Globalization of The World Economy

transaction - справа, угода

to benefit - отримувати користь

to restrict - обмежувати

surplus - надлишок

revenue - прибуток, джерело прибутку

revenue tariff - тариф на прибуток

protective tariff - пільговий тариф для вітчизняного виробника

to levy - оподаткувати

dumping - розвантажування, демпінг

to flourish, to pervade - процвітати, досягати успіхів

to reach - розповсюджуватися

rapidly - швидко

to recede - відступати, віддалятися

average income - середній прибуток

unemployment rate - рівень безробіття

obstacle - перешкода

instability неврівноваженість

to falter - вагатися

to rescue - позбутися, рятувати

to defeat - завдавати поразки, руйнувати

to gorge (on) - поглинати

Global economy is a qualitatively new state of the world economy which is being gradually transformed into a unique global organism. The functional blocks of the global economy are global production, global financial sphere, global system of supply, global markets of a labour force, capitals, information and global exchange system of the intellectual property's results.

The notion "globalization" came into scientific being in the eighties of the XX- century. Globalization is a new phase of the world economic relations, connected with the transition to the global economy, which results in strengthening of mutual dependence of different countries and regions, in interaction of their economic systems and complexes. The globalization process is being developed under the influence of such factors as technical-technological, socio-economic, political and ethical factors.

Globalization is a complex system which operates at different levels. The world level of globalization means the economies' interaction of different countries of the world and the formation of the world economic organism. Globalization of a separate country is the increase of its economic openness, its integrity into the world economic system. The branch level of the globalization means the strengthening of the competitiveness's mutual dependence of the branch company in one country with its competitiveness in another country or countries. The level of globalization in separate companies appears in the process of development and expansion of global corporations, which are oriented to operate in the world sources of supply and in supply markets.

Globalization affects the development of international economy differently. From one side, - it opens great opportunities for developing of advanced technologies, for the most effective use of resources on the basis of the global competition's development, for the improvement of the people's well-being and family standards of living, for the strengthening of international cooperation and coordination, etc.

Most international trade consists of the purchase and sale of industrial equipment consumer goods, oil and agricultural products, and both sides expect to benefit from the transaction. They benefit because trade enables them to exchange things they don't need (their surplus goods and services) for the things they do need and want. Some areas can produce things that others cannot, because of its warm climate and the type of soil it has. Florida grows oranges, but not wheat - Kansas grows no oranges but it does grow wheat. The people in Florida and Kansas would like to have wheat and oranges and so each specializes in one of those crops and trades its surplus with the other. Nations will gain because of differences in term, of climate, natural resources.

Another side of the problem with globalization lies in the conservation of the technological and social drawback ness of separate countries, global inequality of their social and economic development, the possibility of transition of the crisis situations into another countries and regions, etc. Most countries, including our own, often restrict the trade in a number of ways. Restrictions on the numbers of certain specified goods that can enter the country from abroad are called quotas. Quotas limit the amount of foreign competition a protected industry will have to face. In the 1980's, the government protected the U.S. automobile industry by placing a quota on the number of automobiles that could be imported from Japan. The next way is the tariffs. A tariff is a duty on imports. There are two basic types of tariffs. Revenue tariffs are levied as a way to raise money. Protective tariffs are levied to protect a domestic industry from foreign competition. There are many other devices that directly affect the flow of trade among nations. One of them is selling their products abroad at a lower price than they could sell them for at home. Selling the same product for a lower price abroad than at home is called dumping.

The global economy flourished throughout much of the post-war period, in the early 1960's, many industrialized countries grew as fast as 5% per year, with Japan leading the way at 10%. In the early 1970's, a combination of factors, including increased oil prices, contributed to slower growth in Japan and most of Western Europe. Inflation reached unprecedented levels in many countries and their governments fought it by slowing economic growth. In the early 1980's, high interest rates limited investment and increased unemployment in many countries. By 1986, many of these problems had receded. But increased competition among the advanced industrial countries made it seem that one could grow rapidly only at the expense of the others.

Let's imagine that the world economy worked the way everyone wishes. The United States, Europe and Japan representing almost half of global economic output all have vibrant economies, meaning that a recession in any of them has only modest worldwide effects. Meanwhile, advanced countries invest heavily in poor nations, whose poverty declines. Growing middle classes clamor for more democracy. This is globalization's glorious vision. Unfortunately, the world economy words differently. Europe and Japan don't have vibrant economies. In the 1990's Europe's unemployment rate averaged 9.7 per cent, for a decade Japan's annual economic growth had barely exceeded 1 percent Nor has globalization yet rescued most poor countries. In Africa, average incomes have hardly increased since the early 1980's. For Latin America, gains averaged less than 1% a year. Only Asia, including China, has enjoyed big advances. Globalization has two obstacles. One is culture, which often defeats economics. Corruption pervades many poor countries. But globalization's second problem may now be more pressing. It is potential instability. Terrorism and oil disruptions pose obvious threats. In the 1990's the robust U.S. economy supported the world economy. American consumers gorged on imports: shoes, compute chips, toys. From 1997 to 2001, U.S. trade deficits totaled almost $1.7 trillion. Now, the American economic Slowdown leaves a vacuum that could go unfilled.

In other words, globalization allows countries to enjoy one another's strengths through the flow of products, ideas, technologies and investments. But globalization also exposes countries, to one another's weaknesses. Everyone increasingly depends on the overall world economy, which in its turn, depends on the health of its major parts. When a few small countries (say, Argentina and Thailand) are in trouble, it doesn't matter much. When all the big players (the United States, Europe and Japan) are in trouble, it matters a lot.

Summarizing the above mentioned information, one can say that modern globalization of the world economic ties develops great problems, having the global character, and requires coordination of all the World Community's efforts. According to their activities, all the global problems are divided into:

-problems, characterizing the interaction between a nature and a society;

- problems of public mutual relationship;

- problems of further human development providing guarantees for the future human life.

The successful decision of all global problems is possible under the main condition that lies in close cooperation and coordination of economic, political, cultural, technological, ecological, psychological & social processes.

QUESTIONS AND TASKS

1. What is globalization?

2. Can you name the functional blocks of the global economy?

3. What are the advantages оf international trade?

4. How can quotas restrict trade? Give an example, please.

5. How many basic types of tariffs do you know? What are they?

6. What is dumping?

7. When did the global economy flourish throughout?

8. When did inflation reach unprecedented levels?

9. Can you describe obstacles of globalization?

10. What global problems are developed by the modern globalization of the world economy?