The Economy Of Developed Countries

=== 2e94ff58cab825ed29a0d4016f3816680152d7de_686860_1 ===

UNIVERSITATEA DIN ORADEA

FACULTATEA DE …

PROGRAMUL DE STUDIU …

FORMA DE ÎNVĂȚĂMÂNT …

Lucrare de licență /Disertație

COORDONATOR/I ȘTIINȚIFIC/I

(GRADUL DIDACTIC TITLUL ȘTIINȚIFIC ȘI NUMELE )

ABSOLVENT

(NUMELE ABSOLVENTULUI)

ORADEA

ANUL

UNIVERSITATEA DIN ORADEA

FACULTATEA DE …

PROGRAMUL DE STUDIU …

FORMA DE ÎNVĂȚĂMÂNT …

The economy of developed countries -Theoretical approach

COORDONATOR/I ȘTIINȚIFIC/I

(GRADUL DIDACTIC TITLUL ȘTIINȚIFIC ȘI NUMELE)

ABSOLVENT

(NUMELE ABSOLVENTULUI)

ORADEA

ANUL

TABLE OF CONTENTS

INTRODUCTION

The economy in developed countries is sustained by high average incomes per person and the percentage of citizens living in poverty is very low; a powerful and technologically advanced industry; a high level of life, which is reflected in the development of infrastructures and in the quantity and quality of health, educational, cultural services, and so on and so forth. In addition, a good part of the population maintains a high level of consumption.

At present, there are three criteria to determine the category of a developed country: the production generated per person; the purchasing power of monetary income in each country; the quality of life. Therefore, the developed countries have the states that reach the highest levels of production and purchasing power per person, as well as the best quality of life. They are part of the developed countries, countries from Western Europe, the United States, Canada, Australia, Japan and some Arab countries. Developed countries usually have a liberal capitalism and one life under democracy.

In this paper, I have tried to give a theoretical approach to The economy of developed countries through three chapters, ending it with the Conclusions and References upon which the present paper was developed.

The first chapter offers an inside look on the concept of Economy with focus on the Small countries, Life quality and the role of State intervention policy in the economy. What we can conclude from here is that there is a high number of countries that share common characteristics such as primary economic structure, economic, technological and even cultural dependence; inequality in income and low educational level, among others. Not all developing countries are at the same level, unfortunately, some are in positions of total disadvantage.

The mechanisms to overcome this state are multiple and varied, and in principle, they have a very high political cost, which many governments are not willing to assume, but at no time should the human and social aspect of it be neglected.

The second chapter focuses on the economy of USA vs. the economy of Japan, revealing the belief that the following turn of events will take place: lower economic growth implies less competitive pressures to improve efficiency; the greater aversion to risk implies a lower appetite for innovation and experimentation, and the nominal interest rates anchored in values ​​close to zero mean that the savings of society cannot be effectively applied. What to learn from this? If the collapse of a bubble, mostly well managed, in a low-inflation US economy could permanently reduce potential economic growth by about 10% in a decade, can it be ruled out that the poorly managed collapse of a bubble could, in a generation, leave Japan 40% poorer than it could have been? Something is clear: economists no longer dare to assume that a trend is a trend and a cycle, a cycle, and that their reciprocal interactions are small enough to rule them out in an initial analysis. That approach has condemned many economists to live in much poorer countries than they expected.

The third and final chapter highlights The group of G7 / G20 with debates on The emerging countries in G20 and The existing relationship between the so-called G8 without Russia and the G20.

The G7 representatives, as finance, economy and labor ministers, meet annually in one of the cities of the member countries. It is known as the G7 Summit and its main objective is to study the economic and political situation of nations to identify problems and find common solutions, such as reducing debt or fighting poverty.

The heads of state, directors of the central banks and the ministers of economy and finance of G20, as G7, in the summit of the G20. In July 2017, the last G20 summit was held in Hamburg (Germany), where, according to German Chancellor Angela Merkel, the main advances came from a greater opening of markets to international trade.

One of the economic characteristics in developed countries is that the economy is spread in three parts (a process by which there is a continuous growth of the tertiary sector or services in the structure of the economy, becoming the most dynamic and productive, as well as replacing the other two (primary and secondary) both in employment and in production).

The secondary sector, as industry develops, new technologies, etc., needs a lot of labor (from the primary sector due to the technicality that exists in it), and employment increases considerably; the purchasing power increases, therefore, it begins to demand more and more services, therefore, the tertiary sector begins to develop and born what we call the welfare states (education, social security).

In 2017, world economic growth reached 3.0%, a percentage that represents a strong acceleration compared to the meager 2.4% in 2016 and constitutes the highest global growth rate seven years ago. Labor market indicators continue to improve in a wide range of countries, and around two-thirds of the countries in the world have grown more in 2017 than in the previous year. Worldwide, it is expected that in 2018 and 2019 growth will remain stable at 3.0%.

The recent acceleration in the gross world product is mainly due to the more stable growth of several developed economies, although East Asia and South Asia remain the most dynamic regions in the world. Cyclical improvements in Argentina, Brazil, the Russian Federation and Nigeria as these economies overcome the recession also explain approximately one-third of the increase in the global growth rate between 2016 and 2017. However, the economic benefits of the last few years continue to present an unequal distribution by countries and regions, and in many parts of the world, the economy has not yet returned to growth at vigorous rates.

The economic outlook remains bleak for many commodity exporters, underscoring the vulnerability to the cycles of expansion and contraction of countries that rely heavily on a small number of natural resources. In addition, the long-term global economic potential is dragging down the drag on the long period of low investment and weak productivity growth that followed the global financial crisis.

In general, conditions for an investment have improved in a context of low financial instability, less weakness in the banking sector, recovery of some commodity sectors and better global macroeconomic prospects. Financing costs are generally still low and spreads have decreased in many emerging markets as a result of lower risk. All this has contributed to increasing the inflow of capital flows into emerging markets, including the increase of cross-border loans, and to strengthen the expansion of credit in developed and developing economies.

The improvement of economic conditions has generated a modest reactivation of productive investment in some of the major economies. Around 60% of the acceleration of global economic activity in 2017 was due to the gross fixed capital formation. This improvement is due to the fact that the starting point was very low, after two years of very weak growth in investment, and because world investment had been scarce for a prolonged period.

The firm and wide recovery of investment activities, necessary to promote greater productivity growth and accelerate the achievement of the Sustainable Development Goals, could be held back by the great uncertainty regarding trade policies and the repercussions of the adjustment of the balances of the main central banks, as well as the upward progression of indebtedness and longer-term financial weaknesses.

CHAPTER I

ECONOMY

The economy is a social science that studies the processes of extraction, production, exchange, distribution, and consumption of goods and services; the word economy comes from the Latin oeconomĭa, and this in turn from the Greek οἰκονομία (economy), which is derived from the union of the Greek terms οἶκος (oíkos), meaning ‘house’, νόμος (nomos), ‘norm’.

The concept of economy encompasses the notion of how societies use scarce resources to produce goods with value, and how they make the distribution of goods between individuals; the scarcity of resources suggests the idea that material resources are limited, and it is not possible to produce an infinite quantity of goods, considering that human desires and needs are unlimited and insatiable.

The science of economics tries to explain the functioning of economic systems and relations with economic agents (companies or individuals), reflecting on existing problems and proposing solutions. Thus, the investigation of the main economic problems and decision making are based on four fundamental questions about the production: what to produce ? When to produce ? How much to produce? For whom to produce?

In Economics, two main branches are distinguished: microeconomics and macroeconomics. Microeconomics studies the different forms of behavior in the individual decisions of economic agents (companies, employees, and consumers), while macroeconomics analyzes microeconomic processes, observing the economy as a whole and with aggregate variables (total production, inflation rates, unemployment, salaries, etc.). As a mixed economy, we know the economic system that combines elements of the planned or directed economy, which obeys the objectives and limits imposed by the State, and the free market economy. Likewise, it is also called the economic model in which the private property of capitalism and the collective property of socialism coexist.

The concept of political economy emerged in the seventeenth century to refer to the relations of production between the three main social classes of the moment: bourgeois, landowners, and proletarians. Unlike the economic theory of physics, according to which the earth is the origin of wealth, political economy proposed that, in reality, labor was the real source of value, from which the theory of value- job.

The concept of political economy was put aside in the nineteenth century, replaced by economics, which privileged a mathematical approach. Nowadays, the term political economy is used in interdisciplinary studies whose objective is the analysis of how politics influences market behavior. As a submerged economy we know all that economic activity that is practiced outside of legal and tax controls. It includes from activities not declared to the treasury to illegal and criminal economic activities, such as arms or drug trafficking, or money laundering. Because they are economic activities carried out outside the law, they do not appear in the fiscal or statistical records of the State.

The informal economy includes all economic activities, exchange of goods and services, which are hidden to evade taxes or administrative controls. Like the underground economy, it is part of the underground economy. Some common examples of the informal economy are domestic work or street selling. In all countries of the world, to a greater or lesser extent, there is an informal economy, despite the fact that this will cause serious economic damage to the Treasury. As an underground economy, also known as a black market, it is designated that which is constituted by the exchange of goods, products or services in a clandestine or illegal manner. As such, it is not subject to any legal regulation, so it usually violates the pricing or legal provisions that have been imposed by the government for a trade of such effects.

I.1.Small countries

In the last 25 years, the study of economic development and development strategies has grown. The investigation of the problems of economic backwardness and the overcoming of this state encompasses “an increasingly broad field of the social sciences, it is increasingly common to distinguish between economic phenomena and politics, according to whether developed countries and countries are concerned. In Hungary, insufficient attention has been paid, until now, to the correlation

Increasingly between the pace of economic growth and scientific-technical development and the scale of socio-economic activities.

The results of scientific progress can be applied effectively only within organizations and broad economic units. Since socio-economic development is carried out in national frameworks, the. The economic size of each country exerts a growing and considerable influence – in a positive or negative sense – on the prospects for development. At the same time, the incessant scientific-technical development exceeds the narrow national borders.

Each time, more countries become small countries or even dwarfs in relation to the world economy and are faced with the increasingly complex problem of the existence of a small nation. We will try to examine the correlations of economic potential and development from the point of view of small countries in the world economy and also the development alternatives appropriate to them. We will analyze, among others, the following issues: the expansion of the scale of economic activities and the extent to which this influences the modern process of growth-; where and how the advantages and disadvantages of small countries are presented, and what are the characteristic features of them, given the current circumstances of the world economy; what are the economic measures politics, the forms of economic direction and the structures that can compensate the disadvantages arising from the smallness of each country.

Adam Smith already observed that the expansion of the scale of human activity improves the efficiency of work and reduces the costs of the activity. The economic literature written since then on the advantages of the massive growth of production distinguishes between the so-called “internal economies” and “external economies”.

The internal economies arise from the growth of certain companies, from the indivisibility of certain factors of production and are nourished by the advantages of specialization. Most economies of this type originate in capital expenditures. A large part of modern machines and facilities cannot be used in small businesses.

One major group of internal economies corresponds to the sphere of business administration and production and for the most part, comes from the best use and specialization of the workforce. The importance of economies is growing since functional management and scientifically based coordination are possible only in large organizations.

The large-scale production also makes it possible to purchase wholesale and therefore at a lower cost, the required inputs, lowering the costs of transport, marketing, maintenance and storage of the contracted lot. Due to its greater negotiating power, the ‘large company can also obtain credit and market advantages. This type of company also has a greater capacity of self-financing, whose importance is obvious.

Naturally, the savings obtained through the growth of the company cannot be increased without limits; Exceeding a certain level in production and in socio-economic activities, economies disappear or may even become losses. However, such cases are counted as exceptions, since according to the research data mentioned above, only one % of US companies are indifferent to the economies obtained through expansion and barely 2% of them have as a characteristic feature the increase in cost in case of increased production volume.

The relative incidence of internal economies is naturally different in the various industrial branches. In less capital-intensive industries, such as the textile and grocery industry, the growth in the size of the company and the volume of production does not essentially change the cost structure. We are therefore faced with a completely different situation than the case of the branches that require a high density of capital and technology. Some industrial activities that require large investments of capital, and a very complex technological base, such as the manufacture of airplanes, rockets, and computers, can only be carried out with large companies.

The increasing importance of the economies associated with large-scale manufacturing, and the increased costs of small-scale production, show that a growing percentage of modern industrial products are produced by large companies, which increases the massive character of production. As a general phenomenon, it is observed that in all industrial branches, in which the demand for products is presented in a homogeneous way, for example, in the automobile industry, tractors, radio and television sets; washing machines and refrigerators; in the production of steel, chemical products, energy, etc., the majority of production, almost 70 or 80%, is concentrated in the hands of some companies, owners of such competitive advantages, which lead to displacement and gradual liquidation of its competitors with a lower production capacity. To avoid confusion, it may not be superfluous to observe that in the process of the formation of large companies, the economic factors arising from technical development are not the only ones that matter. In a previous period and less intensive from the point of view of capital and technological development maybe those

Other factors have been the most important. It is about the concentration and centralization already indicated by Marx and arising from the process of capital accumulation. Among the causes of the growth of the capacity and size of enterprises, it would be difficult to differentiate quantitatively the consequences of internal increases in capital and technical development. Concentration in itself does not necessarily mean technical development, nor a greater degree of efficiency of the

The economy often reflects economic and, in some cases, political or power-link conditions, and although technical power is translated into different economic advantages, the degree of concentration does not. offers a point of support for judging the magnitude of economies of scale; moreover, if the concentration is made only in the spheres of power and does not reflect technical-economic movements, there are numerous cases in which small, medium-sized enterprises are viable and can enjoy advantages. Such advantages derive from greater decision-making capacity, greater flexibility. Economic growth is the sustained increase in the total production of goods and services produced in a given society.

The growth in the total product can occur either through an increase in the factors of production-land, labor and capital-or because there is an increase in the productivity of the factors used. If the population increases, there may be growth of the total product, but not necessarily of the product per capita; moreover, if the growth rate of the population grows faster than the product, the result will be a decrease in the per capita product, as has happened in recent years in some underdeveloped countries.

The term economic development means economic growth accompanied by a substantial variation in the structures or organization of the economy, for example, moving from a local subsistence economy to markets and trade, or the relative growth of the production of industrial goods and services regarding agriculture. Structural or organizational change may be the “cause” of growth, but it does not have to be inescapable; sometimes the causal sequence moves in the opposite direction, or both changes may be the joint result of other changes inside or outside the economy.

In advanced economies, private consumption continued to be the main driver of growth in 2017, joined by investment (see the section questioning the recovery of investment in advanced economies), leading to the greater dynamism of aggregate spending. Within this group of economies, that of the United States showed a remarkable acceleration -from 1.5% in 2016 to 2.3 %-, in line with what was expected at the beginning of the year. Economic activity also accelerated -more than expected- in the euro area, reaching a growth of 2.4%, supported by exports, and in Japan, where GDP grew by 1.6%. The exception to this trend of improvement among the large advanced economies was the United Kingdom, where growth went from 1.9% to 1.7%, due to the effects of the depreciation of the pound on the purchasing power of households, which it more than compensated for the greater dynamism of exports and business investment.

Inflation rates remained, in general, quite contained, marked by the profile of energy prices. Thus, in the United States, the variation rate of the CPI went from 2.7% at the beginning of the year to 1.6% in June, to rebound to 2% at the end of the year; in the euro area it fell from 2% to 1.3% -1.5%, where it has remained in recent months; and in Japan it remained almost all year round at around 0.4%, recently increasing to 1%. The exception was, once again, the United Kingdom, where inflation continued to rise, to 3%, due to the effects of the depreciation of the pound after the Brexit referendum. Core inflation rates remained more stable, still below the targets of central banks, except in the United Kingdom. This evolution took place in a context of the moderate growth of wages, in relation to their habitual behavior in recovery phases, due to the confluence of a series of factors. Medium and long-term inflation expectations obtained from market variables followed a similar profile to observed inflation, falling during the first half of the year and subsequently increasing.

II.2. Life quality

In developed countries, people are living better and better, because they have their food, education and health needs met, as well as access to a wide variety of satisfiers. On the other hand, underdeveloped nations try to reproduce the dominant economic model, trying to reach the level of rich countries such as Japan, the European Union and, above all, the United States, which besides having the economic power has the military power that has led to achieve world hegemony, although politically it needs allies.

Globalization is not only economic but also cultural. Pretend homogeneity in the way of thinking. The culture is left as a mere object of folk curiosity. Parameters are imposed on the way we dress, eat, listen to music, achieve satisfaction. Crime, organized crime, trafficking in conventional arms and nuclear weapons, gambling, prostitution, the black market of currency, money laundering, tax havens and tax evasion are also globalized.

The central political task of the 21st century is the creation of a new historical project with a humanist and solidarity perspective, setting aside apathy and trying to recover the memory, to live and reconstruct a future obtaining the strength of reason; also, making technical and scientific progress available and for the benefit of all the peoples of the world.

The difference in development between countries is due to multiple causes, not only to those of an economic nature. These causes have both an internal and an external origin. Not all States have the same degree of social organization, nor similar productive structures, nor similar financial resources, nor comparable ways of life. At present, two realities contrast sharply: that of the developed countries and that of the underdeveloped or developing countries. 80% of the world population lives in this second group. However, if we adopt a global vision on the situation of the economies of the countries of the world we have to recognize that this process makes sense for a part of the world population, that of the most developed countries, but that many others live in a continuous situation of economic underdevelopment.

We all see on television images that illustrate underdevelopment and we ask ourselves what the causes of this situation are, and although some countries, such as China, have managed to improve their growth and the development of their cities and of many of their inhabitants, there are more and more people in the world in a situation of poverty.

The causes and characteristics of underdevelopment are not the same for all countries or for all people who suffer from it, but it is undoubtedly the most important aspect that the Economy should address, which, let’s not forget, tries to satisfy the human needs.

Economic growth is one of the main objectives of governments and the most important economic institutions. If you remember, we understand by economic growth the increase in the value of the production of goods and services made in one place and to measure it we used mainly the economic indicator of the Gross Domestic Product (GDP).

The increase in the goods and services available to people can mean an improvement in their living conditions, that is, economic development can be achieved. This development refers, not so much to the improvement from the quantitative point of view but to the improvement in the quality of life of all the inhabitants.

The analysis of the evolution of the countries shows us how economic growth is a necessary condition to achieve development, but it is not always enough. This is because it does not always achieve improvement for all inhabitants, especially because growth can be distributed unevenly.

Important: Economic growth and development are not equal concepts. While economic growth measures the situation of societies in a material way, development refers to the evolution of all inhabitants towards better living standards. Keep in mind that for many people their standard of living does improve thanks to economic growth, but there are also many inhabitants (even from countries with strong economic growth) to which, however, development does not come. In order to have a more complete vision of the situation of a country beyond growth, we can approach its degree of human development.

The concept of human development starts from the satisfaction of basic needs as a central element but emphasizes that there are other dimensions besides economic ones. Development is, then, an integral concept that aims to expand the opportunities of the human being: prolonged and healthy life, acquisition of knowledge, quality of life, and so on and so forth.

Thus, development is achieved when people acquire greater capabilities and not only when they can consume more. As a concrete aspect and in a primordial way, Human Development proposes to allow access to the entire population to a minimum in food, health, and education.

The paradox pointed out in the text related to the fact that the more wealth generated, the more poverty there is, is derived from the great inequality that occurs in the distribution of income within countries and globally.

It is important to emphasize that poverty in many cases is the origin of direct violence. Not being able to satisfy basic needs can contribute to the generation of violence by people who see their opportunities for personal development reduced or annulled. For there to be peace, it is essential that people have human security, which means feeling safe in the conditions of their daily lives, providing protection against phenomena such as illness, hunger, illiteracy, and unemployment.

We can characterize the situation of underdevelopment under which a quarter of the world’s population lives mainly due to the shortcomings in three basic areas:

Low per capita income: in developing countries, 1,300 million people survive on less than one euro per day, which translates into malnutrition, homelessness or lack of other vital necessities such as clothing, hygiene, medicines, electricity, etcetera.

Low life expectancy: related to the previous aspect since much of the fault of that low life expectancy is the incidence of diseases (including diseases already overcome in the North such as rubella, malaria, or influenza), the high infant mortality, malnutrition and lack of drinking water. According to data from the World Watch Institute, around 30% of children under 5 years of age are lightweight and although the number of people who have clean water since 1980 has more than doubled, some 1.3 billion people still lack it. , and some 2,500 million do not have access to an adequate sanitation system.

Educational deficiencies: the UN denounces that two of every ten inhabitants of the planet are illiterate. Although the level of world literacy has improved by 10% in recent years, there are still 100 million children who do not attend school. The impact on the development of basic literacy is very important, especially when the beneficiaries are women.

These deficiencies, and in general the situation of poverty, are suffering in different ways and acquire different characteristics depending on the country or region in which one is located. In general, we talk about absolute poverty when people do not meet their basic needs: they do not have a decent home, they do not have clothes other than clothes, shoes, soap, or guaranteed daily food. According to UNDP data, almost 2,000 million people are in this situation. This makes poverty much more than an economic condition since the horrors of poverty extend to all aspects of personal life: helplessness in the face of illness, illiteracy, submission, total insecurity in the face of change, lack of self-esteem, etc.

From the economic point of view, the characteristics of underdevelopment translate into low productivity, high rates of unemployment and underemployment, dependence on the primary sector and poor development of secondary and tertiary activities. Derived from this situation, and in turn causing them, we find deficiencies in the capital, in the financial system, in the business organization, and so on.

If we analyze this economic structure following the knowledge we have acquired during the first topics of this course, we can delve into the characteristics of the fundamental elements of the economy:

The economic factors: the less developed countries often present a very powerful supply of natural resources although most of the time it is the multinational companies that make the most out of their exploitation. As far as the labor factor is concerned, there is a lot of unemployment and low qualification. Finally, the greatest shortcomings are the lack of savings, which prevents the accumulation of capital and the development of a banking system that channels resources among economic agents.

Regarding the economic agents we have already commented that there are many difficulties to set up an economic fabric that allows the development of companies, and also in the sectors with the greatest potential, foreign companies usually take charge. Families or domestic economies have little room to carry out their economic functions of work and consumption. Finally, the public sector does not intervene effectively in the economy but, unfortunately, is often characterized more by corruption and bad government.

It is very important to analyze the evolution and tendency of underdevelopment. Thus, we can verify that some indicators have improved for some countries during the last decades (the impact of some diseases or especially the levels of poverty in countries like China and India). However, the UN denounces that the number of poor people has doubled. At the beginning of the new century, the UN launched, as we know, the Millennium Development Goals, which were intended to be a way of raising awareness in the countries to solve the main problems of the world.

As we have said, the situation of poverty is lived unequally in different countries or by different people. Even we cannot forget that sometimes what from our capitalist western perspective can be considered a situation of poverty or poor quality of life may not be lived in the same way by other people who could say to us: “Is it better to work 8 hours a day, spend another 3 hours on the round trip and live anguished by the mortgage, stress, dissatisfaction or fear of the near future? “ However, there are very serious situations of objective poverty that, in general, tend to affect some groups more intensely, such as:

1. Children: they are required to obtain family income (often in exploitative conditions) depriving them of education that could in the future change their personal situation and the enjoyment and emotional development of the infant stage. Girls are especially punished by the system. The hope of ending child labor soon has faded. According to the International Labor Organization (ILO), of the 250 million, 61% are Asian, 32% are African, 7% are Latin American and slightly less than 5% work in rich countries. For example, in India – the country with the most child labor – 44 million children work in the following activities: carpets, glass, matches, fireworks, locksmith’s, jewelry, pottery, clothes, etc.

2. The elderly: although in many cultures they continue to be a well-respected group, it can be said that, especially in more developed countries, their weight in families has been losing relevance and too many of them end up living poorly in the streets.

3. Women: according to the Human Development Index, women, globally, accounting for 70% of the total poor population. They are the ones that are mainly responsible for the care and feeding of families, but although they perform 60% of the world’s work, they receive only 5% of the profits and have less than 1% of the goods. They are one of the most punished groups but at the same time, international cooperation relies on them when it comes to achieving development. Thus, a measure that we will see at a later point – micro-credits – often focuses on helping women as the driving force of families and communities.

4. The indigenous: they are a group that is very forgotten in almost all the analyzes, even though there are more than 450 million people belonging to one of the approximately 5000 different indigenous peoples that are estimated to exist in the world. The development imposed by multinationals and international organizations has passed over the rights, culture, and customs of those minorities that cling to models of life and values ​​different from the Western one.

When analyzing why many countries and many people suffer situations of underdevelopment it is very difficult to point out unique causes or explanations for all situations.

For that reason, we are going to indicate some reasons that can condition the lack of development. Some are internal, insofar as they come from the countries themselves, and others are external since they depend on global mechanisms. Within the internal we can find:

Geographical and climatic causes: it is very complicated to create socioeconomic structures that favor development under extreme conditions of climate, soil, lack of rainfall, orography, etcetera.

Political factors: such as the lack of freedom and democracy. Although the equation economic development equals freedom and democracy (or vice versa) is not exact, in many of the poorest countries there are serious deficiencies in human, political, labor, social and human rights, as well as, many times, armed conflicts that They are difficult scenario for economic growth.

Demographic factors: it is difficult to satisfy a growing demand for needs in such a large scarcity situation.

When talking about the causes of underdevelopment, we should consider socio-cultural factors that make many populations do not have economic growth objectives compatible with our welfare measurement. Put another way: we address the issue of underdevelopment or development from a Western perspective, based on a capitalist system accumulating material wealth, but it is very likely that for many inhabitants their parameters to measure their personal and social development do not match. In this sense, it is curious to see how, according to the FIB (Gross Internal Happiness) indicator, Bhutan is the country in the first position.

Some economists see in submission to the economies of the North the main obstacle to the exit of underdevelopment as they think that our growth is achieved at the cost of the exploitation of the poorest countries. They relate the economic backwardness of underdeveloped countries to international economic conditions, considering underdevelopment as the inevitable consequence of the historical process of colonialism and subsequent capitalist development.

The rules of the operation of international trade, moreover, would deepen this problem. International trade has grown steadily for decades, but the poorest of the poor, with 10% of the population, participate in 0.3% of the total, half as it was 20 years ago.

The model of the international division of labor in which the underdeveloped economies specialize in primary products, of low technology and added value, causes the deterioration of the real exchange relation between developed and underdeveloped countries in favor of the former (they export manufactured products and services that continually increase their price in relation to the price of agricultural products and raw materials).

In addition, it must be borne in mind that it is mainly the multinationals of the richest countries that obtain the benefits of international trade since they usually control the exploitation of those goods produced in the Third World countries.

This disadvantage is further aggravated by the problem of external debt. The indebtedness of the poorest countries in international markets has led to an exponential increase in the interest they have to pay, so that, sometimes, these exceed the amount of money received. The problem is of such magnitude that some countries would have to dedicate almost all of their production to paying creditors: other richer countries, international institutions, and private banking. Although sometimes it seems unfeasible that it can improve the economic situation of all people, it must be considered that according to the data of the Annual Report of the United Nations of 2008, the annual expenditure on perfumes in Europe and the USA. it would be equivalent to the sum necessary to solve health and nutrition throughout the planet, and ice cream spending in Europe goes beyond the budget required to cover water and sanitation needs on Earth. During the current crisis, there has also been the talk of astronomical aid granted to banks that would have served to alleviate many of the world’s problems of poverty.

Can the world feed its current population of 6 billion people with current crops? This question is vain because everything depends on what is meant by feeding. If it means that the production is divided so that everyone receives an identical vegetarian ration, consisting of cereals or tubers, with a minimum of proteins from peas, beans, and legumes and a barely enough total of 2,350 calories a day, then the answer is “yes”. In circumstances of absolute equality and universal will to consume a basic diet, monotonous and barely enough to live, the world can feed its current population and a few more inhabitants. If, on the other hand, it means that a quarter of each inhabitant’s diet comes from animal products (which are concentrated calories) and that people can also consume various fruits, vegetables, and oils (and, from our privileged position, we would add wines and beers), then the answer is flatly “no”. In that case, starting from the base of the current harvests, the world can only feed more than 3,000 million people, approximately half of those who live today.

We have seen that underdevelopment is a problem with causes so complex that the recipes for their solution are neither simple nor generally applicable to all corners of the planet. As we have already mentioned, some countries have managed to enter the path of growth thanks to their insertion in globalized markets. The most outstanding case, without a doubt, is that of China, which by combining its free-market policy with a strong interventionism and planning of the economy has not only achieved that a large number of the population has come out of situations of underdevelopment, but that has become one of the main world powers. Therefore, a solution to achieve economic growth would come from promoting savings and investment (productive, in R & D and highlighting the driving role of the industry as a driving force for other sectors).

To carry out improvements in education (it is the first stone and it is considered fundamental to achieve the economic and social progress of the countries), to be able to enter the international goods and services and financial markets. To this end, state policies that protect the incipient sectors, promote improvements in the distribution of income and maintain legal security and economic, political and social stability would be essential. However, these proposals do not seem to be generalizable to all countries, either because of the existence of vicious circles that prevent the take-off of many underdeveloped countries from taking place or directly because globalized markets do not seem to work as they do in the past. Currently, allow all countries and all inhabitants to benefit, that is, generate sustainable economic growth that allows development for all people. Since the fall of the wall and the failure of the central planning of the economies of the communist countries it seems that, in spite of the problems that the international economic system generates (not only in relation to inequality and underdevelopment but also linked to the negative impact on natural resources as we will see in the next topic) there is no alternative system in which to look for global solutions.

As a conclusion of everything presented in this chapter, it all resulted in a constant talk, especially from the anti-globalization movement, of the need to change the operating model of the economy, but it does not seem that in the short or medium-term global alternatives to the current system based on capitalist globalization will arise. Rather, we find ourselves with attempts to solve the problems of underdevelopment based on small corrections or measures of redistribution of income at a global level within what is called international cooperation. It is carried out by the Non-Governmental Organizations for Development (NGDO) or Official Development Assistance (ODA) given by the governments of the richest countries. However, the governments of the North are often accused of, on the one hand, not giving a sufficient volume of aid and, on the other, that many times more than for the countries in need it is about covert aid to the companies of the donor countries.

Other measures that try to mitigate the problems of underdevelopment are fair trade (which mainly tries to establish commercial relationships in which a price is paid that allows a production of workers from the South in decent conditions), the micro-credits (loan of small sums of money for the implementation of activities dedicated to self-employment), debt forgiveness (forgive some of the external debt accumulated by the poorest countries), and so on and so forth.

I.3. State intervention policy in the economy

John Maynard Keynes may be considered the father of state interventionism in the economy: of course, in a capitalist, not communist one. Supporting the economic role of the state, he did not challenge the motor role of personal interest or the regulator of the mechanism of competition and the market. Keynes did not recognize the classic idea of ​​self-regulation of the economic system, thanks to the free market forces. Keynes’s conception inspired Franklin D. Roosevelt’s administration to formulate his policy of relaunching the US economy, known as the New Deal. For many years, Keynesism was the fashionable theory.

World War II had not yet ended and the international democratic community was already discussing the Keynes plan on the new monetary order. Among other things, this plan was based on the premise that the new international monetary organization to be set up (IMF) should interfere as little as possible with the domestic economic policies of the Member States.

Since the Great Depression, and many years after the end of the Second World War, developed countries have placed emphasis on budgetary measures, leveraging public tax, taxes, and spending. But in order to absorb the unused production capacity and the unemployment, to finance the “half-time” of the economic activity, more was spent than it was collected through the fiscal policy, reaching important deficits.

Component of a country’s general economic policy, budget policy is the State’s action through its budget. The action takes place by combining fiscal policy with government spending and setting a certain level of the public deficit. In all countries, the draft budget is subject to parliamentary debate. From Keynes to today, public budget management is considered to be the most important means the State has to influence the economic conjuncture in its different phases.

In the economy, seeking perfect regularity is a utopia. What can be achieved is the recovery of the economic body when it knows moments of crisis. The state oversees the evolution of the economy and intervenes, as appropriate, either through a STOP policy, when an “overheating” occurs, or through a re-launch policy (GO) in times of depression.

If the economy is experiencing a slowdown, characterized by a reduction in global demand and investment, by rising unemployment, a recovery policy is being used. It is understandable that the measures taken will be at the opposite of those characteristics of the policy of rigor; the increase in public spending and the budget deficit will have the most important role. “Budget balance is a myth,” says Keynes’s theory, when they support the need for budget deficits. Most of the budget revenue comes from tax and tax rates (over 90%) charged by individuals or companies. There are several categories of taxes: on consumption (VAT, customs duties), on income (of individuals, firms), on wealth. By the manner of collection, there are direct taxes and indirect taxes (incorporated in the sales price).

In terms of State spending, they concern the social sector (health, unemployment benefits, etc.), education, culture, defense, stimulating the economy (infrastructure, aid to disadvantaged areas, etc.). Execution of the budget is mainly for the governments and the public treasury. The latter is the government’s fiscal policy instrument. In its current account from the Central Bank, all budget revenues are paid out. The public treasury finances state expenditures provide revenue and expenditure adjustment, and treasury operations such as public debt repayment.

Nowadays, after two consecutive years of a slowdown in global activity, in 2017 there was a rebound in world GDP growth, higher than expected at the beginning of the year and widespread among advanced and emerging economies. Inflation, on the other hand, increased moderately in 2017, largely due to increases in commodity prices, but the underlying component remained more stable and away from central bank targets. The outlook for 2018 pointed to a continuity of these global trends.

Various factors (cyclical recovery, advance in deleveraging, fiscal changes, rebound in wages) point to the short-term maintenance of the dynamism of investment registered in the advanced economies in 2017, but in a longer time horizon the maintenance of this strength it will depend on the evolution of real interest rates, technological factors and resistance to protectionist threats. Secondly, the expected change in the combination of macroeconomic policies in the United States and other advanced countries towards a more expansive fiscal policy and a less lax monetary policy can increase growth in the short term, but, if they do not graduate properly, they could generate episodes of instability in the international financial markets. Finally, global financial conditions remain favorable. However, the turbulences in the US stock exchanges registered at the beginning of 2018, which spread rapidly and intensely to other stock markets, seem to point to global financial conditions less favorable for the future and, at the same time, warn of the risks associated with a sudden adjustment in international financial markets.

CHAPTER II

THE ECONOMY OF THE USA VS. THE ECONOMY OF JAPAN

As far as the economies of the industrialized nations are concerned, there are clear differences in the structure of their national competitive advantage, which have become more pronounced over time. By increasing the level of openness to the outside, more and more industries have been put to the best international competitors in both production and service. Even before the Second World War, the US was the first consumer society at a time when Europe and Japan were trying to cope with the shortages and accentuated needs.

In the first decades after the Second World War, American management was a true myth, a “Mecca” of management and efficiency for the vast majority of specialists in the field and generally for all involved in initiating, conducting and finalizing economic activities. At present, the most commonly studied, adapted and adopted management concepts and tools are US management. and Japan. The reason for this is that companies in the United States and Japan are characterized by the highest competitiveness.

Japan is the world’s second largest economic power after the US. Transforming from a country with a ruined economy into a second economic power was regarded as an economic miracle and a historical phenomenon. According to specialists, the ingredients of this spectacular growth were, in turn, the American investments and the intervention of the Japanese government, especially through the Ministry of Industry and Commerce. The Japanese economic miracle led to bring Japanese management to the forefront of attention. The peculiar features of the Japanese economy during the “miracle” period include: the co-operation of producers, vendors, distributors and banks inhomogeneous and welded groups called Keiratsu, the powerful trade union organizations that set the salary negotiation season, close ties with government bureaucrats, in large corporations and factories where blue-collar workers are active, ie industrial workers (who differ from those working in the service sector – the system is also expanding on the “white-collar”). From this point of view, Japan is ranked first in the world in terms of steel production, ocean-going shipbuilding and car industry, and 2nd in the world in the oil processing industry. 47% of the top 1000 companies in the world are Japanese.

Immediately after the war, productivity in Japanese firms was reduced compared to that of the US, but in a few decades, the situation in some areas has come to reverse. This spectacular increase in labor productivity among Japanese companies was also due to the fact that Japan has imported technology from the beginning, mainly from the US, to reduce the gap with the Western countries. Even today, when Japan is characterized by technology innovation, Japanese managers are at the center of technology transfer from developed Western countries.

Policies in the field of technologies are closely correlated with those in the field of science, whose focus is on increasing international competitiveness. However, Japan is the leading importer of technology from abroad, registering a deficit in this area, even though it exports mainly to Asian countries. Japan is known to be a country with a much greater capacity to copy and imitate foreign technology than to create new technologies. But at the same time, Japan is also distinguished by the ability to disseminate foreign technologies in all areas, and Japanese companies are putting technology into practice much faster and much better than companies in Western countries.

The spectacular successes achieved by the Japanese economy over the last three decades have also resulted in the focus of many countries’ attention on it. Although the US has been among the first to investigate its performance and especially the causes it has generated, under the pressure of the need to cope with the growing Japanese competition, it has been forced to join the ranks of those who are trying to learn from the Japanese experience. As a result, it was found that one of the secrets of the Japanese, if not the main, is the quality of its business management.

The pragmatic outcome of this finding was the appreciable efforts to implement some of the Japanese management-specific elements in North American enterprises. Of these, there is a widespread spread in US businesses, with substantial economic effects: quality circles (as a result of the qualitative upward trend that Japanese products often have over North America) and real-time inventory management (sizing of material stocks raw materials, fuels, etc., in close correlation with the production needs).

In conclusion, Japanese management elements have proven their effectiveness in the US, in all cases, the necessary premises – human, technical, financial – have been assured and recorded in the entire management system of the respective companies.

When it comes to business, most people tend to refer to the US context, which they consider to be a real economic machine. Huge investments in key technologies such as electronics, aerospace, synthetic materials, protection and nuclear power have placed the US at the top of the hierarchy in many fields of science and technology that have been applied in many industries.

The importance of technology for modernizing society and for economic development has long been recognized, but today, along with information, it has a central place in the theory of companies’ development and international competitiveness.

The US political-economic system can be characterized as a democratic one, in which production and distribution are mostly privately owned. In addition to the strong private system that dominates the entire economy, there is also an important public sector, which again confirms the definition of the American context through a mixed economy that many specialists have underpinned the stability of the economy. Unlike the US, where society, culture, and management are characterized by pronounced individualism, in Japan, more emphasis is placed on collectivism than on individualism, which is reflected in the emphasis on belonging and loyalty to group and organization, in as a whole, in promoting a group orientation and in the first place not the “self” of the individual but our “interests” and actions.

Japan and the United States of America, as any rule of law, appear with a clear separation of the three branches of authority: legislative, executive and legal.

Japan has a functioning democratic system in which sovereignty belongs to the people; is a unitary state, symbolically led by the emperor and democratically governed by a parliamentary system. The government is organized and functions on the principles of constitutionality.

II.1. The economy of the USA

Everyone knows that if you have enough money and economic means, despite the many vulnerabilities that wealth generates, you can have the necessary security. The fact that security has an economic dimension is already a truism. In other words, although vulnerabilities are directly proportional to the value and social impact of wealth, and security is directly proportional to economic and financial strength. Insecurity is directly proportional to poverty, to the impotence, to the difficulties of living, to life. A man who has a job and earns good money, can buy a house, can set up a family, can provide a minimum of conditions for living peacefully, in peace, security, at least, in relation to a another man who does not have this opportunity, who does not have a job, a home, a safe place for tomorrow. The fact that, annually, people die of hunger or malnutrition, 45 million people to be precise is a reality of the insecurity generated by poverty and the immense disparities between the rich and prosperous world and the poor and miserable world. Therefore, the economic dimension of security is necessary and obvious. Always, economic power generates security, and poverty creates insecurity and anxiety. But security is not just a system of protection against villains, and insecurity is not reduced to the lack of such a system of protection. Security is an important function of system and process, a condition of systems functioning and the maintenance of a dynamic balance necessary for cohabitation in a complex, always changing, tensioned, competitive environment, with complicated and, most of the time, unpredictable developments. A distinction must be made between economic security and the economic dimension of security. The first concept relates to the functioning of an economy, the economic security of the individual, the family, the community, the state, the financial and economic condition of life, the second is the functioning of the social and political systems, the state, public institutions, and international, alliances and coalitions, etc.

Economic security, in its essence, aims to ensure the conditions for maintaining economic activity in normal parameters and counteracting many types of attacks, the most important of which are the following: financial frauds, strategic dependencies, cybercrime, industrial espionage, corruption, underground economy. At the same time, we can speak of the economic security of the territory, understood as a system of protection of resources, markets, enterprises, jobs, and so on and so forth.

Economic security can also be spelled out in terms of preserving national strategic assets, for instance, strategic sectors such as critical infrastructures, energy, military and information technology. Also, we can include here demographics, natural resources, educational resources, and so on and so forth. Some states, however, are less concerned with such a protectionist type of economic security, in a neo-liberal vision that goes beyond acceptable limits, while others have not given up an instant – and have no intention of giving up – to their economic security levers in the sense of protecting, defending and securing critical economic infrastructures, their own businesses, resources, and markets, etc.

The economic dimension of security results from the fact that without a modern and strong economy there is no, and there can not really be safety, prosperity, and stability, either at the level of the individual and the family, at the level of the state or at the level of mankind.

Security and defense are part of those components that put into operation ways to fulfill the vital interests of states and communities. Neo-liberal currents in the economy and in the political life of some of the states do not spoil or fail to break down or significantly diminish the security and defense concepts. Even in those countries where the philosophy of the market economy, ie the non-obstruction of the action of economic factors on the economic dynamics, the economic security measures, the protection and defense of the interests of enterprises, of the national interests, are most drastic.

II.2. The economy of Japan

An economically strong state is a stable state that allows for political and strategic initiatives that will always be listened to and respected. This is the case for Japan, which basically has almost no natural resources (90% of the raw material is imported), Switzerland, located in an area without resources, but also of other countries. So the economic dimension of security is a synergic and essential one, as it gathers around it and integrates all other dimensions – human, cultural, social, informational and military – into the same concept of power, giving them strength and consistency.

Among the main characteristics of the economic dimension of security and defense, the following can be taken into account: it is a factor generating material and financial resources; is a support for all types of security (economic, financial, individual, collective, institutions, state, etc.); is a dissuasive, intrinsic and indirect security factor; it forms an architecture, albeit stable, in its structure of resistance, dynamic and complex in its evolution; is a powerful globalization factor (alongside information), which in the future will probably alleviate the conflicts between states, generating other types of relationships; is the basic support for strategic partnerships, alliances and coalitions; is increasingly moving from the main financial and financial support of the rule of law into a new configuration, that of supporting the cooperation between the states of law and the improvement of the relations between them. All these characteristics, to which others can be added, show that the economy, without diminishing its role of power, of generating and supporting the power of the state and the army, a vital resource for the defense potential, goes to a new dimension, that of internationalization and globalization of power carriers. Of course, the mechanism by which the economy “escapes” from the political pressure of states or through which it expresses and materializes is still questionable. For now, this internationalization is discontinuous and fractal, but there is already a not-so-reconfiguration of the new pillars and new power areas.

The economic dimension of security is, in fact, an extension of economic security to other areas, it is potential and potential security. Economic security is also a function of the system, therefore, intrinsic to the system, and of a meta-system, ie process, in the sense that, in order to function, an economy needs a set of parameters of dynamics, safety, protection and stability which are acquired both through its immune system (system function) and by the creation of micro-devices of economic and social security, a function that belongs both to the economic hierarchy, ie to the bases generating the enterprise, and to the economic securing structures created in such as the fight against economic espionage, economic terrorism, financial fraud, the underground economy, economic crime, etc.

Thus, the economic dimension of security consists of a system of interdependencies that generates potential, safety and stability, in systems that interdepend on the security space, self-regenerates and together configures a dynamic and complex system that is associated with architectures with complex developments in all possible security dimensions.

In this way, the economic dimension of security, as well as economic security itself, has not only a linear determination, as the economy is more efficient, the more secure the security, but the nonlinear, dynamic and complex one, in the sense that the determinations are inter-conditioned and generates a security space that is suited to situations that are hardly detectable and predictable that closely resemble the frequency hopping system used for security of information transmitted through radio stations in communication systems. Removing the economic dimension of security from linearity is an action of strategic importance. The unpredictability of the architectures, actions, and reactions of the security systems is equally important, if not even more important, than the unpredictability of the defense or offensive in the armed struggle. It also leads to the realization, in the security plan of any kind, of the strategic surprise, as virtually all the evolutions within what we call economic war, in fact, a complex always like the bifurcations of endless and unpredictable battles, markets, resources, power, and influence.

II.3. Partial conclusions

The Japanese work ethic would persist; along with the high savings rates and the slow growth of its population would give it a substantial advantage in the intensity of capital – and, therefore, in the productivity of labor – in addition to the advantages it could develop throughout the country in terms of the total productivity of its factors. In addition, its proximity to a large pool of low-cost workers would allow Japan to build a regional division of labor that makes the most of its well-paid and educated workforce and outsources tasks of low complexity and low wages-that is, jobs with low productivity – to continental Asia.

When Japan equaled, and perhaps surpassed, the North Atlantic in terms of capital intensity, industrial knowledge and standard of living, the best-rewarded activities in the global economy – research and development in high-tech industries, fashion for wealthy consumers, high finance and corporate control-would migrate more and more to Tokyo Bay.

With a third of the population of the United States, it was unlikely that Japan would become the most important economic superpower in the world. But Japan would close the 30% gap (adjusted for purchasing power parity) between its GDP per capita and that of the United States. It was considered very likely that by 2016 the Japanese GDP per capita would be 10% higher than the US (in terms of purchasing power parity). None of that happened. The current Japanese economy is approximately 40% lower than what the analysts so confidently predicted in the late 1980s. 70% of the Japanese per capita GDP in terms of the US that had been reached at that time was its maximum mark. The level of relative productivity for the whole country has declined since then and two decades of unrest have removed the pressures to improve agriculture, distribution and other services.

Japan’s export-oriented manufacturing industries have maintained their advantage but failed to attract other cutting-edge activities – in fashion, finance or corporate control – significantly. Japan is not a poor country today. But its economic structure and level of prosperity make it more similar to Italy than to its eastern counterparts in the Pacific Rim: the US coastal states of Washington, Oregon, and California.

Seven years ago, before the global financial crisis, the overwhelming consensus among economists was that, in retrospect, the charts did not show the expected convergence in Japan's productivity levels with those of the Pacific coast of the United States. Japanese culture produced huge blockages to the employment of half of its population: women. And Japanese policy consolidated rural interests and small businesses in a way that prevented the spread of export-oriented manufacturing.

Japan, it was said, was too different in too many things from the North Atlantic to serve as a model of economic development. And the export-oriented manufacturing companies that had been stimulated and guided by the Ministry of International Trade and Industry were not the nucleus around which the rest of the Japanese economy would crystallize, but a separate and walled territory. It was largely a coincidence that such a reduction in growth coincided with the collapse of the asset bubble and the cyclical downturn, which led to a reduction of the Japanese output of approximately 10% in a few years, followed by a slow recovery towards a new and lower potential growth rate.

In 2017, the world economy grew by 3.7%, 0.5 percentage points (pp) more than in 2016 and three tenths higher than expected at the beginning of the year by the IMF. This greater dynamism of global activity was observed both in the developed economies, where GDP growth increased by six tenths (from 1.7% to 2.3%), and in the emerging economies, where there was a rebound ( from 4.4% to 4.7%), supported by the resistance of the Asian economies -including China, which increased its growth- and the exit from the recession of some countries. The tone of economic policies remained expansive, despite the normalization of monetary policy in the United States and its beginning in the United Kingdom.

Investors kept moving in a profitable search environment and high appetite for risk, which materialized in continuous rises in the prices of numerous financial assets and in a very low volatility, which reached minimums at the end of 2017. The main one's Stock indexes, both in developed and emerging economies, increased and exceeded their historical highs in some cases, such as in the United States; the sovereign debt spreads of emerging economies and those of corporate debt with a worse credit rating were further compressed; and there were important capital inflows into emerging economies. The dollar depreciated against most currencies, especially those of those countries with which the United States maintains a greater trade deficit. Slack financial conditions contributed to an almost generalized improvement in the confidence of households and companies, and to the rebound in investment, employment, and trade.

In February 2018 there was an abrupt increase in volatility as measured by the VIX (implied volatility index on the S & P), following the publication of salary growth data in the United States above the expected. This episode caused important stock market declines in most of the economies, moderate increases in the long-term interest rates of the public debt and slowed the weakening of the dollar. However, it did not affect the risk premiums or the general tone of the financial conditions.

The increase in global demand in 2017 was noticeable in the prices of raw materials, which experienced an average increase of 6.5% during the year.

The price of metals rose by 25%, also supported by some supply restrictions, more than offsetting the moderating impact of good harvests on the price of food. For its part, the price of a barrel of Brent oil increased by 21% in the year as a whole, although with a different evolution along this: initially, the price decreased from 55 dollars/barrel to 45, since the increase of the American shale oil offer compensated for the OPEC cuts agreed with other producers; however, as of summer, prices were oriented upwards, increasing more than 30%, to exceed 70 dollars/barrel at the beginning of 2018. This increase was the consequence of the fact that the increase in demand was added to the increase in production cuts by OPEC and other producing countries until the end of 2018, and some tensions on the supply side; the futures markets discount prices similar to the current ones. Although the rebound in commodities led to a certain increase in headline inflation in advanced economies, the absence of inflationary pressures remained the norm on a global scale.

CHAPTER III. CASE STUDY

THE GROUP OF G7 / G20

The rise of the emerging countries, the change in their weight in the world economy generates changes and influences the international decision-making framework. Practically, these are now important actors on the scene of the new global order, which the US has to take into account, although they remain a world superpower.

The group consists of the United States, Japan, Germany, France, Great Britain, Italy, Canada, the world’s largest industrialized countries. The central purpose of this group is to coordinate macroeconomic policies and, in particular, exchange rate policy between the respective countries. These countries determine international strengths, world economic order. From the point of view of the quality of life, the United Nations Development Program (UNDP) calculates an index of human development I.D.U. which includes income/living, life expectancy, health, access to knowledge and resources to ensure a decent living standard. In these countries, life expectancy exceeds 70 years, the population’s access to health services is 100%, the daily intake of calories exceeds real needs, the primary and secondary schooling rates are higher than 90%. According to I.D.U., if in 2001 the world average was 0.722, these countries had> 0.916 (the largest, owned by Norway 0.944).

After the Second World War, the collapse of the colonial system, determined by the political will of the peoples in that situation, the transformations that took place in developed countries, the offensive policy promoted by the former USSR. in the third world and the capture of more and more states in its area of ​​influence, the Soviet imperialist tendencies have had a strong impact on the evolution of the world’s states.

The group of developing countries comprises mostly countries grouped together in the United Nations Trade and Development Conference (UNCTAD) created in 1964. Developing countries can be grouped by their origins in former colonial or dependent countries, ex-communist countries, current communist countries (the Chinese Republic, Democratic People’s Republic of Korea, Vietnam, Cuba).

Taking into account the differences between the economically, politically, institutionally, socially developing countries. they have been reclassified into the following subgroups: least developed countries, medium-developed countries, new or newly industrialized countries, oil producing and exporting countries.

In terms of the least developed countries, they are the most disadvantaged in terms of natural and human resources. The characteristics of these countries are: agriculture is predominant but the cultivated area represents a small part of the arable land; industrial activity takes place in the fields of food, textile, wood processing, etc.; the degree of capitalization of raw materials is very low; the pace of economic growth is very low; productive institutions are insufficient; manual work technique; poor labor productivity; the closed, subsistence economy predominates. Along with primitive forms of production and social organization that predominate, there are forms of market economy. The economy is characterized by heterogeneity, disarticulation. The poor economic situation is largely determined by social and political issues – tribal forms of organization, tragic events, interethnic struggles, etc.

Newly industrialized states. China, India, Argentina, Brazil, Mexico, Chile, “Asian tigers” – Taiwan, Singapore, Malaysia, Thailand. Growth rhythms of P.N.B. are 8.3% Thailand, 5.9% Singapore, 5.7% Malaysia. The main features that define them are the development of heavy industry, top industries, processing of natural wealth, high level of diversification of activity, labor productivity and product quality comparable to those of developed countries, export of processed products, a strong infusion of foreign capital.

“Asian Tigers” recorded an economic growth at an average rate of 6-8% / year, currently providing 40% of world trade, economic expansion allowing them to improve their living conditions. Problems still faced by these states are economic inefficiency, insufficient infrastructure, corruption, poor workforce training, limited resources.

If we consider the economic and demographic potential of these countries, the People’s Republic of Korea is at the forefront. Between these countries, given the order of magnitude according to GDP compared, China is headed, followed by Brazil, India, Mexico and Indonesia.

China is the country with a communist regime, but it is orienting its economic policy on the formula “one country, two systems”, thus opening up to the market economy. In this respect, particular emphasis is placed on the development of special economic zones. The promotion of market-specific rules of the market has been done only in certain enclaves. China has the surplus trade balance and is ranked 10th worldwide by the value of exports (50% of Chinese exports of processed products are made by foreign enterprises). The number of wholly foreign-owned companies outperformed that of mixed-capital enterprises. Low production costs (35 times lower than those in the US and 10 times lower than those in Taiwan) due to cheap labor and abundance of raw materials, massive government and transnational firms’ investment have prompted continued economic growth even if the international situation is not the most favorable.

China faces poor productivity in the economy due largely to the maintenance of state property. It is the strongest of the developing countries and the strong economic growth of the last years places it among the first in the world hierarchy.

Brazil is considered a continental country; represents half of the population, on the surface and in South America, which gives it the status of a natural leader in the region. He is one of the main international forums being the spokesperson of developing countries in front of the developed ones. Its economic policy is marked by the accumulation of huge debts made in previous governments; the overvaluation of the national currency and the high level of the interest rate were also promoted. It is a country with high economic potential, industry and, in general, diversified economy – production of aircraft, tanks, cars, hydro-technical dams, agricultural production, etc. From a social point of view, Brazil is considered among the most retrograde countries in Latin America.

Singapore, the state-owned city, which is considered to be due to its size (620 km2, 4.2 million square meters), is still included in the group of developing countries, although macroeconomic results rank it among the world’s earliest economies (geographers consider it a developed state). Singapore’s economy depends largely on exports of electronic components. Singapore must resist Malaysian fierce competition in transport and logistics. In the Chinese industrial competition is dangerous. The state seeks to impose itself in the field of the knowledge economy – high technology, health, university education, biotechnology.

Developing countries, producing and exporting oil, the majority grouped in OPEC – Saudi Arabia, Iraq, Iran, Kuwait, Venezuela, Qatar, Indonesia, Libya, United Arab Emirates, Algeria, Nigeria etc. occupy a special place among countries in development, through heterogeneity from different points of view. Distinctive: High income countries – Kuwait, United Arab Emirates, Qatar with NBI/inhabitant (22,500 -17,000 $); high-income countries – Bahrain, Oman, Venezuela, NBI/inhabitant ($ 8000- $ 10,000); Intermediate Income Countries – Iran, Algeria, Ecuador (5300-4300 $ / place); low-income countries – Nigeria $ 290 / individual.

Relatively recently released from colonial domination (India – 1947, China – 1949, Singapore – 1965, Congo, Nigeria, Somalia, Chad, Gabon – 1960, etc.) developing countries face difficulties due to lack of experience in managerial activities.

On the map of Africa, following the achievement of political independence, a number of disadvantaged, resource-free and/or out-of-country states have emerged. The persistence of ethnic groups of different bills, different languages, cultures, different religions, imposed cohabitation on the same territory. The consequences were the worst: civil wars, separatist movements, internal convulsions, political instability, government overthrows, state blows, sub-regional scale wars.

In general, to start concrete programs of economic, commercial, monetary policy, etc., the key issue to be solved is national, namely, the formation and consolidation of the nation. Currently, in most countries, the nation was established, being in the consolidation stage (Latin America, Arab and Asian countries); in these states the economy is developing, the urbanization process is increasing as industrial and tertiary activities develop, the communion of culture and territory, giving its imprint on the formation of a national consciousness, etc .; in others it is noticed that the nation is in the constitution phase, either in the situation where a majority ethnic minority coexists, or in the case of cohabitation of several ethnic groups, with a relatively similar importance. In order to conquer a nation, the first of the variants, in which there is a majority ethnicity, favors in a relatively better way the settlement of the differences of culture, religion, and ground for the economic development. In the second case, the state mission is particularly hard, because it must play permanently, the role of arbitrator in alleviating the problems and extinguishing interethnic conflicts.

The state needs to have an integrative action, both socially and economically, through promoting economic programs to recover national wealth, exploiting agricultural potential. The reality of the last few years shows that in the underdeveloped countries the differences in ethnic integration persist, many of the nations are strongly affirmed, others are in the making, the struggle for independent development and national sovereignty being the main concerns of the respective states.

The first billion inhabitants were registered in 1830, the second in 1930, the third in 1960, the fourth in 1975, the fifth in 1987, the sixth in 1999. The absolute increase in the world population stabilized at around 80 million. additional inhabitants (+ 1.3% / year), the peak reached in the early 1990s by almost 90 million per year. According to the forecast, it should remain almost unchanged for 20 years, before decreasing significantly. It was estimated that in 2002 there were between 130 and 135 million births versus 50-55 million deaths, so 250 births and 100 deaths per minute. Based on this rhythm, the 7 billion people threshold would be passed between 2011 and 2015. It is very likely that the planet counts 8 billion people close to 2030.

The population is unevenly distributed around the globe. It is noticeable that states with a low level of development have a large population. The world’s largest population, 75%, belongs to the third world, unequally distributed across countries. China and India together account for 70% of the total population of developing countries. Estimates made at the end of the 20th century on global demographic growth due to developing countries are realities. Under the current demographic situation in Angola, Burundi, Madagascar, Niger, Uganda, Sierra Leone, Somalia, Chad, Congo, Yemen, Oman, the Palestinian territories, the number of inhabitants should double in 25 years. Fecundity now rises to high levels in Sub-Saharan Africa (an average of 8 children/women in Niger, 7 in Somalia and Uganda, 6-7 in 12 other states) or Western Asia (7.2 in Yemen, 6 in Saudi Arabia, Oman, Afghanistan). Also in these countries, the mortality rate is the highest; AIDS is raging here as well – on average, 10% of the adult population, 1/3 of the population in Botswana, Swaziland, Lesotho, Zimbabwe is seropositive. Life expectancy is very low in these countries: if in the developed countries the average age is 65 years, in these countries it is under 50 years (Zimbabwe is 38 years old).

Given the current global demographic situation that is converging towards a slow demographic increase (population growth in these countries is counterbalanced by declining in the developed countries), full use of surplus labor is required to make economic and social policies more efficient. A phenomenon with chronicling tendencies is unemployment. The population of developing countries in this situation comes mainly from the rural and urban areas, especially from men, poorly qualified, semi-literate. Resolving is temporarily found in the tertiary sector, in construction, in small enterprises.

An important phenomenon specific to developing countries is the urbanization of underdevelopment. The particularities of the urbanization of the developing countries are: it occurs in the context of increasing population numbers in these countries. Although rural exodus contributes 50% to city development, the rural population continues to grow. The moment in which these countries are urbanized is linked to the objective of eradicating underdevelopment; another aspect is related to the improper living conditions that third world cities provide; dwellings – vandals – unhealthy, without facilities for a normal life, increased crime and violence, poor healthcare, heavy transportation, etc.; another key issue for developing countries is ignorance, as expressed by the high illiterate population.

Workforce migration has been predominantly towards the US, Canada, Australia, but also to the Indochina peninsula, the Indonesian archipelago, S, and SE of Africa, completing the labor shortage in those areas. At present, however, restrictive measures are needed on labor displacements; however specialized staff continue to look for and find jobs in developed countries. In this way, poor countries see themselves deprived of valuable human capital. With the United Nations Trade and Development Conference – U.N.C.T.A.D. from Santiago de Chile in 1972, the problem was called – “reverse technology or competence transfer”, stating the need to grasp and liquidate this unequal transfer.

In Latin America, the process is advanced even before the First World War, in the first stage focusing on the export of primary products, later on, the development of equipment producing branches, and since 1950 the development of foreign investments, especially North American, in new industries – chemistry, electro-technics, machine building.

As for the industrialization of Asia, there are three relatively more advanced areas: the West of the continent – the Gulf countries – producing and exporting oil, the center of Asia – China, India, SE Asia – Singapore, Malaysia, Philippines, Thailand, a strong economic growth due mainly to the development of industrial branches: steel, non-ferrous metallurgy, electronics, leather, shoe industry, chemistry, etc.

As far as Africa is concerned, industrialization knows the lowest levels here. Capital shortages, skilled labor, limited domestic market, poor infrastructure quality are just a few of the contributing factors. Especially aimed at capitalizing on natural resources and in North Africa some development of the manufacturing industry – especially the agro-food industry, petroleum, car-building, textiles, etc. – are making considerable efforts to overcome their condition, with the support of the state in many or transnational companies.

This sector holds the highest share in most of the developing countries, with the majority of the population of these countries. However, it is characterized by poor productivity, insufficient diversification, lack of capital and skilled labor, the use of outdated equipment, technically outdated. Natural conditions, in many cases inappropriate for agricultural development, natural calamities, erosion phenomena and forms of land ownership – maintaining feudal or even primitive remains are added.

The overcoming of the current situation, the characteristics of the developing countries, the eradication of poverty and the underdevelopment are issues that come to the attention of the governments. The achievement of the proposed objectives and the perspective is possible by engaging our own effort, the full human potential and the available material, by increasing investments, creating a favorable internal economic climate, increasing the role of education and instruction, and also through an external effort due mainly to enlargement multiple plans, especially deficient ones, of cooperation on mutually beneficial basis.

China surpasses the economic power of any other country in the world, including the US, which at this time continues to erode its own world famous because of the political and economic elites, but also because of an endless war with which it was launched in the Middle East.

According to data released by the IMF, China will reach a GDP of 17,600 billion dollars a year and more, while the United States will stop at 17,400 billion, at a relatively small difference, according to Project Syndicate. 2,000 years ago, China was the first economic power in the world. However, we have to admit that if we refer to China’s population, more than four times as large, the GDP per capita reaches just $ 12,900, while the US $ 54,700 of GDP.

China has surpassed the US and has become the largest economy in the world.

Jumping to a great power as China is remarkable, but it only produces a return to a previous situation. Since the time when the Chinese state was united, about 2,000 years ago, it was the most populous country in the world. At that time, without technology, economic power flowed directly from the number of working people. So it is no surprise that the Asian country was then the world’s most powerful economy (considered by purchasing power) and remained so centuries until 1889 when it was overtaken by the United States in the context of the industrial revolution began to appear in Europe and America.

Today, there is a reversal of the situation as a result of the last decades in which China has developed rapidly. But if two millennia ago, the economic level was an almost internal matter, today’s rapid growth in the country’s economy has a profound geopolitical impact.

Many European countries are based on its economy on trade relations with China, and the African leaders it seems to become an indispensable partner own economic growth, at least in its ability to help support the infrastructure works and the contractor.

The main Latin American entrepreneurs are equally hoping to treat Chinese or American partners, and Japan seems to have moderated its reaction after many years of tense relations with China.

Even Russia, whose relations with China had deteriorated gravely in the post-Stalinist era, has gradually revised them and has lately come to curb Chinese partners, who can do much economic help with implicit implications for politics. Some of China’s current projects are impressive. He has created, together with Russia, Brazil, South Africa and India, a Development Bank, based in Shanghai, and plans to compete with the role of the IMF in that part of the world.

A new Beijing-only infrastructure bank is exclusively for Asia. Now, China takes advantage of the classic silk road to create one adapted to our age and link east and south Asia to the center of Asia and Europe, in a single network that will include railways, highways, energy transmission, and fiber optic communications.

The purpose of these projects where fabulous amounts are invested is to accelerate China’s ties with its financial and commercial partners, which will further strengthen the country’s economic strength. No one guarantees the good intentions. On the contrary, if China becomes aggressive with its neighbors, displaying territorial claims or their raw materials, it has the chances of striking insurmountable diplomatic consequences.

Equally great difficulties await if it neglects the social inequalities in the interior, encourages corruption or fails to make considerable efforts in environmental matters. So far, China has not shown that it is at the forefront of detachment in these areas.

Globally conducted surveys over the past three years indicate that more and more people are turning their backs on the West, and with fear and hope, or both, they see China taking the lead on a global scale. As an anecdote says, optimists learn to speak Chinese, pessimists learn to use a Kalashnikov, notes Project Syndicate. Although some experts dispute that China’s assumption of power should be assumed and that the country’s economic, political and demographic bases are fragile, the “fair” is that China’s influence is on the rise. Many ask what a Pax Sinica (Chinese Peace) means: How will China’s influence be manifested globally? How will Chinese hegemony differ from American variety?

In general, ideology, economy, history, and military power issues dominate the current debate about China. But in comparison to the world dominated by America today and China’s tomorrow, the biggest difference is how Americans and Chinese people see the world beyond their own countries. America is an immigrant country, but a country of people who never emigrate.

Americans living outside the US are not called emigrants, but expats. America has given the world the notion of “melting pot” – a place where different ethnic and religious groups volunteer together, leading to the creation of a new American identity. While critics wonder if this “melting pot” is not just a national myth, the concept has tenaciously maintained the American imaginary.

Since the first Europeans settled in America in the seventeenth century, people around the world have been attracted to the American dream, the dream of a better future. One of the characteristics of America is to turn others into Americans. As a Russian at Oxford University says, “You can become an American, but you can not become an Englishman”. No wonder that the US global agenda is transforming: the Americans set the rules.

The Chinese, on the other hand, have not tried to change the world, but rather to adjust to it. China’s relations with other countries are driven by the diaspora, and the Chinese perceive the world through their experience as immigrants.

Today, more Chinese people live outside China than French in France, and they are among the largest Chinese investors. Only twenty years ago, the Chinese living abroad produced an income equal to the entire domestic population. Chinatowns, usually communities isolated in the big cities of the world, are the center of the Chinese Diaspora.

“The Chinese see such a big difference between them and the others when they unconsciously find it natural to call those whose country they live in,” Lucien Pye observes, a political scientist. While the American “melting pot” transforms others, the Chinatowns teach its inhabitants to adapt, take advantage of the laws and business of the hosts, and remain separate at the same time. If the Americans want to rise as high as possible, the Chinese struggle to remain invisible.

The Chinese communities have managed to become influential in their adoptive countries, without being threatening, closed and non-transparent, without agonizing, being a bridge to China without being the fifth wheel in the cart. Since China is about adaptation, not transformation, it is unlikely to change the world dramatically if it becomes a global leader. But that does not mean that China will not exploit the world for its own purposes.

America, at least in theory, prefers the other countries to share its values ​​and behave like the Americans. China can only fear a world where everyone behaves like the Chinese. So in a China-dominated future, it is not the Chinese who will make the rules; rather, they will try to make the most of the rules that already exist.

The stream of opinion known as supply-side economics started in the United States in the early 1970s and found followers throughout the Anglo-Saxon world. At his head is Arthur Betz Laffer, a professor at the University of Chicago, and then chief economist at Washington’s Office of Management and Budget (MBO). His curve shows that beyond a certain limit, fiscal pressure translates into a loss of budget revenue. When the tax rate exceeds a certain threshold, the propensity for investment declines, economic growth suffocates.

This curve has two advantages: on the one hand, it allows to calculate for each type of tax in part, as for the total taxes, the optimal point, the one in which the yield of the tax is and remains maximum; on the other hand, it allows to justify a policy of tax cuts, demonstrating that the State can obtain equivalent tax revenue even if it reduces the tax rate. Lower taxes encourage businesses to invest more to produce, thus achieving higher turnover and profit. The tax base is increasing, which makes it possible to maintain or even increase tax revenues to the budget, even if the corporate tax has been lowered.

The theory of economy of supply is a reverse-oriented keynesism. Its aspirations are against state intervention through a combined increase in public spending and compulsory deductions, as it would lead to the demotivation of entrepreneurs; Keynesian re-launching policies by demand stimulation are hit by inflationary pressures that have become quasi-structural.

Disengaging the State, reducing and rationalizing taxes, direct stimulating supply by inducing production factors, express the meaning of this theory. Economic agents must be allowed to act themselves. A component of a country’s general economic policy is monetary policy. It consists of the action on the money supply or the interest rate for macroeconomic stabilization.

Monetary or interest rate control is intended to stimulate economic growth, price stability, and reduce inflation so as to achieve the most complete use of the labor factor at the balance of payments external balance.

There are two important guidelines for monetary policy. One is the one that focuses on the amount of money, led by Milton Friedman and his disciples at the Chicago School. The other is the post-Keynesian orientation, which aims at controlling investments, considered the major factor in the evolution of national income, and the interest rate – the instrument to stimulate them. In their view, the current offer (confronted with liquidity preferences) determines the interest rate, which in turn (confronted with the marginal efficiency of capital) influences the total investments, the level of economic activity and the national income.

Monetarists were at the opposite pole to Keynesism. They declared themselves adept at self-regulation of the economy through market forces, challenging the fact that the State could be a balance factor.

For monetarists, fiscal policy has a minor role, with monetary policy being the focus. In this context, the fight against inflation becomes a priority in relation to the fight against unemployment. Reducing the inflation rate can lead to a more balanced and more complete use of the long-term workforce. In monetary policy, the fight against inflation has to be done by reducing budget expenditures and creating money in smaller proportions.

FISCAL INCOMES

TAXATION RATE

Figure 3.1. Fiscal incomes versus taxation rate

The evolution of monetary policy bears the mark of the history of each country. This explains the existing differences. If we refer to ownership of the Central Bank’s capital, it is owned by the State in the United States by private commercial banks, and in Japan by private shareholders. Differences from one country to another arise in connection with the independence of the Central Bank from political power.

In the United States, the EDF enjoys relative independence. In Japan, the Central Bank is under the supervision of the Ministry of Finance.

In Germany, thanks to the statute granted by the law passed in 1957, the Bundesbank enjoys an enviable independence. However, sometimes the bad decisions have not been respected by their own government. For example, on the occasion of the unification of the two Germans, while the Bundesbank predicted a 1-to-2 ratio between the West Mark and the East Mark, the government has decided a 1 to 1 exchange ratio with known negative implications. In turn, the Bank of England, as a public institution, collaborates with the Treasury on monetary issues.

The Central Bank’s action on liquidity offers raises the issue of choosing the monetary aggregate. The composition of monetary money is heterogeneous. Monetary aggregates highlight this.

III.1. The emerging countries in G20 between reformism and socialization

If the official discourse that the G20 represents the place of development of “shared goals and mutual advantages” with a transition from the power poles of the West to East Asia and the South, which corresponds to the tectonic changes arisen especially with China’s economic boom, then the role of emerging countries in this framework would be one of the protagonists of the transition of power. It would be assisting the emergence of a new pattern of global economic governance. However, these assessments are confronted with judgments that see the G20 and its summits at a low level of performance, which observe a fall in the effectiveness of this forum, crying out for a sustained leadership effort on the part of the member states to achieve a transformation of the G20 into an effective multilateral organization.

However, this requirement does not seem to correspond to the interests of the emerging countries, whose orientation dominates a hedging behavior, of risk control by keeping their options open to the maximum. Therefore, the expectation that they can assume a reformist role in favor of the interests of the Global South has proven to be poorly founded, since they assume a limited commitment due to their stakeholder status as conservative free-riders due to their aversion to possible risks. A very significant feature in this orientation is its behavior in a clear sovereign position to guarantee a maximum of national discretion in economic and political matters, giving priority to internal needs. An indicator of this preference can be found in the practical rejection of the peer review process, which the G20 tried to install through the Mutual Assessment Process (MAP) and charged with its implementation. Thus, at present, we can detect a trend of moderate reform in terms of the presence of the emerging powers in the G20, which deals more with the rules to reach decisions and the institutional evolution than with substantive issues. In this sense, the emerging powers have not been able to overcome the function of norm-taker, although they did achieve progress in the agenda-setting areas, the desire to serve as a broker and to form alliances and ad hoc coalitions.

In summary, the above emphasis has been placed on two issues of importance for the emerging countries linked to the G20: identity when belonging, responsibility and associated commitments; and functionality of the forum for the representation of their interests in the global change of power.

Thus, it has been observed that the G20’s emphasis on the equality of the participants has led them to a position of convergence towards the status quo, favoring reforms within the system. This inclination is a reflection of their preference for intergovernmental agreements and distance to hybrid networks with non-governmental organizations, which would imply the need for more debates about their role within the G20. That the G20 arena has served as a space for socialization and adaptation of emerging countries to the established rules of the existing international system, is a very visible result in the revision of some issues on the agenda of this union. This speaks of the generation of an identity sketch. No actions and reformist positions are discerned among the members, much fewer attitudes that indicate extra-institutional strategies to try to undermine this forum, such as temporary absence or abandonment by one of the members.

Rather, the effects of the interaction between this group of states have become evident as its repertoire of foreign policy has been adjusted to the dominant norms, not only in action strategies but also in decision-making.

III.2. The existing relationship between the so-called G8 without Russia and the G20

G8 and G20 fit into those organizations that work within the framework of global governance, each group with its own agenda but the issues on which decisions are made are deliberated and dealt with at the summits of the respective forums, many of these decisions consist of to engage with other international organizations for the effective fulfillment of the diverse problems that we find at the present time at a world-wide level, for that reason they are necessary solutions adopted by different governmental and non-governmental actors.

In March 1973 the so-called G8 emerged, at that time it was still G6 and integrated by the United States, Japan, West Germany, Italy, France and the United Kingdom. It was not until 1976 when Canada would join, becoming G7. Finally, it was in 1997 when Russia first came as a partner, however until the Kannanaskis Summit (Canada) it did not crystallize as G8. It should be noted that at present Russia has been suspended in the participation of the summits as a consequence of the Crimean conflict with Ukraine as stated in the declaration of March 12, 2014, therefore we will refer to the G8 taking into account the present situation in the one that we speak of the G8 without Russia. In addition, it has representation from the European Union, with the assistance of the President of the European Commission and the President of the European Council. As for the organization, which is applicable for both G8 and G20, we must start from the fact that they do not have their own technical and administrative organization, but that the State that is in the presidency, which is rotating and lasts one year, is in charge of preparing the meetings and the topics that will be discussed, these are held annually.

On the other hand, the G20 emerged in 1999 in response to the Asian financial crisis in 1997. In principle it was conformed by the G7 that integrated it: Canada, Germany, the United States, France, Italy, Japan and the United Kingdom, later happened to be called G8 with the above-mentioned inclusion of Russia. Then there would be talks of G20 with the entry of Saudi Arabia, Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Republic of Korea, South Africa, Turkey and the European Union (as permanent guest countries are Spain and Holland). Regarding the criteria followed for its formation is not clear, what is certain is that it does not represent the economic powers, since there are included so many developed countries, the so-called “emerging” countries such as Argentina or Brazil.

Regarding the origin of the G20, the Pittsburgh Agreement deserves special attention, specifically paragraph 6 of the preamble and 50 of the main text, where the G20 leaders met and declared themselves to be "the main forum for our multilateral economic cooperation".

The importance of this designation by the G20 marks a before and after as the main actor of the financial and economic crisis, for this important effort of international economic coordination through the Summits of Washington and London, these two are those qualified as success since they managed to contain the crisis and avoided the protectionist measures on the part of the States.

Obviously, there have been other Summits in which agreements have not been reached or agreements have not been executed. However, the importance of this group lies in the progressive increase of its agenda, which does not quite overlap with the G8 until the present. Therefore, the question we are going to try to answer here is: Have you partially replaced the G20 with the G8? Thus, the hypothesis is that such a replacement has occurred.

This as a consequence of four basic reasons: first, the attitude, until the moment of cooperation of the G8; second, the relevant role of the BRICS; third, the expansion of issues, not only financial and economic, in the agenda of the G20 and finally, the greater legitimacy that the G20 holds against the G8.

Bearing in mind that we are dealing with an issue that is still ongoing, and that does not seem to be of the attention of the researchers either because of the opacity that exists in relation to the development of the deliberations at the summits of both forums or because of the uncertainty nature of the G20, the truth is that we only find two lines of research: the main one that foresees three possible scenarios: coexistence, cooperation and competition and the other line is the one that lists four options: substitute relationship, cooperative relationship, relationship with predominance of the G8 over the G20 and rivalry/competition relationship.

In order to take into account the characteristics of the Member States and power dynamics, we begin with G8, which – we recall – is made up of the United States, Japan, Germany, Italy, France, United Kingdom, Canada (and Russia). These States represent a total of 12% of the world population (based on data from the United Nations Population Fund of 2011), and 37% of the world GDP (the data are calculated on the basis of statistical data consulted in World Bank reports).

Table 3.1. On economic power expressed by GDP in 2017

On the other hand, the G20 which is integrated by G8 plus Saudi Arabia, Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Republic of Korea, South Africa, Turkey and the European Union. In terms of world population, they represent 72% of the world population (based on data from the United Nations Population Fund), and 81% of world GDP (the data are calculated based on the statistical data consulted in the reports of the World Bank and the International Monetary Fund). In total, they represent 10% of all the States recognized in the world.

Table 3.1.a. On economic power expressed by GDP in 2017

Thus, from the data exposed we can see that the G8 is composed of some economic powers and developed states, in geographic terms, in the G8 States located in Europe and North America predominate. On the contrary, in the G20 we observe developed states and the so-called “emerging” as they are called BRICS (Brazil, Russia, India, China and South Africa) or the impulse of newly industrialized economies such as Mexico and South Africa. In terms of geographical representation, we can observe 5 countries on the American continent, 5 on the European continent (including Russia), 6 on Asia (including Turkey), 1 on Oceania and only one on Africa. From the aforementioned regional and demographic composition, it can be deduced that, although it covers a large part of the world population, the African continent is totally excluded, both in the G8 and in the G20. Since the economic and financial crisis of 2008, the G20 has played an important role as the axis of global governance, that role had previously corresponded to the G8. Taking into account the large number and variety of non-governmental organizations that have emerged, and those already existing, in the economic and political field, we can affirm that both G8 and G20 constitute an international reference for the aforementioned organizations. Not only because they are integrated, and have more economic resources to finance their proposals, but because they manifest the commitment of cooperation towards the economic, financial and political coexistence of the different States that are part.

Thus, the current situation is the following, the G20 has partially replaced the G8, because the G8 states are part of the G20 and in case of disappearing they would have their seat in the G20, and because the G8 voluntarily has given up its economic agenda and finance, with all the power and political influence that it supposes, losing its central role as a global governance forum of reference at the global level, and this substitution is being accentuated and consolidated by the expansion of the G20 agenda, the important role of the BRICS and the greater legitimacy enjoyed by the G20 with respect to the G8.

However, we must point out that the G20 is not a perfect organization, it has various problems such as legitimacy, it has already been exposed that there is an evident under-representation of the African States and a super-representation of the Western States, which has as a consequence that most of the proposals are directed to the developed States, and those that are destined to the African continent are to help their extreme situation of famine and poverty but not to guide them towards development. Furthermore, as the forum itself declares, it is an informal organization, that is, that it cannot bind or sanction the States Parties to comply with the agreements signed at the Summits. Finally, another major drawback of the G20 is its poor transparency, the information we get about the various Summits comes from official statements or comments from attendees but it is not possible to have full access to what happens in these Summits. An exhaustive analysis of the issues that are the subject of deliberations at the summits is not part of this work. Therefore, we will try to show a general image of each group's agenda.

Regarding this chapter, we can conclude that the G8 has forty years of history of summits and several economic crises, its origin being one of them. We must bear in mind that the main mission that the forum itself argues is the promotion of open democracy, individual freedom, and social progress. Indeed, until 2008 with the establishment of the G20 as the main international economic and financial forum, the G8 knew about economic and financial issues, such as the Structural Adjustment Programs implemented by the IMF and the World Bank. Likewise, the official G8 website lists the main topics on which they have made statements and initiatives: Africa, refers to the programs in which they collaborate for the economic and cultural development of African countries; the Balkans, as we know, has been a conflict zone, therefore G8 is committed to the peace, stability, and development of worldwide well-being, it consists in ending famines in underdeveloped countries and financial crisis.

Regarding the G20, as the main forum for global economic governance, it started with a reduced economic and financial agenda which has been increasing, since it has gone from the configuration of an international financial system that is stable and tends to grow the fight against poverty, climate change, the management of international economic migrations, the risks of the new energy nationalism, among others. Lately, the G20 tries to solve the global macroeconomic oscillations to level the global growth trying to avoid the commercial and currency wars. On the other hand, during the summits, discussions on the IMF have been of special importance (as we mentioned before, it worked with the G8), since it was agreed to inject a large amount of capital for the IMF, with the aim of making it more cash. In general, there has been a shift away from the regulation of financial and economic investment, reform of international financial institutions, fiscal policy, financial and economic crisis to other issues such as development, especially Africa, and the G20 is committed to compliance with of joint efforts with the African Development Bank (AfDB).

Also, as a second conclusion, until this day, a discourse among the members has not been consolidated, which would indicate the perception that the G20 would be acting on the basis of empty formulas and false declarations, which can be interpreted as a sign of the internalization of its procedures and an institutional characterization, which it sustains an affirmative answer -although insufficient to speak of forcefulness- in terms of identity generation.

The criticisms come more from the Global South, that is to say from those countries and civil society voices that do not feel represented in the G20 and demand their participation or, rather, denounce the lack of legitimacy of this guild and its decisions. Despite its informal characteristics, the G20 seems to allow for greater “ownership” in decisions by members, since it gives a broader base of inclusion of actors, which makes it difficult to join positions that call into question the binding nature of the agreements. In this debate is also the question of its future development, that is, if emerging countries promote a G20 in its current scope as a crisis committee or if they prefer an advance towards a regulatory entity for the world. There are indications that rather induce a certain caution regarding the opportunity and capacity of emerging countries to expand the role of the G20; rather, it is the different groups of emerging countries that try to launch different approaches of their own, within the framework of the United Nations or as systemic intermediaries. This dispersion of an emerging identity of its own and of the corresponding political capacities in “multiple belongings” limits a project and a common action. Furthermore, with the limitation of having to organize responses to recurrent economic crises, there have been no opportunities that have facilitated both the identification with the mechanism and its results as a more comprehensive process of shaping agendas and a sustained function regarding the global governance.

In the end, the emerging powers that are members of the G20 do not show a different behavior from the traditional powers, by following the pattern of extracting the maximum benefit from their participation in the emerging new international order, and by trying to sacrifice as little as possible their decision autonomy. Its north continues being the logic of a “defensive positions”, the orientation that in some way is the consequence of consolidating its position according to a strategy of multiple belongings, expression of its double identities in the different issue-areas. Its cautious attitude in assuming leadership positions and risk aversion for possible political costs in the domestic dimension also limits its role as an initiative in favor of the countries of the Global South, for which reason the G20 arena has not become the place of the great negotiation between North and South, but rather in a crisis committee to control emergency situations.

CONCLUSIONS

The rapid growth of emerging economies has led to a refocusing of economic power: forecasts based on the analysis of Angus Maddison, a renowned economist recently deceased, suggest that the aggregate economic weight of developing and emerging countries is on the brink. to exceed that of all developed countries.

The evolution of the international financial markets throughout the year was marked by a high appetite for risk that favored the search for returns by investors and that materialized in high stock market valuations and low levels of volatility. Indices based on implied volatilities, such as the VIX (calculated on the S & P) and the MOVE (calculated on the US ten-year government debt), reached historical lows at the end of 2017. However, in February 2018 the volatility it rose sharply after the publication of data of salary growth in the United States above the expected, and in March with the announcement of the elevation of tariffs to certain products in the United States.

Although the most obvious determinant of the pursuit of returns is the low level of interest rates, as a result of the ultra-expansive monetary policies of recent years, other factors are also contributing to low volatility. Among the most temporary, the favorable data on corporate profits published throughout 2017 stand out, the low sensitivity of the markets, in general, to the geopolitical uncertainty and the high volumes of share buybacks, used by the own companies to keep stock valuations high. In addition, in recent years there have been some changes in the structures of the markets that have favored this phenomenon. Thus, the greater weight of passive investment strategies, to the detriment of active investment, has increased the number of positions around the medium investor. On the other hand, the greater prominence of electronic platforms, with negotiation techniques based on automatic trading that take market positions with mathematical models, as well as the development of financial products that pivot on the volatility itself, may have increased the persistence of this variable. These structural changes could generate more intense adjustments in the volatility in situations of follow-up behavior among investors (herding behavior).

According to World Development Prospects: the shift in wealth, a new publication by the OECD Development Center, the financial and economic crisis has accelerated this structural transformation of the global economy. Longer-term forecasts suggest that developing and emerging countries are likely to account for nearly 60% of global GDP in 2030. In this sense, it is necessary to ensure a development trajectory which will be based exclusively on the country’s particular features, which will capitalize on the whole spectrum of undeniable opportunities and prevent the escalation of certain threats. Thus, solving this problem globally requires the adoption of sustainable development policies and strategies, including – investment policies to accelerate the introduction of new technologies, increase the regional economy, modernize the infrastructure. Their success will largely depend on the reforms of the public administration, the realization of which is an indispensable condition for the development of the private sector development strategy; policies to reduce poverty and inequity require the reform of the social assistance system; modernizing the system of specialized social services and introducing mechanisms for widening the access of vulnerable people to education, healthcare, housing; improvement of water and sewage systems and others; human resource development policies.

Technological and structural modernization of the economy, the dynamic development of new production processes, their assurance with high technology, the private sector development, entrepreneurship require considerable improvement in the conditions of reproduction of human resources. Currently, investing in human capital is an indispensable condition for post-industrial society development; policies and strategies to ensure long-term environmental protection. In this context, a country, considering its peculiarities, tends to create a new economy, characteristic of the post-industrial society, oriented towards a high quality social and environmental environment. For this, we need to learn from the mistakes and the positive experience of the transition of developing countries towards the information society and knowledge.

REFERENCES

Acharya Amitav, The End of American World Order, Cambridge, TJ International Ltd, 2014.

Adam Young, Increasing Returns, and Economic Progress, The Economic Journal, 38, 1928.

Adam Smith, The wealth of nations. An Inquiry into the Nature and Causes of the Wealth of Nations, W. Strahan and T. Cadell, London, 1776.

Bela Kadar, Journal article, Los países pequeños en la Economía Mundial. Estudios Internacionales, Año 4, No. 16, Instituto de Estudios Internacionales Universidad de Chile, pp. 158-188, 1971.

Bob Sutcliffe, Working Papers from United Nations, Department of Economics and Social Affairs, University of Massachusetts – Amherst, 2003.

Bruce R. Scott, The Political Economy of Capitalism, Harvard Business School Working Paper, No. 07-037, December 2006.

Cornelia Manger – Nestler, Impacts of international law on the restructuring of the global financial system, Max Planck yearbook of United Nations Law, Volume 15, 2011.

Dani Rodrik, Back to Fundamentals in Emerging Markets, Project Syndicate, 13TH August 2015, http://www.project-syndicate.org/commentary/emerging- market-growth-by-dani-rodrik-2015-08.

Deborah D. Avant, Martha Finnemore y Susan K. Sell (comps.), Who Governs the Globe?, Cambridge, Cambridge University Press, 2010.

Gabriel Goodliffe y Stephan Sberro, The G20 after Los Cabos: Illusions of Global Economic Governance, The International Spectator, vol. 47, no. 4, 2012.

Hugh T. Patrick, Financial Development and Economic Growth in Underdeveloped Countries, Economic Development and Cultural Change 14, no. 2, Jan., 1966.

Kai Alderson, Making Sense of State Socialization, Review of International Studies, vol. 27, no. 3, 2001.

Kirton J., Coexistence, cooperation, competition: G Summits. In Aspenia Vol. 43/44, 2009.

Kirton J., Winning Together: Advanced Countries' Approach to G20 Governance. Paper prepared for the session on "G20 Dialogue: Advanced Countries, Emerging Countries and the G20" at the "G20 Seminar" at the Shanghai International Studies University (SISU), Shanghai, China, 3 May, 2013.

Lourdes Arizpe (editor), The cultural dimensions of global change. An anthropological change, Culture and Development Serie s UNESCO Publishing, Imprimerie des Presses Universitaires de France, 41100 Vendôme, 1996.

Martin J. Beckmann, Some aspects of returns to scale in business administration, The Quarterly Journal of Economics, Volume 74, Issue 3, 1 August 1960.

Max-Neff, M. A., Economic growth and quality of life: a threshold hypothesis, Ecological Economics, 15, pp. 115-118, 1995.

Miles Kahler, Rising Powers and Global Governance: Negotiating Change in a Resilient Status Quo, International Affairs, vol. 89, no. 3, 2013.

Paul Cammack, The G20, the Crisis, and the Rise of Global Developmental Liberalism, Third World Quarterly, vol. 33, no.1, 2012.

Ritter, Lawrence S.; Silber, William L.; Udell, Gregory F., Principles of Money, Banking, and Financial Markets (10th ed.). Addison-Wesley, Menlo Park C., 2000.

Roger E.A. Farmer, Prosperity for All: How to Prevent Financial Crises, Oxford University Press,2016

Ulrich Schneckener, The Opportunities and Limits of Global Governance by Clubs, German Institute for International and Security Affairs, SWPComments C 22, 2009.