The International Economy Experiencing Globalisation Economics Essay Example
The International Economy Experiencing Globalisation Economics Essay Example

The International Economy Experiencing Globalisation Economics Essay Example

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  • Pages: 12 (3179 words)
  • Published: October 22, 2017
  • Type: Research Paper
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The importance and recognition of economic internationalization are increasing in our everyday existence. Countries are becoming more interconnected and interdependent. International economic integration denotes the collaboration among nations to establish economic ties via agreements, encompassing the exchange of goods, services, and production across borders. International economic integration can be perceived as having differing levels of integration.

The international economic system can be divided into two extremes. Some countries, such as the European Union, experience a high level of integration, while others like North Korea, Cuba, and Vietnam have a low level of integration. Many developing countries and regions still face challenges in implementing global and regional action principles.

In the modern global economy, there is an expansion in space and increased productivity growth in three major economic centers. These centers continue to grow by utilizing knowledge-intensive production methods and adopting new technologies

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to streamline production processes and encourage innovation diffusion. Additionally, it has been suggested that globalization is accompanied by other processes like regionalization or triadization.

Regions are important in contemporary international relations, along with international governmental and nongovernmental organizations, international financial institutions, and trans-national corporations and banks. The integration process has both positive and negative impacts on individual countries. However, only a small number of states choose to isolate themselves and avoid integration. This essay is divided into five sections, with the first section concentrating on defining the global economy and exploring its historical aspects.

The purpose of this essay is to introduce readers to three main phenomena currently happening in the international economic system: Regionalisation, Triadisation, and Globalisation. It will explore whether specific processes of regional integration and triadisation contribute to or counteract globalization. Ultimately, the essa

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concludes with an evaluation of the current world and offers my personal perspective on the international economic system at this moment.

Definition and Historical Aspect of the International Economic System

The international economic system refers to a global economic structure that involves the increasing interconnection and interdependence among all countries worldwide. It is characterized by the growing internationalization of productive forces, establishment of diverse international economic relations, and formation of trans-national mechanisms governing trade in goods, services, and capital between nations. The liberalization of the global economy occurred through two forms as means to construct international relations and trade.

Initially, international agreements resulted in a decrease in duties, the elimination of non-tariff barriers, and simplified import/export procedures. These changes made it easier to access and operate within the global market. Later on, there were adjustments in domestic laws regarding foreign economic relations, which involved abolishing import/export duties and lifting restrictions on foreign capital in the domestic market. As a consequence, industries that relied heavily on materials, caused environmental pollution, and depended on labor began moving from developed nations to developing ones. Furthermore, advancements in technology and science created opportunities for spatial separation processes like energy and capital-intensive operations and dividing production phases based on factor prices.

The advancement in telecommunication and transportation has made it easier and cheaper for industries that are far apart geographically to communicate. This has led to globalization of the international economic system. The success of a country now depends heavily on its collaboration with other nations, resulting in a world that is increasingly interconnected. This belief is rooted in the idea that involving multiple entities in all aspects of production makes the economy more

efficient, effective, and sustainable. The automotive industry exemplifies this trend, as production is spread across different countries. Each nation's companies have specific roles in the process such as design, engine construction, manufacturing, and marketing.

In the past, companies operated within limited national boundaries. However, in today's world, there are fewer restrictions on the movement of goods, services, and people across countries. This has made it easier for international businesses to operate in the global market (O'Roukre, Williamson, 1999). The trend of global movement is particularly relevant for many developing countries and regions.

The process of globalizing the economy has been ongoing for decades but has recently undergone significant qualitative and quantitative changes that have transformed the overall economy and the nature of international economic relations.

There is a rise in economic organizations at the international level, creating a regional economic space. Additionally, global integration eliminates boundaries between countries and regional groups, who interact through international trade of goods, services, capital and technology. Some researchers argue that globalization is accompanied by other processes such as regionalization or triadization.

O'Brien (1992) has a broader perspective on globalization, stating that its aim is to eliminate regional and national differences, leading to a de-territorialized convergence. However, Jessop (1994) suggests that while globalization destroys national identities, it reinforces the significance of local and regional effects and interventions.

Some writers, like Bhagwati (1993), argue that regionalisation is a defensive response and a counter-tendency to the perceived threats of globalization. On the other hand, some believe that globalization is mostly a myth and that the phenomena attributed to it are better explained by "triadisation" or regionalisation (P. Hirst, G. Thompson 1999). This essay will therefore examine

the arguments surrounding international economic system and its relationship with regionalisation, triadisation, and globalization.

The Role of Regionalisation in the International Economy

The emergence and strengthening of regional economic groupings after World War II, along with developing nations' interest in fostering regional ties, have played a significant role in promoting regionalisation. It is important to assess whether the international economy is currently undergoing regionalisation and understand its relationship with globalization. Regionalisation involves the interaction and convergence of two or more economies within specific regional frameworks. This process includes establishing, operating, developing, and expanding regional organizations and groupings governed by formal agreements and regulations set by affected countries. An important aspect of regionalisation is its reliance on capitalist constraints imposed by trans-national corporations.

Transnationalization creates a hierarchy within the production process, leading to inequality among participating countries. The roles and positions of countries within this structure also undergo changes. While regional trade occurs, the distribution of benefits is uneven among individual countries. Winners and losers will always exist in this context.

When production moves from a lower to a higher stage in the hierarchical system of production, there are value added additions. Therefore, the fact that a state exports and imports a batch does not always mean that it automatically gains more from increased trade. In international economics, there is a trend of increasing exports of goods from developing states. However, the value added is minimal and therefore underdeveloped states do not benefit greatly from it. Their only benefit is having cheap labor in the production process, while developed states have technologies, innovations, and highly skilled labor that bring long-term benefits in the trading process (Josefa Francisco, 2005). A historical

example of regional collaboration is the European Coal and Steel Community, which aimed to create a secure community among former enemies through economic cooperation and political integration.

The start of European integration initiated regional trade agreements, leading to a surge in their numbers and variety over the past two decades. Since the mid-1990s, around half of all post-World War II regional trade agreements have been implemented. This trend resulted in increased focus on free trade agreements during the 1990s, such as North American Free Trade Agreement (NAFTA), Asia-Pacific Economic Cooperation (APEC), and Mercado Comun del Sur (Mercosur).

H. Hveem (2002, pp. 289-293) emphasizes the significance of taking into account both historical disparities in social and political life and structural position when examining components. It is essential to recognize that countries establish regional axes with the primary aim of gaining advantages through mutual cooperation and collectively addressing shared issues.

The only way for poor countries to become more significant in structural terms is to become more regionalized. Small countries find regionalization with larger partners to be a good way of obtaining security and reliability for their access to larger markets. I believe that the process of regionalization contributes to globalization and an open international economy, and plays a significant role in the development of countries and companies. Regionalization is not a counter-effect or provisional obstacle to globalization. However, some authors suggest that the increasing regionalization of economic areas in the world today is better described as 'triadization'.

The following section of my essay will focus on the phenomenon of Triadisation and the international economic system.

Triadisation and international economic system

With more than 80 per cent of trade concentrated in South-East Asia,

North America, and Europe, some observers have pointed out the tripolar structure of trade flows as a reason for the influence of regionalisation on the organization of the global economic system. The three core regions together make up a significant portion of the global economy today. According to Kenichi Ohmae (1987), 85 to 90 per cent of all high-value-added, hi-tech manufactured goods are produced and consumed in Europe, North America, and South-East Asia. Mark Dodgson (1993) believes that over 85 per cent of inter-firm cooperative agreements have occurred among the Triad. They argue that trade internationalization and investments were mostly limited to these three regions, which are dominant economic powers in the world.

According to writers, the current development in the international economic system can be labeled as Triadisation. The integration among the three parts, namely Japan, the United States, and Western Europe, is more intensive, important, and widespread compared to integration between any other states or parts. According to a study by The Group of Lisbon (1995), 92 percent of the 4,200 international agreements signed by companies between 1980 and 1989 were agreed upon by companies from these three parts. In the 1990s, Japan, the United States, and Western Europe witnessed an increasing trend of investment among themselves.

In cases of triadisation, poor countries are being left behind. Particularly, states in the South have no access to the creation of international liquidity. They are being excluded from that process, which in turn means that they easily fall more into debt, confirming and widening current economic imbalance. The Group of Lisbon sees the Triad as the technological and economic center of the current form of globalization. All

existing standards for business evaluation originate from the Triad zone. It may even be its power center, because those three regions have rather stable political governments, they are economically developed, and they also practice global power.

The organization of three powerful parts within the global economy has resulted in a triad formation, allowing these regions to have control and access to the rest of the world. This unequal regionalization in terms of GNP and trade has led to the phenomenon of triadization. Triadization is seen as a step towards globalization, promoting cooperation between other regions and having a global impact.

Globalization and the international economy

There is no singular definition for globalization, and it sparks extensive debate regarding its classification, characteristics, effects, and causes.

There are three different schools of thought about globalization: hyperglobalists, transformationalists, and skeptics. Each school aims to analyze the characteristics of globalization and its impact on the international economic system from different perspectives.

  1. The hyperglobalists school, represented by writers like K. Ohmae and R. Reich, argue that the international economic system has a significant impact on other aspects of our daily lives, such as humanity and politics. They believe that the market is borderless and the economy is global, unified, and interconnected. Ohmae (1995) states that today's world economy is truly borderless, with information, capital, and innovation flowing rapidly worldwide due to technology and consumers' demand for access to the best and most affordable products. Reich (1992) suggests that we are undergoing a transformation that will reshape the politics and economics of the coming century, eradicating national products, technologies, corporations, and industries.

According to skeptics like P. Hirst and

G. Thompson, the belief that globalization is mostly a myth means that there will no longer be national economic systems. They argue that international trade has mainly taken place in Europe, Asia-Pacific, and North America, with the extent of globalization being exaggerated.

"The international economic system can be seen as a collection of nationally located functions, where outcomes are the result of the distinct and varying performance of national economic systems" (Hirst, Thompson, 1999, p. 10).

  • The third type of school, referred to as transformationalists by Held and McGrew, includes writers such as Rosenau (1997) or Giddens (1990). They argue that globalization is playing a crucial role in driving rapid economic, political, and social changes that are reshaping modern societies and the global order today.
  • The concept of globalization refers to the increasing interconnectedness and interactions between societies worldwide, resulting in distant events having localized impacts and vice versa (Held, McGrew, 2007, p. 2). This means that local and personal contexts of social experience are transformed by globalization, with our daily activities being increasingly influenced by events happening on the other side of the world. At the same time, local lifestyle habits now have global significance (Giddens, 1994, p.).

    5) In my personal opinion, globalization is a long-term process that is easily developing in our everyday life. Many questions can no longer be solved within the nation-state model and international cooperation is necessary. These issues range from economic policy (World Bank, IMF, WTO), to social and health matters (WHO), environmental protection and migration (UN), and even military cooperation (NATO). As the number of issues requiring supranational solutions increase, it is not surprising that international organizations and agreements are gaining

    more public attention. Therefore, a country's involvement in these organizations and agreements becomes a sign of globalization. However, globalization affects different regions, states, organizations, or individuals in various ways, just like regionalization and triadization.

    And therefore, it creates inequalities excessively and when disparities are developing on the planetary graduated table, it might be an inevitable procedure.

    Evaluation of current world

    In my sentiment, the most of import drive forces of internationalization are the rapid development and debut of new information engineerings, every bit good as liberalization of markets to worsen the tendency towards the internationalization of economic activity. At this clip, the invention phase of development that is based on scientific and proficient advancement, which is one of the drive forces of internationalization, is international exchange of engineering. Radically altering transit and communicating conditions of the universe economic system are really of import for the development of international dealingss.

    Aircraft, transit, computing machine webs, cyberspace and satellite communicating have expanded chances for relocating people and goods to any location, every bit good as for international communicating. Access and usage of information, cognition and communications today is the 4th factor of production together with land, capital and labour. Today information engineering is a powerful country of the planetary economic system. Under current conditions all sorts of information have obtained a great importance for the universe 's economic system and particularly for its international sector - economic, fiscal, political, scientific and proficient information. Today there is merely a small pick for developed states or parts of non going a portion of the planetary information community. I would wish to briefly discuss chief factors that have had a great impact and intensified

    the development of globalization

    Economic factor.

    Massive concentration and centralization of capital, the growing of big companies and fiscal groups, which in its activities progressively go beyond national boundary lines, get the hanging the planetary economic infinite.

    Economic integration is the process of merging and strengthening economic systems in various organizational and legal forms.

    Political factor.

    National borders are becoming less significant, increasing transparency and creating more opportunities for free movement.

    Technological factor.

    The emergence of new technologies, rapid development of telecommunications, transportation, and internet enable the rapid dissemination of ideas, goods, and financial resources.

    Social factor.

    The diminishing role of traditions, social ties, and customs facilitates geographic mobility for individuals. The main risk for non-participating countries in integration processes is the increasing gap in economic development compared to participating countries, leading to potential long-term setbacks.

    The illustration of states in Central Asia shows that Turkmenistan and Uzbekistan have not made much effort to enter the integration process, lagging behind the developed states. In contrast, Kazakhstan's government has been implementing various projects to integrate into the global economy. As a result, Kazakhstan is now part of a group of high human development index and upper-middle income countries, while Uzbekistan and Turkmenistan, which also have natural resources and began their independent development at the same time as Kazakhstan, have not achieved the same level of success. However, if the government does not take a clear and strategic approach, internationalization could lead to economic instability in the country.

    Sometimes authorities find themselves trapped, attempting to implement economic policies that encourage reduced tariff barriers, tax breaks, and reduced protection for workers in hopes of attracting foreign investment and stimulating economic growth, yet ultimately resulting in low income and economic

    instability. I believe that there are both opposing and complementary processes to globalization. I also believe that processes such as globalization, anti-globalization, regionalization, triadization, and the movement towards a multi-polar world are occurring simultaneously, helping to stabilize and balance our world. In the coming years, the global economy will focus on addressing post-crisis development challenges.

    The post-crisis developments and thoughts are similar everywhere, indicating the increasing globalization of the world economy. The global economy has not suffered greatly from the economic decline since the emergence of the internationalization process. By examining these examples, we can see that there is a balanced system of constraints and counterweights between these processes. The international economy is experiencing globalization, regionalization, and triadization simultaneously, with each process complementing the others.

    Conclusion

    This essay discussed the international economic system and the processes of globalization, regionalization, and triadization.

    Despite the impressive economic globalization, global trade and capital flows are still limited to certain parts of the world. Trade barriers, including both tariffs and non-tariff barriers, greatly impact the development of trade between advanced regions and the rest of the world. The three forms of integration discussed in this essay are all relevant in the current situation. Regionalization can be observed in various parts of the world, including Europe, Asia, North and South America, Africa, the Middle East, and CIS countries. While the extent of regional integration differs across regions, the process is ongoing. Additionally, this essay highlights that most economic activities occur within or between three major regions - Europe, Southeast Asia, and North America.

    Therefore, the concept of

    triadisation as a form of international integration that has currently developed cannot be disregarded. These various processes of international integration to some extent contribute to globalization. Even though not all countries participate in it and the world is not completely integrated, we cannot disregard any of these integration processes. Consequently, this essay posits that globalization, regionalization, and triadisation are interconnected and parallel processes of development in the modern international economy. It would be impossible and incorrect to assume the dominance of any one process over the others.

    All three tendencies coexist in the modern universe of political relations and should be considered when discussing the international economic system.

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