diversity of international production belongs to joint ventures and free trade zones. Joint venture is created in such kind of forms as: Joint Stock Company, limited company, limited partnership and holding. They’re characterized by the third determinant features: joint property, joint management, joint profit and markets dividing. The sphere of joint venture activity includes before-production stage (science and research, information services), goods and services production processes, sale and after-sale service, cooperation in sphere of finance, insurance, transport and tourism.

Exceptionally favorable conditions for international production development are created in free trade zones (FTZ). FTZ are the territories, where foreign companies, using special incentives and benefits, produce goods for export. There’re duty-free zones or zones of free trade, export industrial zones, parks of technological development, off-shores, import industrial zones. Accordingly to various estimates, there’re mostly 3 thousands of free trade zones, which service more than 10% of global turnover.

In developed countries free trade zones, transit zones and ports, technopolises and technoparks are widespread. For developing countries, free trade zones of export orientation are mostly typical. For countries with transition economies usage of different types of combined zones is a typical fact.

The functional area of GE, where movement of different resources between the countries, regions and companies are reflected, international exchange and global trade are. Nowadays, the processes of International Labor Division, and labor cooperation, economic relations globalizing, strengthening of interdependence of countries and the regions of the world are deploying.

The historical practice testify different forms of international trade existing. There’re factories, fairs, trade companies and commodity exchanges which had existed in ancient times and medieval. There’re auctions, international trades, trading houses of industrial epoch civilization. There’re international trade based on cooperation’s, countertrade, intercompany exchange which appeared in newly time.

The biggest exporters in our times are: the U.S., Germany, Japan, France, and Great Britain, fraction of which takes half of world’s trade.

The International monetary system is the one of the important functional component of GE. This purely economic sphere of the GE’s life immeasurably strengthen, the scales are also widening and the amount of finance , debt operations, the quantity of monetary relations subjects are increasing too, new international and regional monetary organizations appear as well.

Most typical features of international monetary system are availability of floating exchanges rates, functioning from implementation of Jamaica’s agreement 1976; diversity of liquidity due to introduction into circulation special drawing rights; and regional currencies (Euro), increasing role in international payments of leading currencies of industrial countries (the U.S., Great Britain, Japan, Euro-zone); functioning of ramified system of international finance centers, which provide finance resource transfer in global scale; creation of international communicative system – SWIFT, which joins international monetary system into integrality.

International monetary relations make sphere of exchange the global economy system. They’re the final stage of movement, transfer of different resources between the subjects of economic relations, which are expressed in such integral category as payment balance of the country.

International monetary relation appears in process of money functioning during international currency exchange. They’re servicing goods, services, capitals, workforce, tourists exchange.

As follows, the main function of international monetary system is effective mediation of payments for export, import between the different countries and creation of favorable conditions for international system of production and labor division development.

The characteristics of developed economies.

1. The common characteristic

2. Models of economic development

3. The form of state interventions into developed countries economies.

To the developed countries member-states of Organization of Economic Cooperation and development (OECD) are included. This organization was founded in 1961 by Australia, Austria, Belgium, Great Britain, Greece, Denmark, Ireland, Iceland, Spain, Italy, Canada, Luxembourg, Netherlands, New Zealand, Norway, Portugal, the U.S., Turkey, France, Germany, Switzerland, Sweden, Japan.

These countries take first place in global economy, as evidenced by their proportion in world’s trade. In 1990 these countries accounted for more than 70% of world’s export, including the U.S. – 11.5%, Japan – 8.4%. In these countries 7.4% of import was accounted.

The evel of economic development next fact proves that the biggest part of national wealth is created in spheres of services: in the U.S. – 70% (in industry – 27%), Japan – 59% (in industry – 39%)

Among these countries according to indicators of economic development, the group of leading countries is: the U.S., Japan, EU-countries (Germany in particular). Canada can be related to leader countries according to separate economic indicators.

Types of countries

Type of the country is a relatively stable set of inherent characteristics and conditions which objectively characterize the developement and the country's role and place in the world community at some period in world history. 1. The developed countries of the world.

Developed countries have reached a high level of socio-economic development and play a leading role in the global economy and international relations. Conventionally developed countries can be divided into some groups.

The most developed.

 The so-called "Group of Seven" The world leaders in economic, social, scientific, political and military spheres.

Highly developed countries of Europe (the so-called "privileged small nations"): Norway, Sweden, Finland, Denmark, Iceland, the Netherlands, Belgium, Luxembourg, Switzerland, Austria and all European "micro". These countries usually have considerable political influence.

A special group of developed countries of "migration of capitalism" Israel, South Africa, Australia and New Zealand. The countries of migration of capitalism are often inherent in the agro-material specialization; relatively low level of productivity; negligible participation in world trade. However, they are important as major suppliers of raw materials and semi-finished products to the world market.

The developed countries of medium development in Europe: Spain, Portugal, Ireland and Greece. For the main indicators of socio-economic development they are behind the previous groups.

In 1997 by the decision of the Economic and Social Council of the UN to the developed countries so-called "Asian tigers" of first wave were included. They are Republic of Korea, , Singapore, etc. These countries have shown the "economic miracle."

 Countries of the former Soviet bloc (socialistic countries). After the collapse of the socialist camp in terms of socio-economic development the Czech Republic, Hungary, Slovakia, Lithuania, Latvia, Lithuania, Estonia were the closest to the developed countries.