Intellectual Vector of World Economic Development
The world economy is largely a euphemism that masks the basic problem of the global world which consists of markedly uneven markets, social and technological disparities in national economies’ development levels, capital-output ratios and competitiveness. In its direct sense, the concept of the world economy is justified only to the extent that global trade and global logistics exist, which in turn are limited by a number of economically subjective factors. Unlike objective factors (needs, demand, resources, location and quality of the workforce, equipment etc.), subjective factors have to do with limitations caused by closed political systems and some countries’ certain national economic policies (sanctions, isolationism, and development conservation).
The notion of the world economy is not unfoundedly often referred to as an artificial construct rather than as the undeniable signifier of an undeniably existing signified. It is used for convenience to describe some but by far not all phenomena and trends that take place in production, distribution and consumption on a world scale. Meanwhile, the world economy is hardly a single system consisting of similar elements that smoothly interact with each other. There are as many differences as there are similarities between different national economies as far as the main modes of production, the quality of forces of production and production infrastructure, market regulation, and economic legislation including the scope of entrepreneurial rights as well as the balance of interests of, and cooperation between, civil society and the State.
However, the concept of the world economy is not devoid of objective and positive meaning. It concerns the global division of labour and global cooperation. They include both transportation and trade, but also chains of production. These can be very long and consist of numerous links: for some products, raw materials are extracted in Venezuela, technology is developed in Finland, assembly is done in Indonesia and packaging in China. Nonetheless, even in this form, the world economy is not a perfect and balanced system. The fact that no universal, legally bound system of requirements ranging from quality standards to environmental standards exists is evidence of that.
What makes the current global economy different from previous economic systems (openness, interpenetration and specialisaton) makes it both stronger and more vulnerable at the same time. Global cooperation, logistics, trade, flow of information, and transfer of technology and labour are built on close interdependence of geographically and technologically close operators as well as on resource owners and innovators, transnational companies, local elites, governments and banks. It is not illogical then to talk about the world economy as the bed of global problems equally pertinent to different national economies whether they belong to the First, Second of Third World. Negative events and processes are testament of it including the 2008 world economic crisis, which still affects the world economy today. In this connection, we should once again stress the danger of a one-dimensional economic growth strategy. It is long known that it has two sides: developed economies move humanity forward on the road of progress just as fast as underdeveloped and poor economies of the Third World drag it back to destabilization and chaos. Both make a contribution, albeit a quite different one, to the escalation of global problems. It is an open question whose contribution will be more lasting in terms of long-term negative effect. A new mutated virus could originate in Africa that would pose a threat of a new epidemic, which would require considerable resources to combat. Asia could produce atmospheric and water emissions that would harm the environment and, consequently, the economy of neighbouring regions. An American mortgage crisis has triggered a global financial crisis, while international conflicts in Central Europe have jeopardized the entire Old World’s energy security as well as trading and industrial relations.
Both from the theoretical and practical points of view, one concrete idea is especially important regarding the problematic and contradictory character of the modern world economy: it is the asynchrony of development and the difference in potential of national economies. Why are some economies powerful, flexible, diversified and competitive while others are underdeveloped, cumbersome, dependent, and unattractive to investors? Why are some economies able to reach high levels of productivity and capitalization with less labour and natural resources while others cannot resolve acute social and economic problems having unlimited natural resources and considerable population? Why are some countries rich and growing richer while others are poor and getting poorer? Such phenomena as the economic comeback of post-War Germany and Japan, the economic miracles of the Asian dragons (Hong Kong, South Korea, Taiwan and Singapore), Scandinavian Socialism and economic prosperity in the United States and developed European countries give a very good picture of the conditions and factors of effective economic development. Their experience shows that the main differences between national economic systems are not based on resources, number of working population or the size of territory but on the legal conditions of production, commerce and economic development, the share of intellectual capital and high technologies in the material base of society. Economic development vectors and economic regulation priorities determine how profitable the economy is and how successful it is in fulfilling its major institutional functions in society. The following are the signs of an effective economic policy:
Balance of interests of the state and the free market and their cooperation;
Rational resource management and the use of market mechanisms to meet environmental needs;
Direct and indirect ways of building a socially oriented economy;
High investment levels in science and research and development;
Public-private partnership mechanisms in breakthrough technologies.
History shows that since 20th century research-driven sectors have been the prime movers economic development. Effective economies are based on intellectual resources, including assets and capitals, and innovations in the broadest sense, as well as those economic institutions that ensure these resources are used in the most efficient way. It is clear that the intellectual constituent is not going to be in the leading role in every economic system. In some resource-based economies, e.g. in a administrative-distribution economic model, government and major national owners fill their budgets with natural rent revenue (oil, gas, mining and forest) rather than through a developed domestic market including an increasing share of national producers and the population’s growing purchasing power. On the other hand, even the so-called traditional economies cannot fully ignore scientific-technical progress and an increasing role of research-driven component of social sustenance and reproduction, if anything, serving as the market for relevant products.