Foreign trade and investments

The world economy is increasingly becoming a single economic unit. Individual national economies are developing closer linkages through trade, capital investment, and financial institutions. Multinational corporations spread their activities across national boundaries, and the international banking system carries on banking activities throughout the world.

During the last two decades, while world output has been growing about 4% per year, world trade has been growing about 8% and production by foreign subsidiaries has been growing by some 10%. Export and import shares of output have increased considerably in practically all-industrial sectors. A growing percentage of world trade is becoming intra-industry trade (reflecting economies of scale and increased demand for differentiated products) and even intra-firm trade by transnational firms (reflecting decomposition of production activities around the world).

The inter-enterprise international division of labour influences relations between developed and developing countries primarily because the giant international companies transfer certain labour intensive production phases or whole production cycles to the developing countries where a cheap and sufficiently qualified (literate, easily teachable) labour force is already available.

The closer integration of developed countries steps up the further progress of the division of labour and facilitates its better organization. The major part of the worldwide demand for new machinery and equipment that accelerate industrial-technological development is met by industrially developed countries. International exports of armaments continue to be an important factor for increasing their exports as well.

The weight of developing countries in world trade is gradually declining. In the seventies, the newly independent states played an important role in the world economy and international politics. Their share in world production increased, and they were able to launch a campaign for a new international order. Almost all over the developing countries world foreign mining concessions were nationalized, raw material prices rose sharply, and the industrialized states become more heavily dependent for raw material supplies on the former colonies. However, using their economic might and technological superiority, they have created and perfected new forms of enslavement: technological, food and financial. They have managed to integrate the developing countries’ economies yet more fully into the world capitalism economy and thus made them more vulnerable to market fluctuations. After the rise in the price of raw materials the West took measures to economize on raw materials, develop resource-saving technologies, and synthetic structural materials, recycle waste matter and extract its own minerals. This led to a reduction in the utilization of raw materials per unit of social product and diminished the West’s dependence on supplies of raw materials from Asia, Africa and Latin America.

THE SOCIOLOGY OF THE «INSIDE»