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Globalization of world economy and Ukraine's place in it

Author : Tymur Chmeruk

The logic of the world market development determines the expediency of each country's participation in the processes of globalization and integration into the world economy. In order for enterprises to participate in the formation of an international economic structure and be competitive, they simply must be under the constant influence of foreign competition
22:37, 16 January 2018

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Today, everyone is talking about globalization processes in the world, but what is globalization? This phenomenon is characterized by an increase in the influence of various international factors on the social reality of individual states. Particularly interesting is the impact of globalization on the economy, which is manifested incorporations of a transnational type that function effectively in different parts of the earth and actively take advantage of new historical conditions. Globalization stimulates the strengthening of the interconnection and uniqueness of people, as well as of civilization as a whole. However, in addition to the positive aspects, there are also a number of factors that are alarming. Some scholars suggest that the role of transnational organizations will soon be so great that it can cast doubt on the existence of individual nation states. Therefore, what are the threats of globalization regarding the economy, and how can it improve the economic system of the world?

Many experts have great hopes connected with globalization in the field of solving complex economic problems. First and foremost, this is the alignment of the economic situation in the world, the improvement of production, the use of high-quality equipment, the exchange of essential products, the improvement of foreign trade, the effective management of finances, the growth of the well-being of the population in countries provided by a common economic system and the absence of a deficit.

But there is also the opposite viewpoint, with which antiglobalists act, actively criticizing any processes of globalization. However, everyone agrees that globalization has opened a new stage in world economic relations. The logic of the world market development determines the expediency of each country's participation in the processes of globalization and integration into the world economy. In order for enterprises to participate in the formation of an international economic structure and be competitive, they simply have to be under the constant influence of foreign competition. Despite this, the problems that globalization engenders are also inevitable.

Thus, the globalization of the economy in the modern world faces one serious problem. All the leading positions in the world are already occupied by the states that are members of the "Big Seven". It is their share of not less than 12% of the total population of the planet and about 60-70% of world GDP. They play a decisive role in organizations such as the IMF and the World Bank, the WTO and OECD. The G7 countries form the epicenter of globalization processes, the so-called core of the world economy.

Two dozen countries managed to join a group of leaders, establish fruitful and mutually beneficial cooperation with them and are actively developing. The consequences of globalization are not only the clash of cultures but also their dense intertwining. For the West, which has always been ahead, the process of globalization offers quite broad prospects and universal opportunities. All other countries were forced to choose between dependence, isolation, and modernization. With the growth of globalization processes, inequalities between states will also grow, which can lead to the emergence of new conflicts.

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Therefore, the negative consequences are obvious: developed countries will become even richer, and the poor ones even poorer, as a result of which the gap between them will only increase. According to statistics, only a small part of the population, in particular about 14% of the inhabitants of the Western world, benefit from the processes of globalization.

The most negative consequences of this process will be felt by countries with the lowest level of development. There will be a demarcation of society in the economic sphere, a sharp increase of unemployment rate, which is caused by the use of innovative technologies and the introduction of robotization. It is known that with the introduction of technology, the need for a large number of workers is reduced: high-tech equipment simply replaces them.

Future of Ukraine

The globalization of the world economy is not only the formation of a free system of world trade. It is also a process of the rapid development of the productive forces, which requires a new type of production relations not only in a single country but on a global scale. Attempts to limit access of foreign goods to the domestic market by administrative methods or create non-market advantages for their own producers will inevitably provoke a similar reaction from the governments of other countries. In addition, under these circumstances, the government, most likely, will not have the opportunity and motivation to implement those measures that would ensure the competitiveness of domestic producers' products in foreign markets.

The liberal model of world trade is determined by the level of technologies and financial instruments that we have today. But creating a great opportunity, the liberal model of the economy forms its very strict rules of the game not in a separate country, but at the global level: either competition or forced bankruptcy. But this is the bankruptcy of not a single enterprise, but whole countries that are slowly but steadily degrading - they are left by citizens who travel around the world in search of a better life. This, unfortunately, is happening today in Ukraine.

In order for Ukraine to survive as an independent state, we must do everything to create a competitive economy in our country, both in terms of production costs and in terms of investment attractiveness. At the same time, it is worthwhile to be realistic and to realize that today we have a limited number of advantages that can ensure the competitiveness of Ukrainian economy.

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In my opinion, it is the raw material structure of Ukrainian economy is the main factor that creates extreme dependence on external influences. It should be recognized that the state of Ukrainian economy and public finances, the level of salaries and the welfare of millions of Ukrainian citizens depend on the prices of raw materials on world markets during the last twenty years.

Domestic raw oligarchs are objectively not interested in increasing the salaries and incomes of the population, in the development of the domestic market, because in this case the profitability of their business with obsolete, unmodernized enterprises will decrease. That is why Ukrainian enterprises need to modernize, improve production and quality of products. The state should invest in the development of innovations and technologies, because without this we will continue to lag behind the developed economies of the world, and then we can simply turn into a bankrupt state.

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