2.

I N T E R N AT I O N A L

ECONOMIC SYSTEM

2.1. International economic system: the essence and the structure 2.2. International economic relations 2.3. Main tendencies of development of the international economic system Key words Economic system International economic system International economic relations International economic activity Subjects of international economic relations Forms of international economic relations International trade International movement of capital International movement of labour Levels of international economic relations Environment of international economic relations Microenvironment Macroenvironment Sovereignty Internationalization Regionalization Transnationalization Globalization

2.1. International economic system: the essence and the structure
Economic system - set of principles and techniques by which a society decides and organizes the ownership and allocation of economic resources [i]. It is a particular set of social institutions which deals with the production, distribution and consumption of goods and services in a particular society. It means that production together with distribution, exchange and consumption play the main role is this system. All economic systems need economic resources for production and the results of economic activity are being distributed, exchanged and consumed (fig. 2.1). Production (supply) Manufacturing Labour

Regulation

Land Circulation

Capital Distribution

Consumption (demand) Fig. 2.1. Economic system

2. • specific economic relations between economic subjects. All aspects of a nation’s economy – its industries. living standard – are linked to the economies of its trading partners. exchange rates  Business: multinational corporations.16-17]: • social-economic relationships based on property relations and organizational forms. raw materials. levels of income and employment. labor. international capital movements and other international transactions (Fig 2. the national economies of the various countries mesh into an international economic system through the media of international trade. No nation exists in economic isolation in the modern world. p.2).2. The main elements of interdependence are: [iii. service sectors. international and supranational) International markets International economic relations . foreign investment. • system of stimuli and motivations of parties. national economic policies cannot be formulated without evaluating their probable impact on the economies of other countries.The distinction between economic systems is in their elements that differ in different countries [ii. The high degree of economic interdependence among today’s economies reflects the historical evolution of the world’s economic and political order. global production Thus. This linkage takes the form of international movements of goods and services. International economic system • • • • The basic elements of the international economic system are the following (fig. services. 1-2]  Trade: goods. groups of countries Regulation mechanism on different levels (national. business enterprise. Indeed. р. 2. ↔ The relations are: Mutually conditioned Interrelated International economic relations International economic system Fig.3) Countries. investment funds. energy  Finance: foreign debt. • economic mechanism (the way of regulation of economic activity on macroeconomic level). and technology.

when changes in one element eventually lead to the changes of other elements and the whole system. Structure of international economic system So. The system also allows labor and capital to move more freely around the world. international organization. distribution.the level of intensiveness of the interaction: • Economic contacts – the simplest economic relations. 2. • International movement of capital – movement of capital between countries in a search of more profitable utilization • International movement of labour – movement of able to work citizens mostly due to the economic reasons • International movement of technology These IERs are connected by the international currency-financial and credit relationships and their development leads to the international economic integration. have episodic character and are regulated by solitary contracts. . The global economic system allows nations to engage in international trade.3. International economic relations International economic relations (IERs) is a system of economic relations in manufacturing. Main principles of development of the international economic system • Evolutionary – accordingly to the action of the objective economic laws (models of economic development) • System approach – development of the economic system is realized as the development of the system of interdependent elements and relations. • Equivalence of the exchange – IE Relations are profitable for all the participants. the international economic system refers to the arrangements and institutions that unite the world’s economies in one global marketplace. 2. state and its bodies. or exchange of goods and services across national borders. Gains from international trade International economic activity 2.2. All forms of the international economic relations are interrelated and interdependent. exchange and consumptions of products out of national borders (fig. exchanging goods and services. • legal persons – companies. forms and levels of international economic relations that are developing in a quite specific environment.National economic systems Regulative institutions IE System International economic relations Fig. Subjects of IE relations .4) This system includes subjects.participants of the IE relations that are able to act relatively independently and actively with the purpose of realization of their mainly economic interests The main subjects of the international economic relations are: • individuals (natural persons) – mainly entrepreneurs. sale. The main of them are: • International trade – purchase. Levels of the IE relations .

. Cooperation – firm economic relations on the basis of mutual long-term agreements. International economic integration – interconnection of the economies of two or more countries in the process of internationalization. mutual economic policy with the elements of national regulation.• • • Interaction – stable economic relations on the basis of long-term international contracts and agreements.

Social-cultural environment Political-legal environment Subjects of international economic relations jects of international economic relations households companies governments international organizations Forms of international economic relations Int.4. movement of capital Int. System of international economic relations The environment of the international economic relations should be considered from the point of view of its impact: Information environment . trade Int. 2. movement of labour World currency system (system of monetary relations) Levels of international economic relations contacts interaction cooperation integration Economic environment Fig.

BUT it is dynamic and flexible due to the integration processes. 2. information and communication systems The organization of the international economic relations has its principles that are described in the Charter of Economic Rights and Duties of States (United Nations. territorial integrity and political independence of States. • Peaceful coexistence. by the following principles [iv]: • Sovereignty. Main tendencies of development of IES Globalization Regionalization (2) . social-cultural. • Promotion of international social justice.5.Factors of direct impact – external microenvironment Factors of indirect impact – external macroenvironment The peculiarities of the IER environment • Interrelation of political. • regionalization and globalization of economic activity.3. • Respect for human rights and international obligations. • Remedying of injustices which have been brought about by force and which deprive a nation of the natural means necessary for its normal development. • Non-aggression. • • 2. • Fulfillment in good faith of international obligations. • Free access to and from the sea by land-locked countries within the framework of the above principles. Main tendencies of development of the international economic system The development of the international economic system is a long and everlasting process. • Peaceful settlement of disputes. • International co-operation for development. • transnationalization of production. 1974). Today it is characterized by the following tendencies (fig. inter alia. legal. • No attempt to seek hegemony and spheres of influence. • unification and standardization in different spheres of international economic activity. • Equal rights and self-determination of peoples. 2. • Non-intervention. Economic as well as political and other relations among States shall be governed. economic and infrastructure elements of the environment • Relative uncertainty of the environment • Dynamic contradiction – IER environment is stable due to the stability of the environments of the countries. • Mutual and equitable benefit. Regionalization (1) Internatinalization Transnationalization Fig. • changes in management of the world economy. • Sovereign equality of all States.5): • liberalization of the foreign economic relations of countries that leads to internationalization.

and trade. capital and labour. Internationalization of economic activity is the convergence of economies of different countries in the form of increasing productive interdependence. societies. the spread of technology. It is based on international division of labour and internationalization of production. capital flows. During the first stage (the end of XVIII – the end of XIX) the internationalization was based on the interaction of national economies due to simple cooperation.Internationalization is an objective process of convergence of national economies in the form of increasing interdependence of economic subjects from different countries. – Available at : http://are. and/or as regional communities such as pluralistic security communities Globalization is a new. international exchange of goods. internalization of capital and internationalization of economic activity. Globalization describes the process by which regional economies. increasing involvement of enterprises in international markets. higher step of internationalization. socio-cultural. Transnationalization is a key tendency of the modern stage of internationalization. However. transportation. Internationalization of capital is the process of interweaving and integration of national capitals in the form of creation of companies abroad. all productive and non-productive spheres). movement of capitals and labour. mutual impact of the main economic processes in the countries including prices. internationalization of capital and creation of transnational corporations. It appears in the growing number of international companies and extension of their activity as well as in creation in intra-corporate international markets that cover the majority of the world flows of goods. it can be best understood as a continuing process of forming regions as geopolitical units. Describe the principles of organization of the international economic relations on the basis of the Charter of Economic Rights and Duties of States . International trade was dominant is these relations. The term is most closely associated with the term economic globalization: the integration of national economies into the international economy through trade. almost all countries. including the undirected processes of social and economic interaction among the units [v]. and military presence. interest rates etc. Discussion questions and assignments 1. as organized political cooperation within a particular group of states. It means a steadily transition of production beyond the bounds of a separate country. movement of capitals and labour. political. migration. development of credit capital etc. technological. One should distinct internationalization of production. Regionalization can be conceived as the growth of societal integration within a given region. and cultures have become integrated through a global network of political ideas through communication. Read the article of Irma Adelman “The genesis of the current global economic system” [Electronic source]. Internationalization of production causes internationalization of capital. and biological factors [vi].edu/~adelman/KEYNOTE.berkeley. The third stage (since the mid of XX) is characterized by a complex internationalization of production (that covers all subsystems of economy. Internationalization of production means establishment of stable relations between companies of different countries that makes the manufacturing process in one country a part of manufacturing process in the global scope. As a dynamic process. extension of international trade. The second stage (the end of XIX – the middle XX) is characterized by sophisticated cooperation on the basis of international division of labour. There are three main stages of development of the internationalization of economic activity.html 2. foreign direct investment. globalization is usually recognized as being driven by a combination of economic. services.

– Thomson.Гаврилов. or Overlapping? [Electronic source] : Working Paper #262 / Arie M. 1998.britannica. – Р.org/wiki/Globalization#cite_note-1 – Title from the screen .un. : ЮНИТИ-ДАНА.1929&rep=rep1&type=pdf – Title from the screen v vi Globalization [Electronic source] / Wikipedia.1-2 Charter of Economic Rights and Duties of States [Electronic source] : UN Documents / General Assembly of Unated Nations. Regionalization. Региональная экономика и управление [Текст] : Учеб. 16-17 ii iii iv Carbaugh R. and Nationalism: Convergent.110.edu/viewdoc/download?doi=10.1.com/EBchecked/topic/178493/economic-system .psu. Globalization. 2002. – М. пособие / А.И.Title from the screen i Гаврилов А. – Available at : http://citeseerx. – Available at : http://documents.И.1. M.ist.org Kacowicz A. International Economics [Text] : 10-th ed. – С. December 1974.J. 2010 – Available at http://en.wikipedia. 2005. Kacowicz // University of Oslo.Encyclopædia Britannica Online [Electronic source] – Available at : http://www. Divergent.

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