Market prospective

From the markets prospective the globalization of the world economy denotes a process based on the formation of a single market for goods, services and factors of production - including capital, labor, technology and natural resources - covering all countries and economic regions. From a theoretical point of view, globalization means an unlimited access to these markets for all businesses regardless of country of origin and economic region[11]. The commodity market was liberalized and it preceded contemporary globalization. As a result, it has reduced the barriers for a free movement of goods, at the beginning on a select number of international markets and later on a global scale as well.

Liberalization of economy has resulted in both integration and globalization. Even by its definition globalization offers greater opportunities to economically stronger entities and it helps to secure their competitive advantage. Although, the integration process is important as well. In some context, integration can represent a stage on the road to globalization. Since regional integration is seen as a form of protection of the weaker and smaller countries, from the threats of globalization, by merging their economic capacities. In case if they would operate as a single entity they would lose the global competition, together they will be able to meet the requirements to cope with this competition.

Another effect of globalization in the world economy is the increasing economic dependence to the entire world. Individual economies, groups of countries and regions are sensitive to changes happening on a global scale. At the same time, the global economy is also depended on changes in different regions, individual countries and groups of countries. The other way in which globalization makes countries mutually dependent is by technological and structural relationships - when countries contribute to technological progress – or unilaterally dependent - when technological progress is driven by only some of the countries. Difference in natural resources owned by individual countries as well as difference in capital and labor plays a key role in structural dependence. The codependence might have a smaller manifestation as well. For instance, when listed on a U.S. stock exchange a foreign firm is partly subject to U.S. laws and regulations[12].

From the consumer perspective, globalization provides an access to better quality and more modern products with better pricing policies than it was available before.

Other effects of globalization are privatization of production assets and deregulation on the basis of excluding of the state from the economy, including the protection of local enterprises from foreign competitors. Opened borders increase the amount of imported services and goods and domestic enterprises go bankrupted being unable to compete.

All those mentioned factors results in a division of the global economy into a peripheries and center. Economically developed countries and transport corporations belongs to center, while peripheries considered as reservoirs of cheap labor with the outflows of capital, high mobility of speculative capital and also the areas subordinated to the center.

All in all globalization results in improved financial, managerial and technological knowledge around the world, including less developed countries, which leads to higher effectiveness. At the same time we have to realize that benefits of globalization are distributed disproportionately within its participants, resulting in higher benefits for the key actors – mostly established economies - and significant smaller benefits for the remaining entities. The main reason for this is the concentration of physical capital, trade and production. As 75% of the global commodity market is controlled by transnational corporations and 40% of the global trade ties among the 500 largest corporations. Thereby, the rules which define those ties are not even close to the laws of free trade and free market[13].

While globalization in the markets of labor and goods is desirable, financial globalization, opening markets to flows of foreign capital, is however a controversial subject. Having some powerful benefits such as mobility of capital, which lowers cost of capital and encourages investments, at the same time it has some considerable disadvantages: first, globalization does not always provide growth (especially in the case of developing countries using external capital)[14]. Second, as globalization is mostly economically driven, financial crisis as a part of economic cycle is a logical consequence of globalization. Here comes the main drawback – globalization provides much greater exposure of local economies to external shocks, financial crises and instability that we all have seen in the past.

Speculative capital grows in also one of the effects of globalization process. In the late 1970s, it has accounted for 10% of financial transactions. Nowadays the proportions is totally different, the share of speculative capital exceeding 90%. In 2004, the value of speculative transactions was 22 times higher than the value of global GDP[15].

We believe that future global monetary and financial stability will require much greater international coordination on the regulation and supervision of financial system. Eventually, they may even require a global regulator, given that capital is mobile, but regulatory policies remain national.

In the current regulatory framework the focus is mostly on individual institutions. But little attention is placed on the overall framework. Financial markets have become increasingly interrelated. We cannot look at the system focusing on the banking alone or on the securities market alone. There is a need for a regulator that looks at the financial markets overall and assesses whether the various regulatory agencies are doing what they should be doing to maintain financial market stability[16].

All in all, we believe that globalization should be considered as en economically driven process and in this case it cannot be influenced or stopped by political actions. Thus, the things like crisis are natural consequences of the globalization and will inevitably occur in the future, we can only affect the scope and deepness of these unfavorable occurrences taking some political and economical measures. The politic actions which are in use today are not really effective and oriented towards slowing down the globalization process. As the recent crises of 2008 has showed, political regulations did not helped the countries to collaborate at the time of crisis. Moreover, after the crisis happened, most of the countries had focused their policies and measures on the national level, which started the process of deglobalization. Protectionism took place in many different forms, unfair trade cases, reductions in export taxes and taxes on imported intermediate goods, outright tariff increases from happening in certain sectors[17].

Дата добавления: 2015-11-14