The essence of MRI and the factors of its development

Economic cooperation between people began to develop about 10 thousand years ago. Surplus manufactured products were exchanged first by neighboring tribes, individual families and individuals, and then by states. Merchant caravans crossed deserts, and merchant ships ploughed the seas and oceans, paving solid ways of economic interaction between distant states. These were the first attempts at economic rapprochement of peoples, largely due to natural and geographical differences.

In the manufactory period of the development of the capitalist economic system (from the sixteenth century to the middle of the eighteenth century), the international division of labor was limited mainly to bilateral relations between countries. The nascent industry was closely connected with national markets; export goods were produced mainly from national raw materials in relatively small volumes due to the low productivity of labor characteristic of manual labor.

The transition from the manufacture to the machine industry meant a technical revolution in production, an industrial revolution.

The “pioneer” of the large machine industry was England, where the industrial revolution began with the most important branch of the economy – textile production and took a period of time from the last third of the XVIII century. to the end of the first quarter of the XIX century. In 1785, the mechanical loom was invented, by the 40s of the XIX century. completely replaced manual weaving. The steam engine in England was invented in 1784 and began to spread rapidly outside the country, revolutionizing the production of all industries and transport – in 1825 the first railway was built in England. There was an industry – mechanical engineering. For the production of cars, steam locomotives, rails, steamships, a huge amount of coal and steel was needed. Metallurgy began to develop rapidly. As a result of the Industrial Revolution, England became the industrial workshop of the world.

The process of formation of the international division of labor between countries has become especially intense, the interconnection of national economies has strengthened, their complementarity has manifested itself. By the end of the XIX – the beginning of the XX century. with the development of mass “cosmopolitan” production, the process of formation of the international division of labor was basically completed. Along with purely trade relations in the world, international production ties were increasingly developed, and the export of capital was large-scale, mainly to backward countries, where wages were low, raw materials were cheap, and the price of land was relatively low. The most important consequence of the export of capital was the growth of rivalry between countries, the struggle for the most profitable areas of capital application. Before the First World War, the main countries exporting capital were England, France and Germany.

The international division of labor (MRT) can be defined as the highest stage in the development of the socio-territorial division of labor between countries, which relies on a stable, economically profitable specialization of production of individual countries on certain types of products and leads to a mutual exchange of production results between them in certain quantitative and qualitative ratios.

The international division of labor acts as an objective basis for the international exchange of goods, services, knowledge of production, scientific, technical, trade and other cooperation between the countries of the world. It is participation in the MRI that is the most important material prerequisite for effective economic interaction of states.

The essence of modern MRI is manifested in the dialectical unity of dismemberment and unification of the production process on a global scale. The production process goes beyond the national framework, involves the specialization of individual countries and their business entities in various types of labor activity, as well as the subsequent exchange of production products between them.

The main motivation for participation in MRI for all countries of the world, regardless of their socio-economic differences, is their desire for economic benefits. For example, in modern conditions, among the universal motivations for participation in MRI, as well as the use of its capabilities, can be attributed to the need to solve global problems of mankind through the joint efforts of all countries of the world. The range of such problems is very large: from environmental protection and solving the food problem on a planetary scale to space exploration.

The development of the international division of labor is influenced by a system of factors, the components of which have different effects in different periods of time. Factors in the development of the international division of labor include:

Natural and geographical differences, namely: natural and climatic conditions of the country; natural resources; the size of the territory; population; economic and geographical location. For example, the favorable climatic conditions of Cyprus determine the specialization in the export of tourist and recreational services, and the explored oil reserves in the Middle East predetermined the export of this strategic resource by a number of Arab countries. The small size of the territory of Japan has become the reason for the demand since the 70s of the XX century. first in the national, and then in the world market of compact goods and technologies. The relatively excessive population in most developing countries directly affects the transfer of the most labor-intensive stages of the production cycle (for example, assembly) to large corporations, which makes it possible to achieve significant savings on production costs at the expense of lower wages than in developed countries. The economic and geographical position of Italy, for example, influenced the active development of foreign trade relations of this country and contributed to the emergence there at the beginning of the XV century of the first bank in history that carries out international operations. Socio-economic conditions – features of the historical development of production traditions and traditional external relations; the achieved level of economic, scientific and technological development; social type and mechanism of organization of national production; social nature and mechanism of organization of foreign economic relations. Thus, the former huge colonial possessions of Great Britain to this day form the geography of its foreign trade. Scientific and technological progress, under the influence of which the country’s participation in the international division of labor gradually becomes less dependent on natural conditions. For example, Japan, which does not have the minerals necessary for the production of engineering products, as a result of leadership in the relevant scientific developments, is now one of the largest exporters of these products. The improvement of information technology, its introduction into all the most important spheres of public life changes the division of labor that has developed over the centuries to its proportion of its distribution between countries, industries, regions, while transforming the forms of its organization.

The development of MRI is also affected by such a factor as differences in habits, tastes and preferences between countries. Even when two countries are provided with the same resources and use them with the same efficiency, each of them will reap “their” benefits from specialization, if the tastes and preferences of the populations of both countries differ significantly. The differentiation of consumption preferences leads to trade between countries, and trade, in turn, promotes specialization if a given country wishes to exploit its comparative advantage. For example, Norway and Sweden fish and produce meat in approximately the same conditions and quantities, but the Swedes prefer meat, and the Norwegians prefer fish.

It should be borne in mind that the above factors are not absolute in their manifestation. Their influence to one degree or another can be adjusted, for example, by changes in the competitiveness of domestic products in foreign markets, the foreign trade policy of the state.

The degree of development of the international division of labor is determined by the participation of individual companies, countries, regional political blocs in international exchange. It is generally recognized that the most important indicators of participation in the MRI of world economic entities are: the share of exported products in the total volume of production; the volume of foreign trade in relation to the gross product; the share of the country, the regional economic bloc in international trade, including trade in individual goods. It should be borne in mind that it is not so much the share of a country in international trade itself, but the share of exports in GDP that most fully characterizes the degree of inclusion of a country in the MRI system. Each of these indicators can be used to characterize certain aspects of the country’s participation in foreign economic relations.

For example, the size of the export quota of the Republic of Belarus is about 55%, the USA – 12%, in Germany – 27%, England – 29%, France – 24%, Belgium – 71.2%. Among the 24 richest industrial economies, exports, as measured by a share of GDP, have doubled in the last 40 years.

Realizing the advantages of MRI in the process of international exchange of any country under favorable conditions ensures: first, obtaining the difference between the international and domestic price of exported goods and services; secondly, the saving of domestic resources due to the abandonment of national production while using cheaper imports.

The two forms of the international division of labor are international specialization and the resulting international cooperation of production.