Some aspects of the impact of globalization on the national economy deserve special mention. First of all, we note the extremely high growth rate of foreign direct investment, far exceeding the growth rate of world GDP. These investments play a key role in technology transfer, industrial restructuring, the formation of global enterprises, which has a direct impact on the national economy.
Thus, the world flow of net foreign direct investment (FDI) in 1998 reached $ 619 billion, which amounted to 7.1% of gross domestic investment and 2.2% of world GDP. The last figure in the early 80s was only 0.8%. Cumulative (accumulative) FDI to world GDP increased over the same period from 5 to 16%. The average annual growth rate of FDI in the period 1986 – 1990 – 24%, 1991 – 1995 – 20%, 1996 – 1999 – 31.9%.
The second aspect concerns the impact on technological innovation. New technologies, as already noted, are one of the driving forces of globalization, but it, in turn, increases competition, stimulates their further development and diffusion among countries.
Finally, globalization has led to an increase in trade in services, including financial, legal, managerial, information and all kinds of invisible services, which are becoming a major factor in international trade relations. If in 1970 less than 1/3 of foreign direct investment was associated with the export of services, now this share has increased to 50%, and intellectual capital has become the most important commodity on the world market. This trend has led to call our time the “age of competence”, but the importance of continuing education and the need to invest in human capital for any country cannot be underestimated.
Different researchers operate with approximately the same indicators characterizing the level of globalization of the world economy. For example, S.I. Dolgov suggests using the following indicators:
the volume of internationalization of production of goods and services and its growth rates in comparison with the volume and growth rates of total GDP in the world; the volume and dynamics of FDI as compared to the volume and dynamics of all investments (domestic and international); the volume and dynamics of international centralization of capital (in the form of foreign mergers and acquisitions of companies) in comparison with the general data on the centralization of capital (including intra-country mergers and acquisitions); the volume and dynamics of large, complex complex international investment projects in comparison with the overall scale of such projects; the volume of all trade in goods and services, the growth rate of trade in comparison with the gross product (it is necessary to consider goods and services not only in their aggregate, but also separately, since the internationalization of commodity production and circulation for natural reasons is significantly higher than in the service sector); data on international transactions with patents, licenses, know-how; the volume and dynamics of international operations of banks and other credit institutions in comparison with the total volume and dynamics of all their operations; the volume and dynamics of international stock markets in comparison with the total size of these markets and their growth rates, while it is advisable to distinguish between the main segments of these markets: bonds and other debt obligations (public and private), shares, derivative securities (futures, options), swap and repo operations; the volume and dynamics of foreign exchange markets in comparison with the general scale of money markets.
In general, in the economic sphere, globalization has been most pronounced in the areas of finance, trade, investment and production. At the same time, the globalization of financial flows and markets has the most significant scale. The decline of the Bretton Woods system in 1972-1973 gave rise to currency trading, which spread at a gigantic pace. Its daily volume has increased from $15 billion. in 1973 to $900 billion. in 1992 and now exceeds 1.5 trillion. Usd.
Globalization in trade has also reached enormous proportions. Since 1950, world trade in goods and services has increased at almost double the rate of GDP growth. World exports increased from $61 billion. in 1950 to $315 billion. in 1970 and up to 7 trillion. Usd. Its share in world GDP increased from 6% in 1950 to 22% in 1999.
Globalization in finance and trade is complemented by the growth of world volumes of foreign direct investment, which are the basis of international production of transnational corporations, therefore, the growth of investment is directly related to the globalization of the world production sphere.
Trade growth is also contributing to the dynamism of the world economy. The growing globalization leads to the fact that a growing part of world GDP is realized through international trade channels, while a growing part of world trade falls on intra-company turnover. From the beginning of the 70s to the end of the 90s. the share of world exports in world GDP increased from 1/8 to 1/5. The share of intra-company turnover in world trade is respectively from 1/5 to 1/3.
In addition, the development of the infrastructure of the world economy provides millions of people with the opportunity to receive the most advanced education for modern conditions in different countries of the world, which are leaders in certain industries and spheres. In general, this leads to an increasingly rapid and “synchronous” spread in the world economy of technologies, managerial experience, corporate culture, knowledge in the field of management and marketing. In this regard, it is no coincidence that one or another country manages to make a powerful breakthrough in the development of new high-tech industries, even without having the appropriate scientific, technical, industrial and financial base. Thus, the Finnish Nokia, the 12th largest company in the world (market value by 1.04.01 – 197 billion dollars), arose in a country that did not have serious potential in the field of telecommunications R&D, and its development took place on the basis of a company whose main production profile was represented by automobile tires. Today, the capitalization of this Finnish company exceeds the country’s GDP.
The globalization of the world economy has been accompanied by an increase in the scale of production through transnational mergers and acquisitions. Thus, the volume of transnational mergers and acquisitions in 1999 reached a record level of $ 720 billion. In general, over the past 20 years, about 24 thousand transactions have been carried out, while mergers and acquisitions are increasing at an average annual rate of 42%, their total volume amounted to 2.3 trillion. Usd. Over the past decade, the average annual growth rate of TNC production was 10.7%, while world GDP growth was at the level of 3.7%. Sales of goods and services of TNCs in domestic and international markets amounted to $13.5 trillion. While world trade was valued at $7 trillion. Usd. This process also leads to the consolidation and elimination of excess productive assets, including assets with low productivity, accumulated in the world economy as a result of protectionism and closure. This was especially evident in the automotive industry, the oil and gas industry, where the largest transnational mergers take place (Texaco-Mobil, BPAmoco, Daimler-Crysler, Renault-Nissan).
Statistics show that international business is concentrated in the countries of the “triad” (USA, EU, Japan). In the current international system, the triad countries account for 73 per cent of foreign direct investment, 76 per cent of international trade, about 88 per cent of the world’s new patents and more than 90 per cent of internet users. Among the five hundred most successful firms operating in the world market, 203 are American, 105 are European, 109 are Japanese and only 2 are Russian. For example, the American TNC Unilever has 500 subordinate companies in 75 countries, as does Exxon, which receives 75% of its revenues outside the United States. During the 90s, the German concern Siemens from a “national champion” turned into a “global player”. From 1992 to 1997, the share of sales in Germany fell from 46% to 34%, Europe’s share remained at 20% of total sales, and the Americas and asia-Pacific increased from 13% to 20% and from 8% to 13%, respectively. Thus, in terms of output, the Japanese corporation Mitsubishi is second only to twenty-one countries in the world, and among the forty largest producers, along with thirty states, there are 10 TNCs. According to experts, TNC investments will increase by 4 times by 2020 and reach the level of $ 800 billion. The cost of goods produced at foreign branches of transnational corporations will increase at no less rate ($ 5 trillion at the end of the twentieth century ).
With the development of human society, the economic relations between the countries and peoples of the world become closer and more comprehensive, acquiring the character of universal. According to George Soros, over the past few years, the globalization of financial markets has reached a level at which the movement of exchange rates, bank interest and stock prices in different countries are very closely related. The ever-increasing internationalization of material production and financial markets is manifested, in particular, in the form of emerging regional economic unions, transnational corporations, international financial organizations such as the International Monetary Fund (IMF), the World Bank, etc. Thus, globalization has finally become irreversible and is becoming a condition for world economic growth. The main “globalizer” of the economic space on a global scale has become international corporations, to which the following topic is devoted.