The main stages of the evolution of the world economy

The world economy was basically formed by the end of the nineteenth century, when almost all countries and territories joined the international exchange. This is due to the fact that the last third of the nineteenth century was marked by major technical shifts, the growth of industry and its concentration. In metallurgy, new methods of steel smelting (Bessemer, Thomas, open-hearth) were widely used. Invention

metal-cutting machines (turret, milling), new types of engines (dynamo, internal combustion engine, steam turbine, electric motor) accelerated the development of industry and transport. In the future , the growth of the production of electrical energy, its use for technological purposes contributed to the emergence of a number of new industries, for example, aluminum, electrical engineering. There appeared: the oil refining industry; telegraph and telephone communications; road transport; aviation; radio; cinema.

Thus, heavy industry began to play a transformative role in the industry of developed countries, taking the place of light industry. A solid foundation of the system of international economic relations has been formed.

The historical mission of the developed countries was to link all countries into a single inseparable economic knot, and the widespread use of joint-stock companies beyond the national joint-stock companies further strengthened the centralization and concentration of capital. The “master” of the world was finance capital. The era of free competition was replaced by the era of the domination of monopolies. Not only the production, but also the reproduction cycle has acquired an international scale.

The first stage in the development of the modern world economy and the involvement of national economies in it came at the turn of the XIX – XX centuries and lasted until the end of the 20s of the XX century.

What signs were characteristic of the world economy  at  this stage? “(1) the concentration of production and capital, which has reached such a high stage of development that it has created monopolies that play a decisive role in economic life; 2) merging banking capital with industrial capital and creating a financial oligarchy on the basis of this “financial capital”; (3) the export of capital, as opposed to the export of goods, becomes particularly important; 4) international monopolistic alliances of capitalists dividing the world are formed, and 5) the territorial division of land by the major capitalist powers is completed.”

The word “oligarchy” is of Greek origin and literally translated into Russian means “the power of the few.” The financial oligarchy realizes its economic dominance, first of all, through the so-called “system of participation”, which means the ownership by one company of controlling stakes in a number of other companies, resulting in a multi-stage system of dependence of a large number of enterprises on one financial magnate or on a certain financial and industrial group.

Throughout the twentieth century, the marked signs of the world economy “acted” and “acted” to this day, with the possible exception of the territorial division of the world by the major powers, as colonial empires collapsed.

The next, second stage in the development of the modern world economy covers the late 20s – mid-40s of the twentieth century and is characterized by  numerous crisis phenomena, such as the Great Depression, the Second World War, etc., confirming the fact that the political and economic dominance of the financial oligarchy significantly exacerbates the contradictions of the world economy up to the unleashing of armed conflicts in which many states take part.

The third stage of the evolution of the world economy lasted from the late 40s to the late 80s. It was during this period of time that a powerful expansion of American capital was observed, which confirmed the modern dominance of the United States and the current claims of this state to the role of the only superpower, and the last in world history. An illustration is the statements of Z. Brzezinski: “In the end, world politics will certainly become increasingly uncharacteristic of the concentration of power in the hands of one state. Consequently, not only is the U.S. the first and only superpower on a truly global scale, but likely the last when U.S. supremacy begins to diminish, it is unlikely that any state will be able to achieve the global supremacy that the U.S. currently has.”

The growth of foreign production of corporations, the formation of their “foreign economies” quantitatively and qualitatively adjusted many parameters of the functioning of the world economy, putting forward international corporations, primarily American ones, to the forefront in the world economic space.

In the 50s of the twentieth century. there was  an  economic revival of Western Europe. In the 60s, the world colonial system collapsed, as a result of which a large group of developing countries appeared on the world stage, which still occupy a special place in the world economy. The middle of the twentieth century was also marked by the confrontation of two socio-economic systems – capitalist and socialist. The development of regional economic integration processes has begun.

In the 80s, there was a convergence of the levels of economic development of the United States and other industrialized countries. The world economy began to turn into a multipolar system with “centers” – the United States, Japan, Western Europe, and the Soviet Union.

The differentiation of developing countries has increased, from which a group of newly industrialized countries has advanced, approaching the developed countries in terms of macroeconomic parameters. The beginning of a new stage in the development of the world economy can be considered the 90s of the twentieth century.

Distinctive features of the current stage of development of the world economy.

The main distinguishing feature of the world economy of the beginning of the XXI is globalization, which the Americans were the first to talk about. The term itself was introduced into circulation by T. Levitt in an article published in the Harvard Business Review in 1983, he designated with this word the phenomenon of merging the markets for individual products produced by large multinational corporations.

IMF experts define globalization as “the growing economic interdependence of countries around the world as a result of the increasing volume and diversity of international transactions in goods, services and global capital flows, as well as due to the increasingly rapid and widespread diffusion of technologies.” It is important to note that the growth of globalization in the world economic space is accompanied by the strengthening of the position of the United States, especially in the economic, military and technological fields.

A global economic infrastructure has developed and is effectively functioning, covering the international transport system, the telecommunications system based on electronics, cybernetics, satellite communication systems, and the international computer network Internet.

The level of development of the international transport system is evidenced by the fact that, for example, the average cost of a man-mile of  air transportation  in  1930 was 68 cents (at the dollar exchange rate of 1990), in 1950 – 30, and in 1990 – 11 cents, i.e. for 60 years air transportation fell in price by more than 6 times. As a result, the so-called economic distance between countries that are becoming several times closer to each other is reduced.

“The volume of information exchange via the Internet doubles every 100 days – an annual increase of 7.3 times. At the same time, the price of computers during the life of one generation has fallen by more than 10 thousand times and continues to decline (per unit of power) by 30-40% per year. “

Along with globalization, regionalization is also actively developing, i.e. the organization of production and the market in a certain geographical space, which inevitably leads to a gradual “erosion” of national-state complexes. The strengthening of regionalization processes is manifested in the form of economic integration.

Economic integration means the convergence and mutual adaptation of individual national economies. Integration is ensured by the concentration and intertwining of capital, the implementation of a coordinated interstate economic policy.

There are the following main types of integration associations (the boundaries between which are very conditional):

1. A free trade zone, when the participating countries are limited to the abolition of customs barriers in mutual trade, without extending this to countries outside the zone. In this case, a unified policy towards third countries is not formed.

2. A customs union, when the free movement of goods and services within a grouping of countries complements a single customs tariff in relation to third countries.

3. A common market, which means the elimination of obstacles between countries not only in the field of mutual trade, but also in the movement of labor and capital.

4. The Economic Union, in addition to all the mutually listed integration measures, presupposes the implementation by the member states of a common economic policy, as well as the creation of a system of interstate regulation of the processes taking place in the region.

The next distinctive feature of the current stage of development of the world economy is the absolute growth of foreign direct investment. Thus, on average, the annual inflow of foreign direct investment in the world in 1988-1993 amounted to 191 billion dollars, in 2000 – 1140 billion dollars, respectively in developed countries – 140 and 890, and in developing countries – 47 and 218 billion dollars. The growth of foreign direct investment in the world is accompanied by an increase in the volume and importance of products manufactured by foreign branches. Thus, in 2000, a plant for the production of VAZ products was launched in Ecuador, in 2001 the implementation of a similar project in Brazil was launched. The Russian automobile plant provides technology and assembly kits of machines, the construction of enterprises and the costs of their operation are borne by local firms. A qualitatively new phenomenon of the financial sector of the national and world economies of the late XX century in this regard was the formation of a global oligopoly. We are talking about such financial giants as, for example, Goldman Sachs, Merril Lynch, Solomon Smith Barney, Morgan Stanley Dean Witter.

The total foreign exchange reserves of transnational corporations are 5-6 times higher than the reserves of banks around the planet. Transnational corporations have their own geostrategic interests, which actually negate attempts to regulate intra-country financial markets – Keynesian and monetarist methods are useless.

A kind of transnationalization of national economies poses an unprecedented task for the world community to find qualitatively new mechanisms for regulating the global international economy. “The world has entered a period of deep imbalance in which no state can resist the strength of global financial markets and in which there are almost no institutions that create international norms.”

Consequently, each country will have to decide on its foreign economic strategy, taking into account the defense of its own national economic interest, combining national, international and sectoral political and economic and social aspects, becomes one of the main problems of integrating the national economy into the system of international economic relations.

The world economy “grows” out of the international division of labor, closely interrelated processes of international specialization and cooperation of production, which will be discussed in the next topic.