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Раздел1
External Economic Relations: Theoretical Aspects
Студент гр. 350 Н. Н. Касьянова
Консультант каф. «Иностранные языки и межкультурная коммуникация»
ст. преподаватель Н. А. Чэ
1 External Economic Relations: Theoretical Aspects
1.1 Definition and Functions of External Economic Relations
The development of civilization causes the continuous involvement of individual states in international economic relations leading to the creation of a single world economy. All countries of the world are developing according to the general economic laws that determine the priority of the economic nature of international relations. The increasingly complex structure of needs, rarity and resource remoteness requires more efficient means of exchange not only among regions within individual states, but also among the states.
Economic development and population growth in different regions of the world occur unevenly that also cause the need to expand international exchanges which promote the development of new markets (of goods, services, labor, information, financial, etc.), the import of raw material, technological and information exchange, scientific, technical, industrial, cultural and other external economic relations [5].
The creation of the market economy in Russia requires openness and integration into the world economy. Regardless of the ownership form, any companies, firms, cooperatives and their unions participating in the formation of market relations should have access to the external market. Only in this case, it will be able to provide their actual entry into the international economic space, developing and expanding external economicrelations.
External economic relations (EER) are a comprehensive system of various forms of international cooperation between states and their subjects in all sectors of the economy. The subjects of the state include the bearers of rights and duties imposed on them by the state. These are the regions that are on the self-government, economic agents (economic partnerships and companies, unitary enterprises, etc.), and individual entrepreneurs [29].
Thus, the external economic relations represent a system of economic relations arising in the movement of resources of all kinds between states and economic entities of different states. These bilateral relations encompass all spheres of the economic life of the state and, particularly, its production, trade, investment, and financial activities.
To understand the trends of international cooperation development, it is necessary to understand and distinguish the concepts ‘external economic relations’ and ‘external economic activity’. The external economic activity can be interpreted as entrepreneurship in the field of international exchange of goods, jobs, services, information, results of intellectual activity [5].
The external economic relations are international economic, trade, political relations including the exchange of goods, various forms of economic assistance, technical and scientific cooperation, specialization and cooperation of production, provision of services and joint ventures, and others [28].
The external economic relations are referred to the macroeconomic level (inter-state) cooperation and the external economic activity is connected with the microeconomic level, i.e. the level of interaction between organizations, enterprises and firms [31].
The purpose of the external economic relations lies in the provision of supplies for the state needs as well as for the interstate economic ones including monetary liabilities and intergovernmental trade agreements. Planning of the volumes of the external economic relations and the determination of the nomenclature of goods and services list are made «from the top», i.e. at the government level by strategically important positions through the state order system with allocation of limits on financial support and monetary resources to the entities that are defined as customers.
Unlike the EER, the external economic activity is related to the micro-level, i.e. to the level of firms and enterprises. But the difference is not so much in the «levels». The external economic activity is primarily an economic, production and commercial activity therefore it cannot be the subject of state authorities and administration activities. The EEA is a part of the market sphere; it is based on the criteria of entrepreneurship and differs by economic and legal independence which is limited by national legislation laws [5].
However, examining the content of the external economic relations and the external economic activity, it would be erroneous to consider them as two separately functioning areas. The emergence of the concept of "external economic activity" is the result of the liberalization of the foreign economic activity of the state. Therefore, it should be remembered that the nature of the external economic relations fundamentally determines the strategy of the external economic activity of economic entities from the primary links to the specialized foreign trade and industry associations acting on the principles of economic accountability.
The external economic relations are historical and economic categories. As a historical category, the external economic relations are the product of civilization. They arise with the emergence of states and develop together with them. As an economic category, the external economic relations represent a system of economic relations arising in the movement of resources of all kinds between states and economic entities of different countries.
The essence of the external economic relations as an economic category is manifested in their functions:
1. Organization and service activities of the international exchange of natural resources and the results of labor in their physical and value form;
2. International recognition of the use-value of products of the international division of labor;
3. Organization of the international monetary circulation.
The content of the first function consists in bringing the products extracted as natural resources and the products obtained in the process of international division of labor to specific consumers through the exchange of products and labor results in their physical and value form. Organization of the exchange provides simultaneously the service of this exchange.
In the process of performing the second function, there occur the completion of commodity-money relation act and the end of the money exchange for the product of international division of labor; as a result, the value in use (its practical significance) contained in this product receives international recognition.
The content of the third function is to create conditions for the continuous movement of money in the process of committing various international settlements.
The external economic relations include the following areas and shapes [5]:
- foreign trade;
- international production (agricultural and industrial) cooperation;
- international investment cooperation;
- international scientific and technical cooperation;
- economic and technical cooperation;
- monetary and financial cooperation.
The basis of the external economic relations is the international division of labor. This is the highest level of social division of labor connected with the output of labor beyond the reproduction of the country`s economic complex. It means the specialization of individual countries on certain types of industrial activity, different industries, products or services which necessitates the exchange of results of production, scientific and technical activities, commodities, i.e. international world trade.
Under the influence of the international division of labor, the economic relations between countries are switching from traditional trading to international specialization and production-sharing, joint venture enterprises, joint operation enterprises in the international environment. International economic organizations are set up. It should be noted that the international division of labor as an economic category is inalienable and interrelated with the concepts of international specialization and cooperation of production which are considered as the elements and the essence of the international division of labor.
The international specialization of production is a form of division of labor between countries which leads to differentiation of national production, the separation into independent processes in individual sectors and sub-sectors of manufacturing uniform products of labor in excess of domestic needs. It may be subject (production of finished products), review (manufacture of product components) technological or phasic (implementation of individual operations or execution of individual technological processes).
International cooperation of production is a form of international division of labor in which the workers of different countries are directly connected in daily interactions in the same or in different but interrelated production processes [26].
Thus, international economic relations are formed and developed on the basis of international division of labor and determine the scope, structure and content of foreign economic activity which resulted in the upholding of economic interests of the subjects of this activity.
At the same time, the external economic relations serve as a tool of influence on the economic system of the state which is maintained through the mechanism of the external economic activity.
In the modern world economy, the external economic relations serve as the factors of growing the national income of a state, saving the economic cost, and accelerating the scientific and technological progress. The implementation of these relationships allows us to move interstate cooperation with the customary exchange of goods to trade in services, the joint resolution of technical and economic challenges, the development of scientific and industrial cooperation and other forms of joint economic activities, including the establishment of joint ventures.
Through the mechanism of external economic relations, the demand for goods and services of the world market is transferred to the domestic market of a state. This causes the need for the development of productive forces which, in turn, contributes to the development of industry, agriculture, trade, services and financial institutions.
The development of the domestic market of the country leads to anticipate the volume of supply over total demand within the state, which causes the expansion of foreign trade, the cheaper the cost of capital and lower costs of production and circulation.
1.2 Classification of external economic relations
The external economic relations are trade, scientific and technical, industrial and other economic relationships with foreign countries. The effectiveness of organizing the external economic relations and management mechanism are largely determined by the classification of relations [5].
The classification of the external economic commercial operations should be understood as the distribution of these connections into specific groups with specific characteristics to achieve the set goals. The classification system of the external economic relations consists of the types and forms of relationships.
The type of the external economic relations is a set of relationships that has a common feature, for example, the direction of the goods flow and structural sign. The classification criterion associated with the direction of the goods flow determines the movement of goods (services, jobs) from one country to another, i.e. reflects the exportation of goods from the country or the importation of goods to the given country. On this basis, the relations are divided into export connected with the sales and exportation of goods, and import related to the purchase and importation of goods. Foreign trade is realized at the level of relationships of companies, corporations, and interstate agreements [29].
The structural feature of the classification defines group composition of relations. It is associated with the sphere of economic interests and with the main goal of external economic activity of the state. According to the structure, the relations are divided into foreign trade, finance, industry, investment (figure 1.1).
| Externaleconomicrelations | ||||
|
|
| |||
| Direction of the goods flow | Structuralfeature | |||
|
|
| |||
| E | C | |||
| Import | F | |||
| I | ||||
| Investmentrelations | ||||
xport
ommercialrelations
inancialrelationsFigure1.1 Classification of external economic relations [5]
The form of relations is a means of the existing of this type of relations, the external appearance (shape, design) of an entity of any particular connection. The forms of the external economic relations include trade, barter, tourism, engineering, franchising, leasing, etc. Annex A presents the classification of the external economic relations [3].
According to the direction of the goods flow, the external economic relations can be divided into export and import.
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