Globalization and its influence on national economy and unemployment

Ramaz Abesadze

Journal number 4 ∘ Ramaz Abesadze ∘
Globalization and its influence on national economy and unemployment

Summary. The article deals with modern issues of globalization and its impact on the national economy.

Globalization has objective as well as subjective features. That’s why the globalization includes unprecedented possibilities for development of human society as so as it threats of its existence. The positive results have been achieved only when any exposures of abuse are excluded and all decisions are received as a result of common consensus. The other trends of globalization might end with disaster.

Globalization influences all sectors of national economy, including unemployment. In the article into detailed form are discussed the positive and negative sides of influence that globalization has on the national state and economy.

The influence of globalization that affects to the unemployment depends on the circumstances that have been existing in the world and in national economies. The article analyzes the influence of globalization on unemployment in developed, developing and post-communist countries as so as its influence on the international labor market at the current stage.

Key words: Globalization, national economy, unemployment, international labor market.

Introduction

The term globalization isn’t just linked with economy, but with nearly all the realms: science, culture, health protection, sports, social realms, politics and so on.

Modern advanced technologies give us the opportunity to make our planet a united global organism. The international economic integration process strengthens. The transnationalizationof national economy occurs rapidly. The creation of international product dominates within the international economic relations and not the trade between states. The formation of global financial markets and their unseen diversification is implemented. The unification process of technology occurs in technological, economic, educational and in a plethora of other realms. The diversifying of communication web also happens. Powerful international economic organizations are formed etc.

****

The term Globalization comes from the word “globe” (the earth) and is the formation process of the world as an economic, technological, political and cultural entity in the conditions of maintaining the statehood and national identity of separate countries. Globalization has a planetary attitude.

Globalization is a real subjective process, the reasons for its creation are: 1.The urge of the society to acquire the highest well-being level possible, and every state is interested in this too; 2. The motivation of business to get as much profit as possible; 3.The problems within the world that single states can’t solve alone [Владимирова И. Г. 2001]. It’s worth noting that the funds used to solve global issues are equal to 2.5% of world’s GDP [Грошева Т.А. 2007].

The quickening of globalization process was promoted by: 1. The development of international economic relations, which by itself was conditioned by the formation of market relationships, large geographic discoveries and the development of machinery creation, transport and communications. 2. The formation of goods, services, capital and workforce in world market. 3. The entry of developed states in postindustrial society and the forming of innovative economy that was followed with the utilization of modern, highly advanced technologies that gave a nudge to the formation of the planet as a united global organism. 4. The acceleration of regionalization process and with its base the economic international integration process strengthens. 5. The formation of world financial markets and their unseen diversification. 6. The strengthening of technology, ecology, statistical accounting, education, culture and the strengthening of other unification tendency realms.

Globalization has a multitude of influences on national government, of course, developed countries have an upper hand in this case, since they have great quality and huge amount of production factors, they create high quality of products, and a lot of them. This position predisposes that developed states worldwide: 1.Utilize much cheaper workforce and resources. 2. Attract high rank workforce. 3. Often times they export low quality goods to other states. 4. They sell and export out of date production to other countries. 5. They have good conditions for acceleration of science-technological development, on the bases of export of resources.

On the other hand, in times of globalization the remaining states: 1. Use the great experience of other states to achieve progress. 2. Get large amounts of financing. 3. Solve a plethora of problems.

From negative and positive influencing tendencies of globalization we can differ: 1.More and more national governments get enticed into the globalization process. 2. The transnationalization and internationalization of national economy occurs in dazzling tempo and transnational corporations represent its main power. Their activity transforms global enterprises into a united market of goods, services, capital, workforce and knowledge. 3. Powerful international economic organizations are created in whole world that instill macroeconomic policy, united criteria and gradually form institutional globalization. 4. Globalization intruded domestic realms and it gradually became one of the defining factors whose power overshadows the capabilities of the government; 5. International competition gains strength in subjects and businesses that have no defined origin, they compete with national companies and eliminate them from their own market; 6. The appropriate common habits of global civilization are developed like: taste, viewpoints, mentality and so on. 7. It greatly contributed the formation of political system that is based on economic mechanism and democratic system in nearly every country. It forces single state governments to ban voluntarism and corruption and to form socially oriented economics. 8. In the process of globalization new technologies are spread at the same pace as the capital. 9. It conditions the rational distribution of resources worldwide. The functioning of largest companies in world arena makes it possible to achieve maximum number of scale economy. 10. In conditions of globalization competition strengthens and with united powers largest science-technological projects are implemented that make technological perfection and innovation spreading process much faster, that’s first of all good for the customer. 11. The solving of global economic, social and ecological problems become much easier with the power of partnership of the states and the coordination of actions. 12. Nowadays, in the conditions of globalization the difference between developing and developed countries in case of well-being increases [Алле М. 2003]. Equality demands that in these conditions the difference decreases as fast as possible, otherwise it’ll be one of the greatest resistance in the path of globalization. 13.On the global scale, when creating negative event there is a possibility of spreading it throughout every country. 14. Contradictions between globalization and state’s national souvernity might occur. 15. Globalization weakened state’s regulation realm and also its substituting international body hasn’t been created. 16. In the conditions of globalization the drug business spreading and illegal trade of weapons increase. 17. The migration of people to developed countries instead of developing ones increase. 18. Whole planetary potential of science-technological advancement is located only in a few countries. 19. The risk of global conflicts increase when the different processes are created incorrectly that can end with catastrophic consequences and so on. 20. National economies not only become inspectors of globalization, but also its organizers and life conductors. 21. The rational sector is getting narrow. Privatization also touched realms that were at a strict regulation (energetics, transport, communications and so on). 22. Social politics become the priority of national regulation because of the economic functions lowering that liberated financial resources that are used in social realm. 23. The influence of international economic institutions increases in power, and a plethora of national economy functions with their regulations. These organizations are The General Agreement of Tariff and Trade (GATT), World Trade Organization (WTO), International Monetary Fund (IMF), World Bank (WB). 24. The new stage of work division occurs, where other countries play great role in creating state’s wealth and their participation rate gradually increases. 25. The influence of exogenic factors in national economy increase. 26. The globalization level of world financing-crediterysystem, has a great influence on the functioning of national economics and so on.

From negative influences of globalization we can separately distinguish its influence on the exchange rate. The existence of fluctuating exchange rate has a great influence on export capacity. If we want for exchange rate to perform the role of the price, it should be determined in the international market of goods and services on the basis of demand-delivery. In reality, capital market also influences it that can put some states into favored condition. Speculations in exchange market have serious negative results. That’s why it’s important to regulate exchange rate internationally that is only possible with the existence of appropriate bodies. We can’t neglect protectionist policy and open doors to every wind that is created by globalization processes. Preferences measures are needed for a state, which grant the country some kind of economic advantage.

The fact that in conditions of globalization goods and services and also production factors are exported from developed countries towards developing states proves that the majority of transnational corporation’s parent companies are based in developed countries. With that being said, transnational corporations give preference to direct investments because they receive free access to natural and laboring resources of other states and they merge them with their capital, knowledge, technologic and entrepreneurial abilities.

Globalization influences every realm of economy and therefore the unemployment as well. The characteristics of globalization towards unemployment depends on the condition of world and national economies. If the global economy functions well, then favorable conditions are created for national economies and vice versa. But, the conditions in single economy may not correlate with ones of the world economy. This first of all depends on the degree of engagement of the single state in globalization process, also the resource provision, technological advancement level and economical state efficiency of it. The influence of globalization on developed, developing and post-communist states greatly differ. Low unemployment rate is a characteristic of developed states, although globalization still has a great influence towards it. We can divide two processes of globalization that have influence on the growth of unemployment in developed countries: firstly, the large-scale destruction of advanced technology that requires less labor on every new production, which gradually kicks out employees with low qualification that assists the unemployment rate growth. Secondly, in conditions of globalization developed states aspire to take their production abroad because of the cheap workforce and natural resources. In the end these processes cause the decrease of labor within the state, especially in recycling enterprises. That’s why work places are reduced in realms that are oriented in outer world and increases in ones that are oriented in domestic utilization. There is a possibility for these two realms to have a misbalance in the direction of work and can cause large rates of unemployment. At the same time, this process is followed by the hardship of finding jobs for low-qualification workers, all their jobs are taken abroad. There are two factors that are capable of keeping the unemployment rate within the developed state low. The first one is that with innovations new places for employment should be created within the realm of service. There is a great difference in the group of developing states. They get large sums of money from oil trade. The oil exporting states were able to modernize the economy and grow life and education level. With globalization oil exporting states were able to achieve high levels of economic growth, that’s why they get closer to wealthy countries [Грошева Т.А. 2007]. Transnational corporations create large amounts of workplaces there, because of cheap workforce and wealth within natural resources. Therefore, the unemployment rate here is lower. Less developed states are characterized with the lowest life level in the world. The leading realms there are the archaic forms of agriculture. Industry is the least developed there. Traditional products are mostly exported from less developed states. These countries are weakly involved in the process of globalization and that’s why it doesn’t have a great influence on them. These states have a large percentage of inequality in the realm of unemployment and salaries. In the majority of developing states the main direction of economic development is the advancement of agriculture and the creation of industrial community. For this the activation of inner as well as outer reserves is essential. With that being said, foreign investments represent the most important component of their development strategy. In post-communist states, the first stage of moving towards market economy, the forced unemployment level had been very high.Then it was gradually lowered with more or less success and in that process globalization played a great role in international materialistic and methodological support, as well as in innovative quotation [Abesadze R… 2012].

As we can see, globalization includes the development of society as well as the dangers of its existence. Therefore, the correct utilization of globalization process becomes vital. Developed states have the greatest role in this process. The existence of globalization depends on them.

It’s noted that globalization is a real process, and no single state can decline it. This is a competition as well as a mutual process between world market subjects and the government. That’s why we shouldn’t neglect this process but vice versa, every state should have an aspiration to acquire this process within itself, but should keep other country’s interests in mind. Every country should fight for winning the competition “war” but of course, not with power, but- knowledge, scientific development, creating highest technology, cultural perfection and etc. With globalization every country should have means to utilize other state’s goods. But with that being said national originality should be kept.

Globalization of course affects national government, its economy, economic state’s regulatory forms, methods and instruments. According to some opinions, in conditions of globalization, government stops existing because its functions are lost. But this point of view is false. It’s true, that in conditions of globalization the country loses some functions, but it acquires greater, international function that should be directed towards neutralizing the negative influence of globalization, efficient use of support, the growth of competition, keeping best national traditions and their perfection.

Literature

Abesadze R. Economic Development and Unemployment. 2017. “Ekonomisti”, №2.
Abesadze R., Burduli V. 2009. Innovative activities and their coordination under advancing globalization. Central Asia & Central Caucasus, velume 4, issue 4
Abesadze R., Bibilashvili N. 2012. The Impact of Globalization on Unemployment. Collection of scientific works of the Institute of Economics named after Paata Gugushvili Volume 5, Tb., “Publishing House of the Institute of Economics of the Tomsk State University Paata Gugushvili”, (in Georgian)
Hirst P., Thompson G. 1995. Globalization and the Future of the Nation State // Economy and Society. Vol. 24. №3.
Mekvabishvili E., Atanelishvili T. 2017. Globalization: Emigration and transactions
Papava V. 2016. Global problems and rational choice of Georgia. Globalization and Business, No. 2,
Silagadze A., Atanelishvili T., 2010. Silagadze N. Economic Doctrines. Georgian National Academy of Sciences,"Innovation"
Spence M. 2011. Globalization and Unemployment //Foreign affairs. N.Y.,Vol. 90, N 4. //http://www.foreignaffairs.com/articles/67874/michaelspence/globalization-and-unemployment
Алле М. 2003. Глобализация: разрушение условийзанятости и экономического роста. М., ТЕИС
Асатиани Р. 2015. Усиление глобальных тенденций конкуренции и новые перспективы конкурентоспособности экономики Грузии. «Social economy», № 6,
Владимирова И. Г. 2001. Глобализация мировой экономики: проблемы и последствия. Менеджмент в России и за рубежом. №3.
Грошева Т.А. 2007. Мировая экономика: учебное пособие . Томск: ТПУ
Фукуяма Ф. 1990. Конец истории? Вопросы философии. №3.

EKONOMISTI The international scientific and analytical, reviewed, printing and electronic journal of Paata Gugushvili Institute of Economics of Ivane Javakhishvili Tbilisi State University

DOI: 10.36172/EKONOMISTI E ISSN 2346-8432 Print ISSN 1987-6890	Journal number 4 ∘ Ramaz Abesadze ∘ Globalization and its influence on national economy and unemployment Summary. The article deals with modern issues of globalization and its impact on the national economy. Globalization has objective as well as subjective features. That’s why the globalization includes unprecedented possibilities for development of human society as so as it threats of its existence. The positive results have been achieved only when any exposures of abuse are excluded and all decisions are received as a result of common consensus. The other trends of globalization might end with disaster. Globalization influences all sectors of national economy, including unemployment. In the article into detailed form are discussed the positive and negative sides of influence that globalization has on the national state and economy. The influence of globalization that affects to the unemployment depends on the circumstances that have been existing in the world and in national economies. The article analyzes the influence of globalization on unemployment in developed, developing and post-communist countries as so as its influence on the international labor market at the current stage. Key words: Globalization, national economy, unemployment, international labor market. Introduction The term globalization isn’t just linked with economy, but with nearly all the realms: science, culture, health protection, sports, social realms, politics and so on. Modern advanced technologies give us the opportunity to make our planet a united global organism. The international economic integration process strengthens. The transnationalizationof national economy occurs rapidly. The creation of international product dominates within the international economic relations and not the trade between states. The formation of global financial markets and their unseen diversification is implemented. The unification process of technology occurs in technological, economic, educational and in a plethora of other realms. The diversifying of communication web also happens. Powerful international economic organizations are formed etc. ** The term Globalization comes from the word “globe” (the earth) and is the formation process of the world as an economic, technological, political and cultural entity in the conditions of maintaining the statehood and national identity of separate countries. Globalization has a planetary attitude. Globalization is a real subjective process, the reasons for its creation are: 1.The urge of the society to acquire the highest well-being level possible, and every state is interested in this too; 2. The motivation of business to get as much profit as possible; 3.The problems within the world that single states can’t solve alone [Владимирова И. Г. 2001]. It’s worth noting that the funds used to solve global issues are equal to 2.5% of world’s GDP [Грошева Т.А. 2007]. The quickening of globalization process was promoted by: 1. The development of international economic relations, which by itself was conditioned by the formation of market relationships, large geographic discoveries and the development of machinery creation, transport and communications. 2. The formation of goods, services, capital and workforce in world market. 3. The entry of developed states in postindustrial society and the forming of innovative economy that was followed with the utilization of modern, highly advanced technologies that gave a nudge to the formation of the planet as a united global organism. 4. The acceleration of regionalization process and with its base the economic international integration process strengthens. 5. The formation of world financial markets and their unseen diversification. 6. The strengthening of technology, ecology, statistical accounting, education, culture and the strengthening of other unification tendency realms. Globalization has a multitude of influences on national government, of course, developed countries have an upper hand in this case, since they have great quality and huge amount of production factors, they create high quality of products, and a lot of them. This position predisposes that developed states worldwide: 1.Utilize much cheaper workforce and resources. 2. Attract high rank workforce. 3. Often times they export low quality goods to other states. 4. They sell and export out of date production to other countries. 5. They have good conditions for acceleration of science-technological development, on the bases of export of resources. On the other hand, in times of globalization the remaining states: 1. Use the great experience of other states to achieve progress. 2. Get large amounts of financing. 3. Solve a plethora of problems. From negative and positive influencing tendencies of globalization we can differ: 1.More and more national governments get enticed into the globalization process. 2. The transnationalization and internationalization of national economy occurs in dazzling tempo and transnational corporations represent its main power. Their activity transforms global enterprises into a united market of goods, services, capital, workforce and knowledge. 3. Powerful international economic organizations are created in whole world that instill macroeconomic policy, united criteria and gradually form institutional globalization. 4. Globalization intruded domestic realms and it gradually became one of the defining factors whose power overshadows the capabilities of the government; 5. International competition gains strength in subjects and businesses that have no defined origin, they compete with national companies and eliminate them from their own market; 6. The appropriate common habits of global civilization are developed like: taste, viewpoints, mentality and so on. 7. It greatly contributed the formation of political system that is based on economic mechanism and democratic system in nearly every country. It forces single state governments to ban voluntarism and corruption and to form socially oriented economics. 8. In the process of globalization new technologies are spread at the same pace as the capital. 9. It conditions the rational distribution of resources worldwide. The functioning of largest companies in world arena makes it possible to achieve maximum number of scale economy. 10. In conditions of globalization competition strengthens and with united powers largest science-technological projects are implemented that make technological perfection and innovation spreading process much faster, that’s first of all good for the customer. 11. The solving of global economic, social and ecological problems become much easier with the power of partnership of the states and the coordination of actions. 12. Nowadays, in the conditions of globalization the difference between developing and developed countries in case of well-being increases [Алле М. 2003]. Equality demands that in these conditions the difference decreases as fast as possible, otherwise it’ll be one of the greatest resistance in the path of globalization. 13.On the global scale, when creating negative event there is a possibility of spreading it throughout every country. 14. Contradictions between globalization and state’s national souvernity might occur. 15. Globalization weakened state’s regulation realm and also its substituting international body hasn’t been created. 16. In the conditions of globalization the drug business spreading and illegal trade of weapons increase. 17. The migration of people to developed countries instead of developing ones increase. 18. Whole planetary potential of science-technological advancement is located only in a few countries. 19. The risk of global conflicts increase when the different processes are created incorrectly that can end with catastrophic consequences and so on. 20. National economies not only become inspectors of globalization, but also its organizers and life conductors. 21. The rational sector is getting narrow. Privatization also touched realms that were at a strict regulation (energetics, transport, communications and so on). 22. Social politics become the priority of national regulation because of the economic functions lowering that liberated financial resources that are used in social realm. 23. The influence of international economic institutions increases in power, and a plethora of national economy functions with their regulations. These organizations are The General Agreement of Tariff and Trade (GATT), World Trade Organization (WTO), International Monetary Fund (IMF), World Bank (WB). 24. The new stage of work division occurs, where other countries play great role in creating state’s wealth and their participation rate gradually increases. 25. The influence of exogenic factors in national economy increase. 26. The globalization level of world financing-crediterysystem, has a great influence on the functioning of national economics and so on. From negative influences of globalization we can separately distinguish its influence on the exchange rate. The existence of fluctuating exchange rate has a great influence on export capacity. If we want for exchange rate to perform the role of the price, it should be determined in the international market of goods and services on the basis of demand-delivery. In reality, capital market also influences it that can put some states into favored condition. Speculations in exchange market have serious negative results. That’s why it’s important to regulate exchange rate internationally that is only possible with the existence of appropriate bodies. We can’t neglect protectionist policy and open doors to every wind that is created by globalization processes. Preferences measures are needed for a state, which grant the country some kind of economic advantage. The fact that in conditions of globalization goods and services and also production factors are exported from developed countries towards developing states proves that the majority of transnational corporation’s parent companies are based in developed countries. With that being said, transnational corporations give preference to direct investments because they receive free access to natural and laboring resources of other states and they merge them with their capital, knowledge, technologic and entrepreneurial abilities. Globalization influences every realm of economy and therefore the unemployment as well. The characteristics of globalization towards unemployment depends on the condition of world and national economies. If the global economy functions well, then favorable conditions are created for national economies and vice versa. But, the conditions in single economy may not correlate with ones of the world economy. This first of all depends on the degree of engagement of the single state in globalization process, also the resource provision, technological advancement level and economical state efficiency of it. The influence of globalization on developed, developing and post-communist states greatly differ. Low unemployment rate is a characteristic of developed states, although globalization still has a great influence towards it. We can divide two processes of globalization that have influence on the growth of unemployment in developed countries: firstly, the large-scale destruction of advanced technology that requires less labor on every new production, which gradually kicks out employees with low qualification that assists the unemployment rate growth. Secondly, in conditions of globalization developed states aspire to take their production abroad because of the cheap workforce and natural resources. In the end these processes cause the decrease of labor within the state, especially in recycling enterprises. That’s why work places are reduced in realms that are oriented in outer world and increases in ones that are oriented in domestic utilization. There is a possibility for these two realms to have a misbalance in the direction of work and can cause large rates of unemployment. At the same time, this process is followed by the hardship of finding jobs for low-qualification workers, all their jobs are taken abroad. There are two factors that are capable of keeping the unemployment rate within the developed state low. The first one is that with innovations new places for employment should be created within the realm of service. There is a great difference in the group of developing states. They get large sums of money from oil trade. The oil exporting states were able to modernize the economy and grow life and education level. With globalization oil exporting states were able to achieve high levels of economic growth, that’s why they get closer to wealthy countries [Грошева Т.А. 2007]. Transnational corporations create large amounts of workplaces there, because of cheap workforce and wealth within natural resources. Therefore, the unemployment rate here is lower. Less developed states are characterized with the lowest life level in the world. The leading realms there are the archaic forms of agriculture. Industry is the least developed there. Traditional products are mostly exported from less developed states. These countries are weakly involved in the process of globalization and that’s why it doesn’t have a great influence on them. These states have a large percentage of inequality in the realm of unemployment and salaries. In the majority of developing states the main direction of economic development is the advancement of agriculture and the creation of industrial community. For this the activation of inner as well as outer reserves is essential. With that being said, foreign investments represent the most important component of their development strategy. In post-communist states, the first stage of moving towards market economy, the forced unemployment level had been very high.Then it was gradually lowered with more or less success and in that process globalization played a great role in international materialistic and methodological support, as well as in innovative quotation [Abesadze R… 2012]. As we can see, globalization includes the development of society as well as the dangers of its existence. Therefore, the correct utilization of globalization process becomes vital. Developed states have the greatest role in this process. The existence of globalization depends on them. It’s noted that globalization is a real process, and no single state can decline it. This is a competition as well as a mutual process between world market subjects and the government. That’s why we shouldn’t neglect this process but vice versa, every state should have an aspiration to acquire this process within itself, but should keep other country’s interests in mind. Every country should fight for winning the competition “war” but of course, not with power, but- knowledge, scientific development, creating highest technology, cultural perfection and etc. With globalization every country should have means to utilize other state’s goods. But with that being said national originality should be kept. Globalization of course affects national government, its economy, economic state’s regulatory forms, methods and instruments. According to some opinions, in conditions of globalization, government stops existing because its functions are lost. But this point of view is false. It’s true, that in conditions of globalization the country loses some functions, but it acquires greater, international function that should be directed towards neutralizing the negative influence of globalization, efficient use of support, the growth of competition, keeping best national traditions and their perfection. Literature** Abesadze R. Economic Development and Unemployment. 2017. “Ekonomisti”, №2. Abesadze R., Burduli V. 2009. Innovative activities and their coordination under advancing globalization. Central Asia & Central Caucasus, velume 4, issue 4 Abesadze R., Bibilashvili N. 2012. The Impact of Globalization on Unemployment. Collection of scientific works of the Institute of Economics named after Paata Gugushvili Volume 5, Tb., “Publishing House of the Institute of Economics of the Tomsk State University Paata Gugushvili”, (in Georgian) Hirst P., Thompson G. 1995. Globalization and the Future of the Nation State // Economy and Society. Vol. 24. №3. Mekvabishvili E., Atanelishvili T. 2017. Globalization: Emigration and transactions Papava V. 2016. Global problems and rational choice of Georgia. Globalization and Business, No. 2, Silagadze A., Atanelishvili T., 2010. Silagadze N. Economic Doctrines. Georgian National Academy of Sciences,"Innovation" Spence M. 2011. Globalization and Unemployment //Foreign affairs. N.Y.,Vol. 90, N 4. //http://www.foreignaffairs.com/articles/67874/michaelspence/globalization-and-unemployment Алле М. 2003. Глобализация: разрушение условийзанятости и экономического роста. М., ТЕИС Асатиани Р. 2015. Усиление глобальных тенденций конкуренции и новые перспективы конкурентоспособности экономики Грузии. «Social economy», № 6, Владимирова И. Г. 2001. Глобализация мировой экономики: проблемы и последствия. Менеджмент в России и за рубежом. №3. Грошева Т.А. 2007. Мировая экономика: учебное пособие . Томск: ТПУ Фукуяма Ф. 1990. Конец истории? Вопросы философии. №3.