Abstract
The purpose of this research is consideration and analysis of the main social and economic problems of the world, which are connected with the existence of the gap between “Global North” and “Global South” and problems of the consumption of mineral resources, including energy and water resources, unemployment, illiteracy, health issues, food supply, demography, etc. We are watching the world become one. Countries and regions are interconnected by a thousand threads that make them interdependent. The world economy today is undergoing a process of globalization – the increasing interdependence of the economies of various countries of the world due to the growth in the movement of goods and services and the intensive exchange of goods, information, technologies, and labor migration.
TopIntroduction
We are watching the world become one. Countries, regions are interconnected by a thousand threads that make them interdependent. The world economy today is undergoing a process of globalization - the increasing interdependence of the economies of various countries of the world due to the growth in the movement of goods and services, the intensive exchange of goods, information, technologies, and labor migration. This process began in the second half of the last century. In industry, the process of globalization is expressed in the deepening of the international division of labor and the strengthening of the internationalization of production. Transnational corporations (TNCs) have stretched out their tentacles around the world. The 5 largest TNCs control more than half of the world's production of cars, aircraft, computers, and other goods.
The commonality of the fate of mankind is most clearly manifested in its general, global problems.
Global problems of the economy are problems caused by the active economic activity of a person. The main problems of the economy are:
The problem of the economic backwardness of the poorest countries in Asia and Africa and some other regions from the economically developed countries was called the “North-South” problem. The gap in the level of economic development also leads to a significant gap in the standard of living of the population. The gap between rich and poor countries is widening. It is in the countries of the South that most of the world's poor and ultra-poor people are concentrated. Poor people are those with an income of fewer than two dollars a day. There are two and a half to three billion of them on the planet. The super-poor is about one billion. These are the people whose daily income does not even reach one dollar. So, at the beginning of the twenty-first century, more than forty percent of the ultra-poor people lived in sub-Saharan Africa.
The demographic problem is the rapid population growth. In 2023, the world's population will exceed 8 billion (Wordometers, 2021). By the middle of the 21st century, it is projected to overcome the nine billion milestones (Wordometers, 2021). Moreover, the fastest growing population is in developing countries. The populations of the poorest countries are growing at a faster rate than the gross domestic product of those countries.
In the field of fertility and population growth in the modern world, two opposite trends have developed: population aging in developed countries; dramatic growth in developing countries.
The food problem is expressed primarily in the problem of hunger. Population growth is outstripping agricultural production, leading to food problems in many developing countries. According to international organizations, approximately six million children die from hunger or its consequences in the world every year. About sixteen thousand - a day, 11 children every minute (UN, 2021). In the future, hunger is not an inevitable problem due to the use of modern methods of intensifying agricultural production, modern biotechnologies, and other achievements of scientific and technological progress.
Key Terms in this Chapter
Orderly Market Arrangements: Voluntary export restrictions through government-to-government agreements to follow specific trading rules.
Global East: The rapidly growing economies of East and South Asia that have made those countries competitors with the traditionally dominant countries of the Global North.
Cartel: A convergence of independent commercial enterprises or political groups that combine for collective action, such as limiting competition, setting prices for their services, or forming a coalition to advance their group's interests.
Intergovernmental Organizations (IGOs): Institutions created and joined by state governments that give them authority to make collective decisions to manage particular problems on the global agenda.
Import: Substitution industrialization – a strategy for economic development that centers on providing investors at home incentives to produce goods so that previously imported products from abroad will decline.
Money Supply: The total amount of currency in circulation in a state calculated to include demand deposits such as checking accounts in commercial banks, and time deposits such as savings accounts and bonds in savings banks.
Global Commons: The physical and organic characteristics and resources of the entire planet- the air in the atmosphere in conditions on land and sea- on which is the common heritage of all humanity.
Macroeconomics: The study of aggregate economic indicators such as GDP, the money supply, and the balance of trade that governments monitor to measure changes in national and global economies such as the rates of economic growth and inflation or the level of unemployment.
Transparency: About the GATT the principle that trade barriers must be visible and thus easy to target.
Functionalism: The theory advanced by David Mitrany and others explaining how people can come to value transnational institutions (IGOs integrated or merged states) and the steps to giving those institutions authority to provide the public goods (for example, security) previously, but inadequately, supplied by their state.
Modernization: A view of development popular in the Global North's liberal democracies that wealth is created through efficient production, free enterprise, and free trade and that countries relative wealth depends on technological innovation and education more than on natural endowments such as climate.
Nongovernmental Organizations: Transnational organizations of private citizens maintaining consultative status with the UN. They include professional associations, foundations, multinational corporations, or simply internationally active groups in different states joined together to work toward common interests.
Interdependence: A situation in which the behavior of international actors greatly affects others with whom they have contact, making all parties mutually sensitive and vulnerable to the actions of the other.
North American Free Trade Agreement (NAFTA): An agreement that brings Mexico into the free trade zone linking Canada and the US.
Foreign Direct Investment (FDI): A cross-border investment through which a person or corporation based in one country purchases or constructs an asset such as a factory or bank in another country so that a long-term relationship and control of an enterprise by nonresidents results.
International Political Economy: The study of the intersection of politics and economics that illuminates why changes occur in the distribution of states' wealth and power.
Export Quotas: Barriers to free trade agreed to by two trading states to protect their domestic producers.
Globalization of Production: Trans nationalization of the productive process, in which finished goods rely on inputs from multiple countries outside of their final market.
Fixed Exchange Rates: A system in which a government sets the value of its currency at a fixed rate for exchange about another country's currency so that the exchange value is not free to fluctuate in the global money market.
Asian Tigers: The four Asian NICs that experienced far greater rates of economic growth during the 1980s than the more advanced industrial societies of the Global North.
Import Quotas: Numerical limit on the number of particular products that can be imported.
Linkage Strategy: A set of assertions claiming that leaders should take into account another country`s overall behavior when deciding whether to reach an agreement on any one specific issue to link cooperation to rewards.
Global Migration Crisis: A severe problem stemming from the growing number of people moving from their home country to another country straining the ability of the host countries to absorb the foreign emigrants.
Bureaucracies: The agencies and departments that conduct the functions of a central government or a non-state transnational actor.
International Regime: Embodies the norms, principles, and rules. An institution around which global expectations unite regarding a specific international problem.
Comparative Advantage: The concept in liberal economics that a state will benefit if it specializes in the production of those goods which it can produce at a lower opportunity cost.
Imperial Overstretch: The historic tendency for past hegemons to sap their strength through costly imperial pursuits and military spending that weaken their economies about the economies of their rivals.
Newly Industrialized Countries (NICs): The most prosperous members of the global South which have become more important exporters of manufactured goods as well as important markets for the major industrialized countries that export capital goods.
International Monetary System: The financial procedures used to calculate the value of currencies and credits when capital is transferred across borders through trade, investment, foreign aid, and loans.
Complex Interdependence: A model of world politics based on the assumptions that states are not the only important actors, security is not the dominant national goal, and military force is not the only significant instrument of foreign policy. This theory stresses cross-cutting ways in which the growing ties among transnational actors make them vulnerable to each other’s actions and sensitive to each other’s needs.
Globalization of Finance: The increasing trans nationalization of national international markets through the worldwide integration of capital flows.
Global South: A term now often used instead of the Third World to designate the less developed countries located primarily in the Southern Hemisphere.
Collective Action Dilemma: Paradox regarding the provision of collective goods in which, though everyone can enjoy the benefits of the good, no one is accountable for praying for the cost.
Trade Integration: The difference between gross rates in trade and gross domestic product.
Liberal International Economic Order (LIEO): The set of regimes created after World War II designed to promote monetary stability and reduce barriers to the free flow of trade and capital.
Collective Good: A public good, such as safe drinking water, from which everyone benefits.
Demography: THE study of population changes, their sources, and their impact.
Export-Led Industrialization: A growth strategy that concentrates on developing domestic export industries capable of competing in overseas markets.
Self-Help: The principle that because in international anarchy all global actors are independent, they must rely on themselves to provide for their security and well-being.
Non-Aligned States: Countries that do not form alliances with opposed great powers and practice neutrality on issues that divide great powers.
Sanctions: Punitive actions by one global actor against another to retaliate for its previous objectionable behavior.
Infant Industry: Newly established industries (infants) that are not yet strong enough to compete against mature foreign producers in the global marketplace until in time they develop and can then compete.
Absolute Advantage: The liberal economic concept that a state should specialize in the production of goods in which the costs of production are lowest compared with those of other countries.
Marxist-Leninism: Communism theory as derived from the writings of Karl Marx, Vladimir Lenin, and their successors, which criticizes capitalism as a cause of the class struggle, the exploitation of workers, colonialism, and war.
Dependent Development: The industrialization of peripheral areas within the confines of the dominance-dependence relationship between the Global South and the Global North, which enables the poor to become wealthier without ever catching up to the core Global North countries.
New International Economic Order (NIEO): The 1974 policy resolution in the UN that called for a North-South dialogue to open the way for the less-developed countries of the Global South to participate more fully in the making of international economic policy.
Gross National Product (GNP): A measure of the production of goods and services within a given period that is used to delimit the geographic scope of production. GNI measures production by a state’s citizens or companies regardless of where the production occurs.
Barter: The exchange of one good for another rather than the use of currency to buy and sell items.
Liberalism: A paradigm predicated on the hope that the application of reason and universal ethics international relations can lead to a more orderly, just, and cooperative world. liberalism assumes that anarchy and war can be policed by institutional reforms that empower international organizations and law.
Washington Consensus: The view that Global South countries can best achieve sustained economic growth through democratic governance fiscal discipline free markets a reliance on private enterprise, and trade liberalization.
Most-Favored-Nation Principle (MFN): The central GATT principle of unconditional nondiscriminatory treatment in trade between contracting parties underscoring the WTO's rule requiring any advantage given by one WTO member to also extend it to all other WTO members.
Developing Countries: A category used by the World Bank to identify low-income Global South countries with a 2009 GNI per capita below $935 and middle-income countries with a GNI per capita of more than $935 but less than $11,456.
Globalization of Labor: Integration of labor markets, predicated by the global nature of production as well as the increased size and mobility of the global labor force.
Opportunity Cost: The sacrifices that sometimes result when the decision to select one option means that the opportunity to realize gains from other options is lost.
Heavily Indebted Poor Countries: The subset of countries identified by the World Banks Debtor Reporting System whose ratios of debt to the gross national product are so substantial they cannot meet their payment obligations without experiencing political instability and economic collapse.
Non-Aligned Movement (NAM): A group of more than one hundred newly independent mostly less developed states that joined together as a group of neutrals to avoid entanglement with the superpowers competing alliances in the Cold War and to advance the Global South primary interest in economic cooperation and growth.
Economic Sanctions: Punitive economic actions, such as the cessation of trade or financial ties, by one global actor against another to retaliate for objectionable behavior.
Imperialism: The policy of expanding state power through the conquest and or military domination of foreign territory.
Hegemony: The ability of one state to lead in world politics by promoting its worldview and ruling over arrangements governing international economics and politics.
Monetary policy: The decisions made by state central banks to change the country's money supply to manage the national economy and control inflation using fiscal policies such as changing the money supply and interest rate.
Civil Society: A community that embraces shared norms and ethical standards to collectively manage problems without coercion and through peaceful and democratic procedures for decision-making aimed at improving human welfare.
Fertility Rate: The average number of children born to a woman (or group of women) during her lifetime.
Globally Integrated Enterprises: MNCs organized horizontally with management in production located in plants in numerous states for the same products they market.
Retorsion: Retaliatory acts (such as economic sanctions) against a target's behavior that is regarded as objectionable but legal such as trade restrictions to punish the target with the measures that are legal under international law.
Monetary System: The processes for determining the rate at which each state's currency is valued against every other state, so that purchasers and sellers can calculate the costs of financial transactions across borders such as foreign investments, trade, and cross-border travel.
Foreign Aid: Economic assistance in the form of loans and grants provided by a donor country to a recipient country for a variety of purposes.
Classical Liberal Economic Theory: A body of thought based on Adam Smith’s ideas about the forces of supply and demand in the marketplace, emphasizing the benefits of minimal government regulation of the economy and trade.
Globalization: The integration of states through increasing contact, communication, and trade as well as increased global awareness of such integration.
International Liquidity: Reserve assets used to settle international accounts.
Floating Exchange Rates: An unmanaged process in which governments neither establish an official rate for their currencies nor intervene to affect the values of their currencies and instead allow market forces and private investors to influence the relative rate of exchange for currencies between countries.
Human Needs: That basic physical, social, and political needs, such as food and freedom that are required for survival and security.
Nondiscrimination: GATT principle that goods produced by all member states should receive equal treatment as embodied in the ideas of most-favored nations and national treatment.
Antidumping Duties: Taxed placed on another exporting state’s alleged selling of a product at a price below the cost to produce it.
Domino Theory: A metaphor popular during the Cold War that predicted that if one state fell into communism, its neighbors would also fall in a chain reaction, like a row of falling dominoes.
International Monetary Fund: A financial agency now affiliated with the UN established in 1944 to promote international monetary cooperation, free trade exchange rate stability, and democratic rule by providing financial assistance and loans to countries facing financial crises.
Low Politics: The category of global issues related to the economy. Social, demographic, and environmental aspects of relations between governments and people.
Development: The processes, economic and political, through which a country develops to increase its capacity to meet its citizen’s basic human needs and raise their standard of living.
Nonalignment: A foreign policy posture that rejects participating in military alliances with the rival blocs for fear that formal alignment will entangle the state in an unnecessary involvement in the war.
Hegemon: A preponderant state capable of dominating the conduct of international political and economic relations.
Embedded Liberalism: Dominant economic approach during the Bretton Woods system, which combined open international markets with domestic state intervention to attain such goals as full employment and social welfare.
European Commission: The executive organ administratively responsible for the European Union.
Non-Tariff Barriers: Measures other than tariffs that discriminate against imports without direct tax levels and are beyond the scope of international regulations.
Least Developed of the Less Developed Countries (LLDCs): The most impoverished countries in the Global South.
Cornucopias: Optimists who question limits-to-growth analyses and contend that markets effectively maintain a balance between population, resources, and the environment.
Intra-Firm Trade: Cross-national trade of intermediate goods and services within the same firm.
Hegemonic Stability Theory: A body of theory that maintains that the establishment of hegemony for the global dominance by a single great power is a necessary condition for global order in commercial transactions and international military security.
Official Development Assistance: Grants or loans to countries from donor countries are now usually channeled through such as the World Bank for the primary purpose of promoting economic development and welfare.
Virtual Corporations: Agreements between otherwise competitive MNCs are often temporary to join forces and skills to coproduce and export particular products in the borderless global marketplace.
Intellectual Property: Inventions created by the use of human intelligence in publications art and design by individuals that are often illegally used for commercial purposes without credits or royalties to their creators in violation of GAT`s agreement.
Neomercantilism: A contemporary version of classical mercantilism that advocates promoting domestic production and a balance of payment surplus by subsidizing exports and using tariffs and non-tariff barriers to reduce imports.
World-System Theory: A body of theory that treats the capitalistic world economy originating in the sixteenth century as an interconnected unit of analysis encompassing the entire globe.
Laissez-Faire Economics: The philosophical principle of free markets and free trade to give people free choices with little governmental regulation.
Developed Countries: A category used by the World Bank (WDI2009) to identify Global North countries, with a GNI per capita of $11,456 or more annually.
Decolonization: The achievement of sovereign independence by countries that were once colonies of the great powers.
Murky Protectionism: Nontariff barriers to trade that may be hidden from government policies not directly related to trading such as environmental initiatives and government spending.
Cosmopolitan: An outlook that values viewing the cosmos or entire world as the best polity or unit for political governance and personal identity, as opposed to other policies such as one’s local metropolis or city of residence (e.g., Indianapolis or Minneapolis).
Ecopolitics: How political actors influence perceptions of, and policy responses to changing environmental conditions, such as the impact of carbon dioxide emissions on the temperature of the Earth.
Exchange Rates: The rate at which one state's currency is exchanged for another state's currency in the global marketplace.
European Union: A regional organization created by the merger of the European Coal and Steel Community, the European Atomic Energy Community, and the European Economic Community (called the European Community until 1993) that has since expanded geographically and in its authority.
Semi Periphery: To world system theorists’ countries midway between the rich core or center and the poor periphery in the global hierarchy at which foreign investments are targeted when labor wages and production costs become too high in the prosperous core regions.
Communist Theory of Imperialism: The Marxist-Leninist economic interpretation of imperialist wars of conquest as driven by capitalism’s need for foreign markets to generate capital.
Dollar Overhang: A condition that precipitated the end of the Bretton Woods era, in which total holdings of dollars outside of the U.S central bank exceeded the number of dollars backed by gold.
Geo-Economics: The relationships between geography and the economic conditions in the behavior of states that define their levels of production, trade, and consumption of goods and services.
Neo-Malthusians: Pessimists who warn of the global Eco political dangers of uncontrolled population growth.
Multinational Corporations (MNCs): Business enterprises headquartered in one state that invest and operate extensively in many other states.
Human Development Index (HDI): An index that uses life expectancy literacy, the average number of years of schooling, and income to assess a country’s performance in providing for its people’s welfare and security.
Commercial Liberalism: An economic theory advocating free markets and the removal of barriers to the flow of trade and capital as a locomotive for prosperity.
General Agreement on Tariffs and Trade (GATT): An UN-affiliated IGO designed to promote international trade and tariff reductions, replaced by the World Trade Organization.
Long Cycle Theory: A theory that focuses on the rise and fall of the leading global power as the central political process of the modern world system.
Third World: A Cold War term to describe the less-developed countries of Africa, Asia, The Caribbean, and Latin America.
Group of 77 (G-77): The coalition of Third World countries that sponsored the 1963 Joint Declaration of Developing Countries calling for reform to allow greater equality in North-South trade.
Boycotts: Concerted efforts, often organized internationally, to prevent transactions such as trade with a targeted country to express disapproval or to coerce acceptance of certain conditions.
Dependency Theory: A theory hypothesizing that less developed countries are exploited because global capitalism makes them dependent on the rich countries that create exploitative rules for trade and production.
Political Economy: A field of study that focuses on the intersection of politics and economics in international relations.
Neocolonialism (Neo-Imperialism): The economic rather than military domination of foreign countries.
Global North: A term used to refer to the world`s wealthy, industrialized countries located primarily in the Northern hemisphere.
Tariffs: Tax assessed on goods as they are imported into a country.