Экономические науки / Макроэкономика

Cand. of Science in Economics Taranenko I.V.

Donetsk State University

TEMPORAL AND SPACE LIMITS OF THE GLOBAL ECONOMIC SYSTEM

The global economic system is to be considered in the temporal and special context, as a new quality of the world economic system. This quality is characterized by high level of closeness and institutionalization of relations between subsystems and elements, and accordingly – by high level of organization, which lead to the change of the system structure for maximum integrity.

In other words, the global economic system is a completely new quality state of the world economic system that arises as a result of its movement to the maximum integral state (which itself is scientific abstraction).

In our opinion, unlike the world economic system where the participants interact mostly in the area of international relations, in the global economic system the internal connections are also of great importance. It means that interaction on the national and local markets between the participants who are involved in the system of global relations is getting global system character. The constituent subsystems and elements of the global economic system are not only the direct participants of the international (world) market, but also the actors operating within national economies and local markets, and directly or indirectly are the agents of global demand and global supply, producers (or participants of supply chains) and consumers of «global product».

The transformation of the world economic system from its previous states to the new condition takes place in time and space, in a continuous-and-discrete manner, through the accumulation of the changes represented by the indexes of internationalization and global integration [1].

The global economic system arises within the world economic system as a result of some kind of «maturity» of globalization processes and a higher level of institutionalization of the connections between separated subsystems (elements) of the world economy. It is a «nucleus», or sphere of very close interconnections within the world economic system which appears on a definite stage of globalization and in the process of the world economic system evolution it grows due to involving its components (subsystems and elements of different levels) into a new system integrity.

Thus, the global economic system is a new modern quality of the world economic system, a form of existence of the latter which is in the process of formation. As the process of the global economic system formation is gradual and non-linear and it is carried out in a continuous - and - discrete manner, its bounds is not clearly expressed but blurred out towards the outside part of the world economic system where the substantial quantitative changes will be transformed into qualitative ones in future.

The author makes an attempt to define conceptually the modern dimension of time and space limits of the global economic system through the KOF Index of Globalization.

The analysis of dynamics of integral KOF Index of Globalization [2] for the world economy, and its constituents - Indexes of Economic Globalization, Political Globalization and Social Globalization has been conducted for the period 1980 – 2008 (Table 1).

Table 1

Integral KOF Index of Globalization, 1980 – 2008

	Index values per years
Index	1980	1985	1990	1995	2000	2005	2007	2008
Integral Index of Globalization	38,82	40,43	40,90	47,30	53,09	56,38	58,12	58,03
Index of Economic Globalization	42,80	44,89	46,40	51,13	57,45	61,23	63,49	62,52
Index of Political Globalization	38,51	40,03	39,57	50,28	53,40	57,14	60,19	61,00
Index of Social Globalization	35,43	36,57	37,54	41,58	47,91	50,19	50,33	50,18

Source: KOF Index of Globalization 2011. Press Release [5].

In 1980–1990 the value of Integral Index of Globalization rose insignificantly by 0.2 points. In the early 1990-s a slight growth of the Index can be observed. By 2000 the Index had increased almost by 13 points. The Index of Globalization value for Eastern Europe and Central Asia demonstrates a higher growth in the period 1990-2000 as compared to the World Index value due to the transitional reforms in post-socialist countries’ and the rise of openness of their economies.

The early 1990-s is the period of intensive integration process and formation of regional organizations – the Ands Common Market (1990), MERCOSUR (1992), Organization of Asia – Pacific Economic Cooperation APEC (1989-1993), signing the Agreement on Free Trade between ASEAN countries (1992), the Treaty of Maastricht in 1992, North-American Agreement about Free Trade (NAFTA) and the completion of the Uruguayan round of GATT/WTO in 1994. It should be assumed that the world globalization processes and institutionalization of international relations as well as socio-economic transformations in the CEE countries and former USSR caused the huge rise of the World Index of Globalization. It enables us to consider the early 1990-s as a starting point of global economic system separation in the general structure of the world economic system, or global economic system scopes in temporal dimension.

The conceptual defining of spatial limits of the modern global economic system as a part of the world economic system should be done by classifying countries according to the degree of their integration into the globalization processes on the basis of the KOF Index of Globalization. It is worth noting that the achieved results are relative due to conventional character of quantitative estimations of countries’ integration into the global economy.

The author presents her substantiation of countries’ grouping according to their KOF Index of Globalization value. The grouping was made by using statistic method of standardization that demonstrates the type of distribution close to the normal one. Accordingly three levels of globalization were separated:

- high level (Index of Globalization value is higher than 70,00);

- medium level (Index of Globalization value is 50,00 - 69,99);

- low level (Index of Globalization value is 20,00 - 39,99);

The data for 186 countries classified according to KOF Index of Globalization 2011 [3] were analysed.

Forty one countries that form the first group (Index of Globalization is 70,00 and higher) such as Belgium, Austria, Netherlands, Sweden, Switzerland, Denmark, France, Hungary, Finland, Germany, USA are on a high stage of the globalization in economic, political and social dimensions and present a relative spatial border of the modern global economic system. The interconnections between the above countries are characterized by a high degree of closeness. The high level of institutionalization of the interrelations within the group is testified by the following facts: 27 countries are members of EU, 28 are in OECD, the USA and Canada operate within NAFTA Agreement, all the countries of the group are members of WTO.

The countries of the second (76 countries) and the third group (68 countries) are on lower level of integration into the globalization processes. It differs from rather high for countries with Index of Globalization 60,00 - 69,99 showing their dynamic movement to the integration into the global economic system to the countries - outsiders with very low Index of Globalization value (20,00 - 39,99).

As it was mentioned above, the borders of global economic system are indistinct and can not be clearly described in terms of quantity. The additional subdivision of each group into two sub-groups proves heterogeneous character of their composition concerning the closeness of global interconnections between countries and permanent rise of the closeness from «periphery» of the world economic system to its «nucleus» that is the global economic system. Therefore, a number of countries with high medium value of Index of Globalization - from 60,00 to 69,99 that includes also Ukraine, can be considered as sufficiently involved in the global economic system in most sectors of their national economy, or as those which will be involved there in the nearest future.

Countries with low Index of Globalization (Chad, Guinea, Madagascar, Uzbekistan, Bangladesh, Turkmenistan, Ethiopia, Rwanda, Tanzania, Tajikistan and others) are characterized by very low closeness of relations with other subsystems and elements of the world economic system and in most cases make periphery of the latter.

The establishment of relative temporal and space limits of the global economic system creates the background for enhance available approaches to the mechanism of globalization processes development at post-crisis world.

References:

1. Тараненко І.В. Системна методологія дослідження та динаміка сучасних глобалізаційних процесів / І.В. Тараненко // Науковий вісник Чернівецького національного університету: збірник наукових праць. Серія «Економіка» – №496 – Чернівці: Вид-во Чернівецького національного університету, 2011.

2. KOF Index of Globalization 2011. Press Release [Електронний ресурс] – Режим доступу: http://globalization.kof.ethz.ch.

3. KOF Index of Globalization 2011. Detailed rankings [Електронний ресурс] – Режим доступу: http://globalization.kof.ethz.ch.