Factors affecting the degree of openness - International Economics

Factors affecting the degree of openness

A significant role in the formation of an open economy is played by the state.

It takes on the functions of stimulating export production, encouraging the export of goods and services, promoting cooperation with foreign firms and developing foreign economic relations. The state creates a solid legal framework that facilitates the flow of investment, technology, labor, information from abroad.

The transition of countries to an increasingly open economy is accelerated by the actions of transnational corporations. Striving to master new markets, creating numerous branches and subsidiaries in different countries, they bypass the protectionist barriers of foreign states, internationalizing international economic exchange.

Notable progress in the second half of the 20th century. transport, information means of communication also played a huge stimulating role in the development of openness of national economies, increasing the mobility of the population. Gradually, step by step, trade and economic, monetary and financial obstacles were destroyed, by virtue of which the countries for a long time were fenced off from each other. Liberalization of international exchange facilitated the adaptation of national economies to external conditions and impacts, contributed to their more active involvement in the international division of labor.

In international and domestic economics, the opinion has been formed that the higher level of technical and economic and cultural development corresponds to a higher degree of mismatch between the domestic supply of goods and services with domestic demand, as a result of which the need for foreign economic activity increases, and therefore, the openness the economy should be greater.

At the same time, the wider the internal economic space, the greater part of the goods and services produced (at the same level of development of the productive forces) finds its consumers and is sold on the domestic market. The larger the national economy, the greater its production capacity, allowing it to meet the ever-growing diversity of production and personal needs, without resorting to import. At a relatively equal level of development of productive forces, the openness of the economy is greater, the lower the country's economic potential in absolute terms.

But between the degree of openness of the country and its economic potential, there is no strict inversely proportional dependence. The openness of the national economy, along with two decisive factors - the level of development of the productive forces and the scale of the country's economic potential - is determined by several other factors. For example, the relative security of the country's natural resources.

Consider, for example, two countries that have almost the same territory: Japan (372.3 thousand km2) and Norway (324.2 thousand km2). The first subsoil is very meager with minerals: imports cover 100% of its needs for bauxite, nickel and uranium ores, phosphorites, 99% of the demand for oil, natural gas, iron ore and coal, 97% for copper, 50% for wood etc. Norway in this respect is much richer: it has deposits of iron ore, titanium, pyrite, oil (on the shelf), some non-ferrous metals. Such a high import dependence forced Japan to look for ways to expand its exports in order to balance the trade balance.

Among other factors, the sectoral structure of the national economy deserves special attention. The more the share of basic industries - metallurgy, energy, etc., the lower the level of its international specialization, the less openness of the country. On the contrary, the manufacturing industry assumes a deeper sub-branch, operational and other types of specialization, which breaks down a single technological process into a number of independent productions. Thanks to this, there is a progressive growth in the technological interconnection of countries.

Another factor is related to the nature of the domestic market. The capacious domestic market contributes to the expansion of economic ties with other countries, as it ensures the sale of products even of large-scale production within the country. A rich domestic market with a differentiated demand is an indispensable condition for the full-fledged functioning of the national economy in the world market.

Some economists emphasize the following regularity: the greater the weight of the basic industries (energy, metallurgy, etc.) in the structure of the economy, the less the country's participation in the international division of labor (MRI), the less open the economy.

Thus, the degree of openness of the national economy is the higher, the more developed its productive forces, the more in its branch structure of industries with an in-depth technological division of labor, the less is its overall economic potential and the availability of its own natural resources.

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A higher measure of openness of national economies, as a rule, also means a higher degree of their involvement in world economic relations, in the process of forming a global economic system.

The role of national states is ambiguous and less obvious in this respect. In the broadest sense of the word, the measure of openness of the national economy that has developed in each country and its involvement in the world economy is not only the result of the market behavior of national producers, but also the traditions of the state foreign trade policy that somehow reflects their interests.

At all times there existed and there are a number of reasons that induce national states to take measures that are inconsistent with the logic of maximum openness. These reasons may include obligations to protect the interests of some of their own producers, losing from the development of international trade, and adherence to national traditions (for example, in the field of agriculture in Japan), and ideological guidelines for limiting external influences that are unavoidable in broad exchanges and the fear of competition, including unfair, and some postulates of national development strategies oriented, for example, on import substitution, and religious dogmas, and many other rank.

Thus, we can conclude that protectionism is quite diverse. His supporters are no less inventive in their search for arguments for restrictions in the national foreign economic policy than advocates of free trade. And yet, the general trend is an increasing participation of states in world economic relations and the inclusion of national economies in the global system of the world economy.

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