Integration and Globalization processes of World Economy and International Economic Relations

Integration processes in the system of World Economy

Notion of international economic integration

Phenomenon of economic integration, understood as compilation and joining, appears along with a progress of commodity - monetary economy. At the beginning, integration got a form of joining different branches of economic activity in some regions. The next stage was joining regions - that is how, integrated national economies started. Then, economies of different countries - by creation thicker and thicker net of economic relations - begin to merge, and create, this way, the world economy. In the modern world economy, the economic integration has a form of creation different kinds of international, economic groupings, including groups of countries, which have a target of mutual integration of their economies [21 , p.28].

At the turn of the 20th and the 21st centuries, it is difficult to overestimate an influence of integrative processes on the global economy. An effect of mentioned processes on national economies, is also seen in every aspect of economic life. Integration became this factor, which has an essential meaning, to make economic decisions for national economies, as well as, for international ones. A majority of countries join integrative processes with liberalization of commerce, not ignoring, an important globalization process [20, p.26].

In an analysis of an economic aspect of integration, there are two tendencies: traditional modern one. The traditional analysis of economic integration, is based on classical and neoclassical theories of international exchange. The first of them, is Ricardian's law of comparative advantage. It is based on advantages from specialization. This theory is based on different production equipment factors and different level of activity of two countries. A known description of this theory is an example of England, where labor costs of cloth are smaller and Portugal, which makes cheaper wine. Barter trade between these two countries lead to a situation, when they concentrate on production of goods, made more effectively (England -cloth, Portugal - wine). This way, international exchange allows getting comparative profits [33, p.741, 742]. Neoclassic theory - Heckscher - Ohlin -says, about uneven equipment of two countries with production factors.

As a result, both countries have fulfilling structure of production -complimentary, which is good to lead international trade [2, p. 17].

These two theories build a base to define an economic integration, in such called traditional way. An author of the first definition is W. Ropke, by whom, a base of integration is liberalization of foreign trade it is a state, which allows commercial relations as free and profitable, as these, which are in national economy'. While a final effect should be a rotation of goods and service between national economies, like in a single country.

A modern attitude to the economic integration, shows fully changes, which were made in the theory of international trade. Economists, not only stress a need to eliminate various barriers in trade exchange, but also say about necessity to assure a free flow of production factors between a group of countries. An example of such an attitude, is the definition of A. Budnikowski, who treats economic integration like a process of liquidation limits in flow of goods and production factors, and creation similar conditions of competition [2, p. 18].

The second adequate definition of economic integration, is presented by an author, who reflexes reasons, targets and results of European integration (in European Union) and motives, directing countries, joining integrative groups. Economic integration (I) is showed as: "made by countries institutional relations and economic processes, which by international cooperation, are heading for optimization of basic economic - social parameters of all members of these agreements" [2, p. 20].

Presented above definitions of integration, stress a point of economic integration, which is joining economies by processes of elimination barriers economic trade and, by building its institutional bases.

Moreover, economic integration should be treated like a process, in which there are changes, not only inside structure integrating countries, but also between them. As a result of this process, a merge of separate elements goes, what leads to creation a new economic organism. Transformations, taking place in the structure of national economies, and charts of integration subjects themselves, cause, that whole this process, has a dynamic character. For this reason, even in seemingly integrated group, can appear following integrative processes [28, p. 208-209]. On a base of these deliberations, we can pronounce, that integrative processes, have an endless character, regarding a permanent progress of the world economy, permanent globalization and competition.

Besides, an economic aspect of integration in the literature of a subject, concerning the international integration, you can find political science interpretation of this phenomenon, the most important are ; functionalism and neo -functionalism.

A founder and main representative of functionalism was D. Mitrany. He looks for ways to prevent international conflicts, besides he wants to set sources of cooperation between countries. According to a conception of functionalism, cooperation between nations should be in economic branches and with reference to their nature. It carries a necessity to focus an attention on a chosen task, and abstract from ideological elements, so, a primacy of economy over politics is accepted. Politics is inseparably with a power and is special for a concrete country. While, economy has an international character, it is a base for cooperation between societies. Approach of national economies goes by, such called spillover effect. This means, that, starting cooperation in one branch, draws a necessity of cooperation in other zones - integration accelerates it automatically. Next, we can mention two stages of this effect. The first stage aims to make changes in attitudes in societies - it is an educational effect of integration. Whereas, the second stage, includes changes in politicians' attitude, and, as a result, bringing actions connected with national safety, foreign politics and defense for common organizations . So, integration process goes to a limitation of a power of independent countries and widening international functional activity, by international organizations. Functionalism also supports global cooperation more, than a regional one [ 1, p.16 ].

The second political theory is neo-functionalism. Its main representatives are E. Haas and L. Lindberg. On a contrary to functionalism, they support a regional integration and joining, as a result of spill effect, an economic integration with a political one. An engine of integration, are elites and groups of business. These political forces, wanting to solve their problems, pass them to institutions of nationless character. An essential role in the neo-functionalism plays a spillover. But, there are three kinds of it. Functional spillover, by Mitrany, is an effect of choosing economic ties [19, p.18].

An effective realization of tasks in separate branches, needs an integration of the following ones, and , as a result, there is a coordination of politics. While, the second kind, is a political spillover. It comes from an economic approach of integrating countries and decisions of elites, who, by their actions, accelerate an integration process.

By E. Hass, the political spillover takes place, when next authorities competences of integrating national countries, are given to international organizations .The last spillover effect is a supported spillover. Here, a main role play international subjects, which are promoters of political integration and initiators of international improving. The last kind of spillover proves, that neo-functionalists throw away a thesis of self-acceleration of integration, and set a necessity make political decisions to support its dynamics [6, p.18].

As a result of integration process, a new economic body comes into being, which is not a compilation of consisting it elements, but states quite new, separate quality, and its progressing possibilities are higher than a sum of possibilities of creating it economies. Also, its meaning and tendering power in the international arena, is bigger, than each of creating it countries, separately. By P. Bozyk, in other situation, the integration would be pointless, because it is accompanied by costs, born both individually, by each member country, and together by all countries [32, p.108].

A notion: economic integration, in its modern meaning started to be used in economic literature, at the turn of forties and fifties of the 20th century. F. Machlup a spreading of this term, ties with a work of German authors, H. Gaedick and G. von Eyern, concerning statistics of commerce (1933), and a work of E.F. Heckscher about mercantilism (1931).

At the same time, the international economic integration, started to appear in official speeches of politician and officials, as well as, in documents concerning international matters. It is worth to mention a speech of P. Hoffman (managing European Community Administration - ECA) in Organization of European Economic Cooperation (OEEC) on the 31st October 1949, in which he insisted on a faster progress in "integration of Western European economy". He means, that "the pint of this kind of integration, was forming one big market, from which quantitative limits of goods flow".

Monetary barriers for money flow and even all customs would be removed for good'. Another significant example, can be a fact, that J. Tinbergen gave his second edition of his book a title 'International Economic Integration', while the first edition was titled 'International Economic Cooperation'. So far, in the literature of the subject one, commonly accepted definition of international economic integration has not existed. It comes from a fact of complexity of discussed problem, and its interdisciplinary character. Some authors, dealing with international economic integration, define it differently and stress various aspects of this process.

With the passing time, a new current appeared, treating the economic integration like, happening in economy, process of joining separate, so far elements, into one, which creates a new qualitatively economic structure, represented by B. Ballasa, R. Cooper, G.Giersch, A. Marschal and J. Tinbergen.

The most known representative of this current is B. Ballasa, and, by him, a definition of economic integration, is one of the most quoted in the literature of the subject. It treats the integration like an objective process, tied with a reached stage of manufacturing base, and, coming from it process of internationalization of economic life . By him, integration can be understood "as a process and as a state". Integration, treated like a process, involves different means of liquidation of discrimination between economic subjects, belonging to various national countries. Treated like a state, cane be presented as a lack of different forms of discrimination, between national economies, considering, that discrimination, on the whole, influences mutual economic relations.

Integration process, understood usually, as a group of means, is to lead to reach awaited state of integration. By B. Ballasa, the economic integration can have a few forms, representing different stages of it - a zone of free trade, a customs union, a common market, an economic union and a total economic integration.

B. Ballasa also achieved a differentiate between an integration and cooperation. According to his conception, cooperation involves actions, going to minimalize the discrimination, while a process of integration, additionally involves actions going to limitation of some forms of discrimination [6, p.19].

Z. Kamecki thinks, that defining the integration by B. Balassa raises some objections. First of all, it is considering the economic integration, as an economic politics, thus to actuate reasons (a set economic politics ) with results (economic integration). The following reservation, is to equate the economic integration with a zone of free trade, customs union and following mentioned by Balassa, stages of integration. By Kamecki, an essence of integration are changes in economic structure, and, it cannot be equated with, coming into being, integrative groups. He stresses, that starting this type of organization, not always must lead to the economic integration, and integration can have place without creation this type of organization. In relation with it, he says, that these organizations 'can be treated only as institutional forms and necessary only in some circumstances, to make the economic integration, bit not , as forms of economic integration generally [21, p.23].

J. Tinbergen achieved a division of integration into negative and positive one. The negative integration leads to elimination different obstacles, in commercial exchange between member countries. The positive integration is tied with a modification of instruments of economic politics, and with leading new instruments and institutions, which would make easier a functionality of a market in an integrated area and would promote wider political targets of a union. In practice of integrative processes, separating these two types of integration is not easy. A statement that the negative integration is tied with lower integration stages, and a positive one appears only on a stage of building the economic union, is not true [25, p. 25]

Negative integration is characteristic for free trade zone and the customs union. Yet, leading a common customs tariff for the third countries in the customs union is a symptom of the positive integration. In realization, the negative integration is easier. Member countries of the integrative grouping can identify and eliminate all symptoms of discrimination in the commercial exchange much easier, than realize the common politics in any other fields.

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