Global Economic Reality: Structure, Systems, and Development
Elements of the Global Economic Reality
Introduction: There are many definitions of “international economic reality.” But virtually all of them share a series of common elements, such as: the subjects or actors that make up economic relations between these individuals, institutions, organizations that regulate economic relations between subjects, the rules governing economic relations between subjects, and the existence of an “order” among all elements.
Development: In detail, the characteristics of these common elements are:
- Subjects or actors: Subjects or actors that make up the international economic situation are the more than 200 countries and territories worldwide. But in the analysis of international economic realities, other public and private actors who are gaining an increasing role must be taken into account in addition to States, such as transnational corporations, non-governmental organizations (NGOs), or international pressure groups.
- Economic relations: International economic relations between countries are very diverse, covering all areas of economic activity. All are important and play their role, albeit internationally, the areas of monetary, financial, and commercial, as well as those concerning migratory movements, stand out for their impact on the global economy.
- Institutions, organizations: Once a financial relationship in any area between two or more countries is created, these countries create at the same time or after an “institution-organization” to regulate the economic relationship through a series of rules established by those same actors. This means that the most important institution is the institution itself, without standards or rules by which the institution regulates the international economic relationship. The set of all institutions is the institutional framework of the global economy, in which international economic relations are achieved and developed. The first characteristic of the institution is that it comes at the earliest when establishing the relationship. That is, the institution was created as a result of the relationship and impacts on that relationship, establishing a flow of influences in both directions and this asymmetric flow. In principle, for every international economic relation, there can be an institution, but institutions cover various kinds of economic relations. Another aspect to note is that the significance of them is not the name given to them or that they have, but what kind of relationship with their governing rules. The “relative importance” of the institutions is determined by the type of international relationship it is regulating.
- Rules governing institutions: The nature of the standards or rules set to regulate economic relations are a function of the country’s interests or countries that have the “power” or ability to impose them upon creation of the institution. Power that is represented in each moment, the “economic burden” and “political” which each country has in the international economic arena. Typically, these are the economic changes taking place nationally in the most economically powerful countries which will generate tensions and crises in the institutions, necessitating changes in the rules and regulations governing these relations. It’s a bottom-up influence. By contrast, for the economically small, the direction of influence is from top to bottom. The ability of these latter countries to introduce changes to the rules and regulations governing the rate at which they are under is very limited. If the point of an institution are the rules and regulations governing the relationship, to analyze the characteristics of these, the historical moment they were set and what was then the international economic situation must be taken into account. You can see how long the country has held the qualification of leading economic power has imposed on other countries its rules of behavior. The concept of an institution is not a static concept in which no change may be made in the rules and regulations that govern the relationship. By contrast, the facility must be sufficiently flexible and dynamic to reflect the changes and transformations that are occurring in the international economic arena. Otherwise, the organization is in crisis and losing its usefulness and may adversely affect the very existence of a relationship.
- “Order:” Rules are rules and a consequence and result in a determined “economic order.” For example, the well-known “Economic System of Bretton Woods” represents the set of specific rules governing, since the end of World War II until recent years, international economic relations, monetary, financial, and trade among developed market economy countries. The “economic order” is a dynamic concept.
Structural Economic Analysis of Global Economic Reality
Introduction: In the analysis of international economic reality, we must distinguish between its static (structural analysis) and dynamic (situational analysis) and the external sector performance and economic policies that apply. In the structural analysis is to know what are the main features presented by the economy at any given time. In the situational analysis is to know what is the behavior of the international economy of a country or a group of countries over a period of time, which will normally range from one year to the daily fluctuations in certain markets such as monetary or currency. This analysis is circumstantial, together with the structural characteristics of that economy, the foundation for making predictions of future short and medium term.
Development:
The variables to be considered in the structural analysis can be grouped into the following major groups:
- Natural setting or geographical location: Far more important than its surface area has a country so know their geographical location and economic position of closeness or distance of the centers of gravity of the world economy and trade flows.
- Population: The main component of economic activity. The population is subject to the same time and stand with it. It produces and consumes. Any measure of economic policy is ultimately aimed at improving the welfare of the inhabitants of that country or territory. With respect to the global average, the higher the economic development of a country, the lower its birth rate and increased life expectancy.
- Production and demand: One of the most significant indicators of a country’s economic weight in the international economic scene is the percentage that represents your supply or production over world production. Theoretically, the variable that should be used to measure output is the Gross National Product (GNP). But in most cases using the Gross Domestic Product (GDP) and increasingly, the Gross National Income (GNI). On the demand side, consumption or percentage distribution among its members is also very valuable information when analyzing the economy and defining the level of economic development of a country or group of countries. But the structural differences are less pronounced between different groups of countries.
- External sector and balance of payments: It’s another very important source for the structural analysis of the economic characteristics of a country. And as important as the figures of the Balance of Payments in absolute values are their ratios with respect to their GNP or GDP.
- Other variables could be stressed from the political to the personal distribution of income or ownership and land distribution. Like other indicators on the educational, cultural, health, nutritional, religious, etc. of that country.
There are many variables that can be used in cyclical analysis; however, the main are:
- Economic growth: Changes in economic growth rates reflect the progress of the economy and the degree of flexibility of countries.
- Inflation: The inflation rate reflects a mismatch between the productive structure and the structure of demand or consumption, taking into account the external sector and monetary policies. The important thing for a country is to keep inflation as the difference from other neighboring countries does not increase and remain as close as possible to the average.
- Unemployment: Variable that reflects the imbalance between demand and supply in the labor market.
- Deficit: The way the budget deficit is financed, going to the money market as a borrower or by increasing the money supply is of great importance. When using the first path is forced a rise in interest rates or if you follow the second route will increase inflation.
- Foreign sector: It reflects external imbalances by crossing the economy.
- Interest rates: The interest rate is the price of money.
- Rates: The value of a currency with respect to each of the convertible currencies is determined on the foreign exchange market.
- Foreign debt: Speaking of the problem of a country’s foreign debt must be taken into account from the characteristics of its debt to the country’s ability to cope with it.
Economic Structure
Introduction: The structural approach as a specialty of economics is the analysis of reality from the recognition that it is formed by structures. Within this approach will be discussed the concept, the structural method, the economic structure as a specialty, and the relationship between economic structure and institutional.
Development:
The concept of structure: The term structure is a category that serves mentally prepared to interpret and reconstruct reality. It comes from the verb “struere,” meaning to build. The dictionary of the RAE, among other definitions, specifies the verb “construct” and “distributing, ordering the parts of a work of a body.” Order and distribution are two terms that define the structure, but need to be completed in economic terms. José Luis Sampedro defines the term as “the set of relationships and elements that characterize a certain degree of economic reality continually towards.” The term structure contains three basic notes: full, interdependence, and permanence. Totality, because it constitutes the main object set consisting of elements but not the sum without any of these, but as parts of a whole are subject to the laws that characterize this whole. Interdependence, upon accepting that reality consists of elements isolated from each other but there are relationships between them. Permanence, to the extent that the relationships that form a structure have a degree of economic stability and duration in time.
The structural approach: The notion of structure is referring to a reality, but also a method and a mode of analysis of that reality. It is necessary to establish the basic elements that define a specific structure and the existing relations of interdependence, which requires a specific analysis method in correspondence with the vision offered of what is meant by structure. The structural approach has theoretical pretensions. There can be a true description without the discovery of the laws governing economic facts and the concatenation of them. A true description is at once explained. The structural analysis, and a method, a vision, and approach to reality, aims to have an approach at the highest level, i.e., speculative. However, it has achieved a level of abstraction and formalization as having economic theory. Structural analysis addresses the limitations of economic theory, considers and incorporates social, institutional, and historical. That is, while economic theory builds models that are not based on a general theory of economic processes, structural analysis must focus on this aspect.
The economic structure as a specialty: Economic structure, as scientists, has the features of theoretical, comprehensive, and current. Theoretical, because its goal is to provide a structural interpretation. It is a vision of events linked by means of inter-dependent, with a degree of permanence, making up some rules for the functioning of the structure with a core character. Global analysis of all elements not belonging of it in isolation and partial. Currently, the present moment. For José Luis Sampedro, the “economic structure” is intended to study the relationships of interdependence that are endowed with a certain permanence and articulate the main components of economic reality (economic structure). Thus the “economic structure” is characterized against other branches of economics as being descriptive, but consistently; macroeconomic situations it considers whole rather than partial analysis, and, now, with reference to situations of our time. Among the main currents of structuralism can be noted linguistic structuralism, mathematical structuralism, the structuralism anthropological, sociological structuralism (French), structuralism (economic structure and superstructure), and other streams and relations (Christian structuralism).
Economic and institutional structure: Here we addressed the relationship between economic structure and institutional institutionalism from American. Institutionalism as an approach to the study of reality economics, considering the institutional framework as the set of organizations and institutions. We generated new versions of institutionalism by the increasing institutionalization of international economic relations. That is, at this point relates to the role played by institutions for the purposes of determining the importance to study the economic facts with variables that are not economic.
Economic Systems
The “Economic System” is the basic set of structural, technical, and institutional that characterize the total economic organization of society and determine the thrust of its key decisions and the predominant channels of different economic activity. Theoretically, economic systems emerge from the answers given to questions: What is produced? For whom is it produced? How is it produced?
To classify economic systems combine two variables: the variable technical and institutional variable. The technical variable represents the ability to innovate and diffuse innovations, while the institutional variable reflects the direction of decisions to explain in one way or the other technical possibilities. And combining the two variables can produce different types of systems and theoretical ideals represented in a rectangular double-entry scheme.
In early 1970 he distinguished three skill levels and three levels that qualified institutional real systems existing at that time. The technical levels were “modern and advanced countries, that of the intermediate and lower technical level”, while institutional levels were “capitalist countries of decisions based on private ownership of capital goods and the market economy, the socialist countries with central planning and public ownership of productive equipment and a mixed.” But the assignment of different countries to the previous classification posed different problems such as measurement of variables, solving in the use of indices (technically) or typecasting qualitative (institutional variable). Finally in the 70s was the classification: socialist systems, capitalist systems, and systems traditional.
In conclusion, the Economic System of a society tries to solve the economic problem, whose function is the allocation of societal resources among different activities production and distribution of consumer goods and services among individuals.
The Natural Context: Natural Resource Sector and Energy
The natural context is the physical support of the economic structure that influences economic activity, i.e., “the skin of the Earth” created and destroyed. It defines the nature and physical framework of our lives and arises from the evolution of the Earth hundreds of millions of years, from a single continent named Pangea. The influence of natural environment on economic activity is extraordinary but not decisive, because man, to a certain extent, you can modify some features of the natural setting: size (km2); status and geographical position, the relief, with the terrain and soil, subsoil hydrography and climate (temperature and rainfall); the flora and fauna and vegetation. There are a number of issues related to the natural environment of great economic importance as they are among others: the topsoil and the destruction of soil due to erosion, the influence on people (health) and, natural resources.
Natural resources are assets found in nature and using humanity for their subsistence and to meet their needs. These are: hunting, fishing, forestry, livestock, agriculture, and mining.
Other resources are the energy, which are those used to produce energy. The primary energy sources are coal, oil, natural gas, nuclear, and others. There are new energy sources and new energy model “resource matrix”. The use of renewable energy has advantages, by polluting less and reducing energy dependence. The most important is hydropower, while traditional fuels such as wood, charcoal or animal waste and marginal plants. Other renewables share growth are basically wind and solar, with its cost and storage problems, not to mention the energy geothermal.
Natural resources and energy goods have gone from being free to be considered economic resources (low = price) depending on the deterioration of the planet, so that the environment is present in the thinking economic.
In conclusion, natural resources are part of the economic base and its proper use depends sustainability of economic activities and from the base which represents the natural frame, resources and goods used in activities are part of the components of the economic structure.
World Population
Population is the main component of economic activity, so the study population as an economic variable is absolutely essential and indispensable.
Population is defined as active and passive subjects of economic activity because it is the people who produce and consume.
In the sixteenth century, world population stood at 500 million people, of which: 55% lived in Asia, 20% in Africa, 15% in Europe, and 10% in America. Currently the world population is over 6,500 million inhabitants with important changes in their production and geographical distribution and a sharp increase in life expectancy at birth.
To study population is required to analyze static and dynamic. The static population pyramids and the dynamic demographic and economic variables that could distinguish several stages in the demographic (birth-death-migration phenomena).
To gauge the future growth of the population has three classes of methods. The first analyzes the current or past natural growth, the second takes into account the current expectations of future growth, and the third is based on population projections over time.
In conclusion, it is very important insight into the characteristics of the population because any economic policy measure has the ultimate objective to increase the welfare of their people and because in a context of optimal population there is a significant relationship between population and limited natural resources.
Technology and Organization
We studied the technique within the components of the global economic structure. The technique is the set of procedures and remedies that uses any activity and involves relations between things. The technology is not without a set of techniques, supported by theories, which allow the use of scientific knowledge. All this together can be used to produce goods and services.
The National Innovation System (NIS) is of great importance. It must be said that today, innovation is regarded as knowledge. The NIS is the complex context in which innovation occurs, and is influenced by policies adopted by the government. Policies need to be designed to drive innovation for the process of internationalization, both favored leaving recipient countries of origin.
Technological development and the role of knowledge (ICT): More and more knowledge is considered as an asset and increasingly more companies base their competitive advantage in its ability to innovate and not on costs. The dissemination of knowledge on a global scale is being led by technological development and ICT, which is creating a digital divide: the difference between who has access to technology and knowledge and who not.
This global diffusion of technology is known as globalization of technology or tecno globalism. There are three meanings: the international exploitation of nationally produced technology, the global generation of innovations by multinational enterprises, and the global technological collaboration. Under this latter meaning, we find strategic alliances, which is the most widespread form of tecno globalism from the 80s.
Transnational Corporations (TNCs) are the engine of global R & D, and play a key role in the internationalization and development of the latter. The internationalization of R & D activities is facilitated by advances in ICT. The phenomenon of relocation of assets also to affect the R & D is being developing countries. From the perspective of the recipient country, the internationalization of R & D opens the way not only technology transfer but also the process of technology creation, with important consequences for innovation and development.
To those summary, technology is the set of knowledge that can be used to produce goods and services. One must take into account innovation and knowledge. Knowledge is increasingly important and enables us to enhance our competitiveness, which implies a move from traditional strategies based on costs, new strategies based on innovation.
The role of ICT is also crucial when it comes to disseminating knowledge and enabling the exploitation of technology worldwide. With the development of ICTs, TNCs can relocate the factor with which they work (R & D) while incorporating technology in developing countries, facilitate the creation of new proprietary technologies.
Economic Growth and Sustainable Development
Economic growth and sustainable development are two terms associated with increased production volume but the second takes into account environmental issues. As a consequence of economic development “runaway” has been a deterioration of the environment. The environmental and ecological issues are taking a growing interest and we have an example in the growing global awareness of climate change issues. On the other hand, there are theories that state that, since natural resources are limited, can act as limits to growth.
Dig deeper into the subject matter section, we can distinguish chronologically several “phases” of economic growth, economic development, and sustainable development. The first resulting in increases in certain macroeconomic magnitudes, the second takes into account that is socially balanced growth (was balanced when there are imbalances or sectoral, or social, or spatial) and the third takes into account that growth, apart from being socially balanced, taking into account the environmental issues (e.g. mentioned at the beginning of the limited natural resources available.) Economic growth in a country and the world economy is produced from natural framework and based on available natural resources, human and capital and levels of technology and organization. And it is one of the explanatory causes of growth and diversification of the economy since the late s. XVIII as Kenwood and logh: technological progress, in addition to training and capital accumulation, the growth of world population (human resources), the increased supply of natural resources, the growth in real incomes and the expansion of freedom economic.
For other authors of the dynamic forces of economic growth produced by the accumulation of capital. In capitalism, wealth is not an end in itself but a means of achieving more wealth.
In short: it went from growth to sustainable growth, and there are basic elements of sustainable development according to models of sustainability. Sustainable development encompasses all economic components (growth of certain macroeconomic variables), social (lack of sectoral imbalances, social or spatial), and environmental (limited natural resources).
The Construction of the State
The concept of state building means the creation of new government institutions and strengthening existing ones. The construction of new institutions or strengthening is carried out according to the result of supply and demand. Regarding the supply of institutions to see which ones are essential for economic development and how it should be designed to be taken into account: 1) Design and management of the organization: in case a private business and science in public sector case management public, 2) Design of the political system, 3) Base legitimation: in today’s world the only real source of legitimacy is democracy, besides being an end in itself, is a tool for economic growth, 4) cultural and structural factors: a reference to the rules (can be changed through public policies), values and culture (not be changed: changes over time). Cultural factors greatly influence the evolution of institutions formal.
For the demand side of institutions, the reality has shown that economic institutions do not always generate its own demand. The demand for good institutions has arisen at specific times in history (structural changes). A domestic demand for institutions or institutional reform is the single most important obstacle to institutional development in poor countries.
The paper should interpret the rule is debatable, and there are controversies about the size, scope, and functions that the state should play. With the collapse of communism, the most extreme form of statism, it gave impetus to the downsizing of the state in non-communist countries. With the Washington Consensus was intended to reduce state sectors of developing countries because they acted as a barrier to growth. In the long term economic liberalization sought. The problem was that the States needed cuts in some areas and needed to be strengthened in others. The lack of an appropriate institutional framework in some countries resulted in a worse situation than before the reform.
Is it better to have a large state with strong institutions, or limited state with weak institutions? The scope of government activities is the different functions and goals taken on by governments and strength in the state capacity to plan and develop policies and enforce the laws strictly and transparently. Well, the Washington Consensus advocates believed that any degree of liberalization was better than his total absence. But keep in mind the importance of institutions, legal framework, and the correct order of implementation of reforms. Sometimes a small degree of liberalization may be more dangerous than none. To conclude, a quote from Milton Friedman in 2001 that illustrates this: ten years ago, he would recommend three countries living a transaction of socialism: “privatize, privatize, privatize.” But I was wrong “the rule of law is more important than privatization.
Classifications of States
The most remarkable of the different classifications of States is that its criteria are totally dependent on who’s doing them, that is, according to which the organization subscribes to a State and according to the relative weight or importance it has in relation to this target, is classified in one way or another. Classification of States according to the bylaws of an organization is listed under international law given the rights and obligations that can provide the membership of that organization. They were the strongest countries who imposed the right to equality could be exceptions, the car assigned a veto in the Security Council UN over countries according to the classification that was this organization, had minor relative.
There are generally two ways in which is classified as a state. The first, more general, serves a number of technical and abstract criteria which are independent of the temporary situation of a country. These serve economic, social, health, cultural … to the face of the country to measure. The most common are the GNP, GNP per capita, PPP GNI, enrollment rates, industrialization, or opening, the characteristics demographic.
The second method is the use of lists and indexes, and is most used by intergovernmental organizations. It can be used positively to identify members, negatively, to point out that excluded countries or by individual countries, which can generate problems of recognition by other States. At present, there are many classifications of this kind, used by organizations like the UN, UNDP, UNCTAD, IBRD, OECD etc. .. seeking to place the countries into subcategories according to their position in these indices. One example is the classification of states depending Developed Countries (PD), Industrialized Countries (PI), Developing Countries (DCs), Least Developed Countries (LDCs) … Another very common scenario is that of the G3, G5, G8, G10 … Lately, however, are gaining increasing importance of developing indices that measure developed by UNDP, based on measuring life expectancy, educational factors, and living standards in terms of GDP per capita.
In conclusion, what is clear is that any classification depends on the purpose for which it does. Two countries can be very different depending on which criterion is applied, and one can have much more important in, for example, rate of industrialization while the other may have a brilliant education system, even with both a similar rate of development. Thus, according to the organization to take into account the results will be used very different approaches, especially when the outcome depends on the inclusion or inclusion of a country in that organization.
The Trilateral. The Group of Seven (G-7), the G-8
Since the mid 1960s, showed the international situation as Japan was becoming an increasing role, therefore it was necessary to incorporate in Japan to the international dialogue between developed economies market, therefore, is born and the Trilateral Commission was a clear precedent for subsequent summits of the G7 developed from 1975.
The Trilateral Commission was founded by David Rockefeller proposal to increase economic cooperation between North America, Japan, and Western Europe, was officially inaugurated in Tokyo on 21 and 23 October 1973 and was attended by businessmen, politicians, and academics in these countries. The objectives were born with maintaining international peace and security, promoting global economic development, and defending the basic values of freedom and democracy. Currently, the Trilateral Commission has lost almost all the prominence they had at the time of its creation because of the increasing role of China and other Asia Pacific countries and is undergoing a restructuring process, but remains an interesting discussion forum.
The origin of the annual summit of the Group of Seven (G-7) dates back to 1975 in Rambouillet, near Paris, where Heads of State and Government of the United States, Japan, Germany, France, and the United Kingdom met to discuss economic issues of a monetary nature, since it was felt that the crisis of that time was money and due to the lack of coordination of economic policies of the countries ‘dominant’ and not a crisis of capitalism therefore, one year later, at the Summit of Puerto Rico, joined Italy and Canada meeting, absent from the first meeting. In addition, issues began to arise car political actor, and it was decided to make aid conditional on Italy’s external adjustment process that would not fall to the Communists in his government. Later, in the London Summit of July 1991, Russia was invited months before initiation of the process of disintegration of the former Soviet Union but it was not until the summit in Calgary (Canada) in 2002 when he recognizes Russia as a “market economy” and becomes the G-7 into the G-8. But in purely economic meetings continues to meet the G-7 and Russia is not a WTO member.
The dynamics of international relations and the end of East-West conflict has become, in practice, the G-8 in the Directory of the world economy. This does not imply that the UN has to disappear, but aims to strengthen it to enhance its role and make an organization more effective. In the current economic situation in which China and some emerging countries have a growing role in the international arena must modify the G-8 to become representative of the new international order.
Have been producing some embodiments because the economic, political, and security are increasingly global and require a new collective leadership. The new GX would underpin the medium term in six “powers”, they would be the United States (Canada-Mexico), the European Union, Japan (countries of the region), Russia, China, and the acting Chairman of the G-15 formed by developing countries as a representative. What does not make sense is to try to convert the G-8 into an intergovernmental organization with the Secretary General, Secretary, Board, Commissions, Committees, etc. .. when it is available not only the whole structure of the UN, but of the entire United Nations system.
Civil Society. NGOs
In the framework of international economic relations, Non-governmental Organizations (NGOs) and more specifically for NGO Development (NGDOs) are becoming major players in the development aid policies of donor countries and the distribution of this aid on behalf of the population of their countries receptors.
In roots NGOs were formed by groups of people who spent part of his time and effort on behalf of the needy without receiving consideration therefore, were intermediaries between the state and citizens with the following objectives: Develop a culture of values and personal responsibility. Try to solve the basic problems of disadvantaged groups or communities. Improve channels of aid and encourage volunteering.
Gradually NGOs are “professionalized” and adopt a more complex structure and that are now independent from government, i.e. not dependent on a government agency and therefore political pressure, in theory, is zero.
There are NGOs operate with private resources and accordingly have greater freedom to make their projects if resources are obtained from public character and in this case, would be conditioned in part by the State, giving rise to interventionism. The actions of NGOs are important both in donor countries as recipients, in the country of origin, they perform a private advocacy and public pressure for the acquisition of resources, on the other hand, in the destination countries are trying to bring out proper management of aid not to lose on the road. A recipient country can not receive more than 50% than it collects in taxes because they could not absorb it and would encourage corruption.
Stand out as key advantages of NGOs:
- His greatest ability to adapt to the needs of beneficiary developing countries for their flexibility, agility, and less bureaucracy.
- Greater involvement of local staff who know best the needs of society.
- Administrative costs much lower than other public agencies of donor countries.
- The concentration of activity in countries with low incomes.
But there are also some disadvantages:
- Lack of transparency, corruption, and profiteering.
- In some cases it serves their interests over-reliance on funding.
- Also are criticized for their tendency to act isolated.
This increased collaboration among government agencies in the donor countries and NGOs have led to the constitutionality ion of co-financing mechanisms with NGOs and in some cases have global public subsidies but this will often lead to problems of independence and credibility in their performances. Finally, say that the activities that have focused more NGOs are: education, training, and health; about 35%, agriculture and rural development at around 18%, and emergency programs, around 16%.
Transnational Corporations (TNCs) in the World Economy
There is no explicit definition of TNCs, but requires 3 elements: The existence of several “centers” in different countries, the relationship between the “centers” and a “center” that influences others.
The TNC is defined as a management unit, has interests and acts in a number of countries, adjusting to the economic, social, and legal for each of them in order to achieve profit maximization.
TNCs not only be studied from the standpoint of capital movements but also from the provision of technology or expertise, capturing local savings and himself being reduced the amount of foreign capital growth processes incorporated.
In current TNCs grow horizontally and vertically (forming clusters) through mergers and acquisitions and corporate growth with new investment in organic growth.
There has been a national company to the multinational firm and now a global enterprise. For the investment bank Goldman Sachs has characteristic a “Global Company”:
a) Globalization is important for the company.
b) To have a global dimension.
c) It’s like a local company, not a foreign subsidiary.
d) Demonstrate flexibility.
e) Use technology to improve.
f) Have labor practices “employee friendly.
g) Have strategy towards China and other developing countries.
h) Have local social responsibility.
Issues related to the behavior of TNCs: corporate responsibility, institutional sphere of the multinational enterprise, multinational corporate governance, types of agreements (bilateral, regional, interregional, and multilateral)
Domestic companies are installed in other countries:
Exogenous factors: expansion of a market, or protecting entering a market, supply of raw materials, movement of the company’s vertical integration into commodities and the market.
Endogenous factors: Vernon distinguishes three phases:
Initial phase: new product on the market.
Maturity: the product and technology becomes widespread, and starts production in other countries that become exporters.
Phase of standardization: the product is technologically situated within reach of all countries, increasing competition.
The main source of information and assistance from TNC is the UNCTAD Division on Investment, Technology and Enterprise Development, which promotes: foreign direct investment, technology transfer, and development and helps to seek consensus on these issues.
TNCs, according to UNCTAD estimates, have a high percentage of production, gross fixed capital formation, and demand for jobs in international trade and the creation of new technology (R & D + i).
Developed countries, particularly the Triad (USA, EU, and Japan) are those TNCs, but increasing in developing countries is creating South-South investment.
The internationalization of TNCs from developing countries is the result of 4 factors:
a) the market: acquisition of customers, avoid obstacles to trade, reduce dependence on the market and so on.
b) increased production costs in the country of origin.
c) competitive pressures in the country of origin (domestic and foreign companies)
d) Rules of the country of origin and recipient.
Other elements are rapidly growing and needs additional resources (China, India) and the growing perception globalized world economy, not national and a more global.
CONCLUSIÓN:
TNCs are influenced by globalization and the steady growth of developing countries.
In connection with TNCs, in many cases the turnover exceeds the GDP in many OECD countries
14. Economic impact of the activities of TNCs: (4-6)
UNCTAD helps TNCs to invest internationally and the development of the company while on the other hand the countries continue to offer favorable conditions for foreign investors.
Foreign investments present:
1. technological effects.
2. effects on employment.
3. effects on the balance of payments.
4. monetary and fiscal problems
5. political problems.
6. effects on investment.
Positive and beneficial effects:
1. technology transfer.
2. Provision of resources
3. Contribution to tax revenues
4. Provision of foreign exchange.
5. Introduction of new products.
6. Creation of direct and indirect jobs.
7. Introduction to business management techniques.
8. Development of internal structures for wider progress in other sectors.
9. Development of external connections and integration into the global economy “.
Negative effects or costs:
1. Promotion of brain drain.
2. Increasing dependence on technology
3. Creating sites and dual economies.
4. Weakening of the balance of payments due to the repatriation of profits, royalty payments and any increase in the propensity to import.
5. Inappropriate production methods.
6. Altered taste of consumers.
7. Export restrictions.
8. Denationalization of making economic decisions.
Indirect relationship between FDI and Official Development Assistance (ODA).
For developing countries and LDCs is important migrant remittances compared to ODA from donor countries. It is a process of privatization of development aid.
CONCLUSION:
If the company invests in the end is that the positive effects outweighed the negative effects.
And if not, whether the company invests in the end it is that the positive effects were less than the negative effects.
15. Stages in the evolution of international economic order: From an economic standpoint the International Economic Order (IEO) is the set of rules governing international economic relations, the concept of autarky rejects and denies the existence of OEI’s “neutral”. The OEI is dynamic and changes occurring in the world economy, which seeks to regulate.
There are four stages from the Industrial Revolution, from a Western perspective.
Although there were changes in the former socialist countries, relations between the North and South remained.
1. First etapa.Liberal, 2nd half of the XVIII-1914.
There was the Industrial Revolution in England in the 2nd half of the century until the First World War.
Features: liberal, private EOI, limited state involvement in economic activity and some control in exchange for international trade.
Until after World War I (1920) the state revenue and expenditure (not “economic state”, ie was not productive assets manager), the public economy is born with the Russian Revolution as a remedy for short-term political and economic problems governments.
2. Second Stage. “Disorder” between the World Wars: 1914-1944.
From 1914 until before the end of World War 2.
International economic relations were subject to restrictions on free movement of goods, labor and capital.
Was developed at this stage, control techniques of trade: tariff increases, devaluation of multiple exchange rates, dumping, commercial areas, bilateralism, compensation agreements and payments, multilateralism limited to areas of economic cooperation not substantive.
There was no institutional framework of international economic cooperation (which compounded the economic problems that exist).
The main countries acting individually, so it became widespread the “economic warfare” which exacerbated the problems of the Great Depression, the U.S. began in 1929.
Since 1944, there was an institutional framework of multilateral economic cooperation.
3 Third stage. Economic Order “neoliberal”: 1944-1989:
During the last years of World War II, the U.S. was the economic and military power. With the support of the United Kingdom established the foundations of the neoliberal order: market as allocator of resources, free trade and multilateral cooperation.
a. The Bretton Woods economic order (1944/47-1971/74).
At this stage there were tensions and changes in economic relations between developed market economies, and there were changes: strong global economic growth, consolidating the socialist system of planned economy and political decolonization of Africa and Asia.
The economic demands of developing countries were increasing, the dynamics of global economic development increased economic interdependence, trade, monetary and financial cooperation among countries.
Both developed market economy, developing countries and developed countries of planned economy, were groups that had an increased heterogeneity among its members, and started from here, has a North-South, East-West, South – This and relations within each group.
b. Economic Order “neo-interventionism”: 1971/74-1989.
The end of the previous period was caused by the sharp increase in oil prices in late 1973, which heightened international economic and political tensions, the dollar crisis (2nd half of 1960) that was occurring as a result of economic recovery Western Europe and Japan and with the loss of U.S. economic power.
Dates in the qualitative transition in OEI:
· 15 August 1971: U.S. President, Richard Nixon ended the international monetary order established at Bretton Woods.
· 1 May 1974: General Assembly of the Organization of the United Nations (UN) adopted the Declaration and Program of Action for the establishment of a New International Economic Order (NIEO), with opposition from the major developed countries, disappeared in 2nd half of 1980.
Developing countries tried to change the rules governing international economic relations to become more interventionist, but survived the pillars of the Bretton Woods institutions.
4. Fourth Stage. Consolidation of a global economic order: 1989 —
With the fall of the Berlin Wall on 9 November 1989 resulted in: the collapse of central planning in the countries of Central and Eastern Europe (which had international repercussions), remains the economic rules of the preceding stage, finally is breakup of the USSR (1991-1992). In early May 1992, former Soviet president Mikhail Gorbachev was terminating the Cold War that had marked relations internacionales.CONCLUSIÓN:
Today the world is increasingly interdependent: the process of globalization (most open to foreign countries) and regionalization, technological advances have deepened in the market economy, growing the privatization, deregulation and economic liberalization.
16. The Economic Order of Bretton Woods (1944-1947):
After the Second World War, the world urgently demanded a new economic framework in which to settle. For this reason during the war, the U.S. designed this new economic environment based mainly on private property and free markets. As expected, the former USSR directly rejected this proposal.
Under this situation, was born in 1944 Bretton Woods and the International Monetary Fund and the International Bank for Reconstruction and Development with the aim of helping member countries.
The global economy then was developed within the capitalist framework consolidating the socialist system and the decolonization of Third World regions of Africa. All these changes together with the new system of free trade led to faster economic expansions seen to date. Companies appeared far greater significance in the global economy and particularly in a process of development, integration and cooperation internacional.En all this context, it started easily distinguish three main blocks: a first block comprising the western countries, a second block with the central planned economy countries of the East, and a third group of countries in the south. This limits international relations to 3 types: interdependence and cohesion among the Western countries, asymmetric interdependence between North and South, and conflicts between East and West.This led to the development of 7 types of rules to govern international relations in terms of who they were addressed: * Universal * Among Western countries, including South-South *, * Among Eastern countries, * Among countries in West and South * Among countries in West and East and * between the southern and eastern countries.
Since 1973 the developed countries were facing threatening its stability and growth to see how the price of oil quadrupled, and lost control of prices on the most basic products such as raw materials themselves.
This crisis relatively close to that of the 30 recessions occurred in all developed countries are not oil exporters.
In conclusion, we can speak of this stage as the final settlement of the capitalist structure in most parts of the globe, with positive and negative consequences that this entails.
17. LaInterpretaciones on a UN NIEO (1974):
18. We speak of the NIEO as a concept born in May 1974 ( “New International Economic Order”) that tried to reflect the new economic situation that was presented to the world, but logically the same interpretations vary significantly among the three groups of countries: Developing countries, developed countries and countries with centrally planned economy.
For developing countries had an NIEO A paradigm shift in the rules governing international relations in all aspects, whether monetary, financial, trade or technology in order to enhance their own economic development and its integration into the global economy . Developed countries instead gave priority to the adaptation of international standards to the new situationeconomic ón mainly among themselves. Whatever your take on the loss puts U.S. hegemony in the head of the global economy and accept the need for consensus with the European Union and Japón.En not seen any case needed a change so radical as that proposed by developing countries , ie continue to maintain the economic system so far. In this context the private sector arising from the trilateral commission and the public by the G8 as current directory mundial.Los economy centrally planned economy countries of countries led by the former USSR considered any economic problem and tensions in this area were the result the crisis of the capitalist economy. Economically its relations with the South were scarce, and existing ones had their reason for being in geographical proximity, as the case of his relationship with India.En conclusion, both the resolutions of the UN general assembly as the declaration and the program of action for a NIEOdid see more than one the beginning of the end of the capitalist era.
18. The new economy: the idea was almost indisputable that the emergence of globalization meant the entry of an economy completely different … a new economy. The term new economy is born in the U.S. referring to this new concept of economy in the 90s where there were perceived inflationary periods and important data are not experienced unemployment. He leaned on the 3 pillars: globalization, changes in supply and demand, and technological revolution (ICT) related completely to this new economic context, focusing on markets, industries and businesses.
From a macroeconomic point of view we highlight several main ideas. The first is that:
a) Obviously the technology leads to a significant growth in productivity.
b) Begin to consider possible failure of economic cycles.
c) Begin to support the economy in a database based on intangible knowledge and information.
d) The more we invest in more intangible skills increase the value of our materials from the idea that knowledge always yields increasing returns.
e) any property based on the information is economically costly when you create it, but post is easy to imitate … what is often a problem.
f) The whole economy is interconnected through a network (internet).
g) The economy we live today is digital and virtual character to be interconnected through the internet.
h) The current economy favors the convergence between technologies.
From a micro perspective, we focus on the impact of ICT (information and communication technologies) on the market, products and businesses. Enumerating the features of this market:
a) The electronic market is divided to create the distinction between conventional electronic commerce and Internet-based commerce.
b) The products do not depreciate with use, being easy to use and improve user.
c) With respect to agents, are ignored completely the barriers of distance and availability, with any point of the market accessible 24 hours a day from anywhere. This means changes in the organization of firms making possible the emergence of firms even without physical presence, acting only on the Internet besides optimizing final information that reaches the consumer.
d) The business models in the electronic market (business to consumer and business your business) that increase the efficiency and overall cost reduction to encourage your own growth.
e) Changes in the structures, creating competitive advantages in the face of emerging Internet industries not only new but improving and existentes.En conclusion, the emergence of technology in the market has been a revolution in economic, forcing companies to catch up and jump on the bandwagon of the Internet or be doomed to remain behind.
19. Underdevelopment. Emerging countries:
All countries, even the most developed, are under development; process regardless of the level economic development in question is produced in greater or lesser extent.
Speaking of economics of underdevelopment quickly associate with the Third World, especially following the political decolonization process that raised awareness of the serious problem of underdevelopment (existence of an international economic disparity and persistent poverty in many regions of the world, there is a growing gap between rich and poor). We could say therefore that the origin of underdevelopment is in colonialism and imperialism (in the exploitation of these countries was abandoned after his luck).
For many the problem of underdevelopment is the worst of the global economy is not a stage of a linear history but the product of particular historical developments. It is understood that development and underdevelopment are two sides of same coin: the expansion of international capital.
Among the essential characteristics of underdevelopment highlight:
Dissatisfaction of physical needs (food, health …) Dissatisfaction psychological needs (education, employment and unemployment, political and social participation …)
But the main problem of underdeveloped countries is characterized by structural failure: Population problems: demographic imbalance and cultural deficiencies exist (difficulty in reaching the population explosion and the balance of work by low-productivity employment) Economic structure: economies based on traditional patterns, poorly developed and diversified (high proportion of primary production of raw materials oligoexportadores, untapped natural resources); strong weaknesses (economic center-periphery dualism, inadequate national integration of the local economy, fragmentation of the market … ) Income distribution and social structure: a shortage of capital, low per capita income, high concentration of wealth and income with low rates of saving and investment.Economic dependency and vulnerability: very subordinate to the outside (business unit, productive, technological and financial). Lack of strong institutions in the State to allow for good governance and underdevelopment país.Saliendo doing homework very well find that the emerging countries. Emerging countries, Brazil, India, Russia and China (BRIC) have taken advantage of its demographic and geographic conditions (large number of population and territory that provide strategic continental dimensions and great amount of natural resources to exploit) and achieved in recent years to maintain a very high growth figures of GDP and a large amount of global trade relations, which has led them to position themselves as the four most attractive destinations for foreign investors. The most attractive of all seems to be China, followed closely by India. Just as data of interest include two other territories will soon have to take into consideration as an investment destination for its growth potential: the MENA (Middle East and North Africa).20. The central planning. The “Washington Consensus”
The classic centrally planned economic model of socialist and communist countries, which is virtually non-existent or null the private sector. The economy is centralized, ie, fully controlled by the state, which is in possession of all or most productive units. Its proponents argued that under this model would avoid dispersion of resources and wealth accumulation in private hands, would avoid the exploitation of workers, would encourage cheap production of basic goods would eliminate unemployment and improve the standard of living of all people.
This economic model applied in URRSS, China and countries of Central Europe failed, since it showed that prices in the absence of resource allocation was increasingly inefficient that centralized power in the state entailed extremely rigid decisions that made the offer to go away more and more effective demand for what is just creating shortages of many goods and overproduction of others (rationing, famine …)
There is a very important historical event that marked a before and after application of this economic model: the fall of the Berlin Wall on 9 November 1989, date marking the end of the centrally planned economy in favor of market economy. The Washington Consensus
After the 2nd World War and until the 80’s the economic model used in Latin American countries was the ISI (import substitution industrialization),model that was nearing its decline as it is causing a political and economic transition at the international level led to the shift to market economies. Thus was born the Washington Consensus (1989), in order to find an economic model more flexible, open and liberalized, particularly aimed at Latin American countries. Jon Williamson conducted the first formulation, which details a list of economic policy guidelines aimed at guiding the governments of developing countries and international agencies (IMF, World Bank, Regional Banks) to the assessment of progress economic sphere.
The Washington Consensus sought liberalization and decentralization of economies, limiting state power in favor of the market, thereby increasing economic development. This was based on the Consensusten points:
Budgetary discipline (control of inflation, balance of payments, capital flight). Changes in public spending priorities (in the sense of reducing expenditure rather than increasing taxes.) Fiscal Reform (introduction of a tax base with moderate rates Integra .) Interest rates (determined by the market and aimed to reduce capital flight and encouraging savings.) exchange rate (determined by the market.) Trade Liberalization (reduce the existing protectionism.) policy of openness towards foreign investment (encourage Foreign Direct Investment).Privatization policy (better management by private firms for public companies). Deregulatory policy (promoting competition) Property rights. Following the implementation of these guidelines, Williamson acknowledged the existence of failures, and developed a list of items excluded in the first instance to be taken into account if they wanted to get a development based on credibility, competitiveness and stability. The issues which had to act were: Increased control and Exterior.Equidad Sector Competitiveness (investment in human capital and new technologies.) Price stability, growth and half ambiente.No forget that to achieve Sustainable Development is Governance precondition, ie the creation or improvement of an international legal framework that includes the promotion and protection of Human Rights, supported by an active and organized society, and combating corruption.21. The Millennium Declaration of the UN. Goals 2015: In September of 2000 was held at the Millennium Summit, where the UN General Assembly adopted the Millennium Declaration call. A year later, September of 2001 established the roadmap, which were established 8 goals, 18 targets and 48 indicators of the Millennium until 2015. The Millennium Declaration was finally adopted in September 2002 for a total of 147 heads of state and government, representing a total of 189 countries. Its main objective is to promote a comprehensive approach and a coordinated strategy, tackling many problems simultaneously on several fronts. All countries recognized the right to development and meeting basic needs, making sure that progress is based on sustainable economic growth should focus on the poor and especially in human rights. Richer countries should provide direct support for pre-developing countries in aid, trade, debt relief and investment.
To monitor progress of the Declaration, the Secretariat and the UN Specialized Agencies, IMF, World Bank and OECD defined first goals and targets and marked temporal deadlines for their achievement. Then, international experts selected a total of 48 indicators to assess progress being achieved. The UN Secretary General prepares an annual report on progress in both the global and regional level (UNDP coordinates the development of national monitoring reports). Regional monitoring is essential to assess the achievement of objectives and to mobilize resources to help developing countries meet the goals.
Objectives (to achieve in 2015) Eradicate extreme poverty and hambre.Lograr primary education universal.Promover gender equality and empower mujer.Reducir mortality of children under 5 años.Mejorar health materna.Combatir HIV, malaria and other enfermedades.Garantizar environmental sustainability ambiente.Fomentar a global partnership for development.
Funding for the achievement of objectives. Monterrey Summit of 2002. We need a global response to ensure the financing of development. Given that available resources will be reduced, it will require a new alliance between Developed and Developing Countries. However, we must not forget that the country itself is primarily responsible for its economic and social development. Key actions: Allocate financial resources to national development (internal reforms to strengthen macroeconomic and financial, legal frameworks appropriate legal coexistence initiative public and private …) Targeting international resources for development (FDI). internacional.Aumento trade liberalization of international financial and technical cooperation for desarrollo.Deudores and creditors must share the problems of commitment in deuda.Mantenimiento national, regional and global financial crisis internacional.La (2008) that concerns us right now detrimental to the achievement of these objectives as it is expected to conduct another statement in the future.
Question 22 – Theories of the “International Economic Organization (IEO) Before you begin this point we must answer the following question: What is meant by the International Economic Organization (IEO)? The OEI is defined as matter that comes to studying the economic reality through international economic organizations. It is very important to distinguish it from the international economic organization (oei) [with lowercase letters] which is defined as the set of international economic organizations once defined itself OEI dichas.Una can spend studying different methods of analysis used in this context, and the various schools of thought existed within it.
With regard to the survey methodology can distinguish two branches:
Of thought or reflectionshould be on how international organizations. It is a method with a strong philosophy that prevailed until the end of World War I due to the absence of such organizations so far. In research, trying to study the IEO from a theoretical point of view.
As for the schools of thought prevalent in this context we must mention three: The realist approach, which sees states as the main actors on the international stage, highlighting their role as decision centers. For supporters of this theory, international organizations only serve to improve the system of relations among states to harmonize interests peacefully contrapuestos.Una second stream includes idealist positions, functionalistand neofunctionalism. Idealists attach to the role of international organizations to overcome its conflicts between states. Under his view, the international organization is above States and therefore should have the legitimacy to impose their decisiones.Los functionalists also believe that international organizations are born with a specific function. The latter theory was improved by introducing neofunctionalists the role of lobbyists in the creation of international organizations, as well as the transfer of powers to the latter we mismas.Por Marxist and radical positions. For Marxists were only positive international economic organizations of socialist character. However, for radicals any positive international economic organization, since under its view they do not provide nada.Podemos conclusion is that the IEO is an interdisciplinary field of study that encompasses economic concepts, political and legal.