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Abstract 3

Mechanisms to protect the national economy from the negative


consequences of globalization
First of all, it is necessary to emphasize the main negative consequences of
globalization so as to determine the most dangerous influences on the national
economies. The most common drawback of globalization is that it is widening the
gap between the rich and poor; where rich people are becoming richer and poor are
becoming poorer. In addition, reach people have more opportunities to use the
advantages of globalization.
As a result of outsourcing, globalization may also deprive an entire country
of its jobs and resources. This is because globalization takes jobs away from one
country and provides it to another country. Processes of moving production to
other countries and the rise of the economies of some countries at the expense of
others provide the tendency of leaving lots of people without the job and living
opportunities that they deserve.
Although people belonging to different cultures and countries get a chance
to interact with each other, but it may causes a loss in tradition and values. It goes
without saying that globalization processes have an influence on the environment
and culture of each country. Another threat for countries is the loss of the national
sovereignty. Because of the universal involvement in the process of globalization
there is a definite interdependence of countries in the world and stronger and more
developed countries have the opportunity to intervene in the economy and policy
of other countries and to dictate their terms or to impose their ideas.
More than that, the boundaries are blurred for manufacturers. In the case of
low competitiveness of national producers, they may be driven out of the market of
their own country and the whole economy of the country may become addicted.
There are various economic and human development measurements related
to the study of globalization. It is very important to strike balance between the
positives and negatives of globalization. Measurements of economic globalization

typically focus on variables such as trade, Foreign Direct Investment, Gross


Domestic Product, portfolio investment, and income. However, newer indices
attempt to measure globalization in more general terms, including variables related
to political, social, cultural, and even environmental aspects of globalization.
The Global Innovation Index can help to determine the countries which
should be aware of their positions and make changes to protect themselves and to
improve their competitiveness in the sphere of innovations. The Global Innovation
Index is an annual ranking of countries by their capacity for, and success in,
innovation.
Table 1 Positions of some countries in the ranking (Global Innovation
Index)
Rank
1
2
3
4
5
6
7
8
9
10
16
27
43

Country
Switzerland
Sweden
United Kingdom
United States of America
Finland
Singapore
Ireland
Denmark
Netherlands
Germany
Japan
Czech Republic
Russian Federation

Score
66.3
63.9
61.9
61.4
59.9
59.2
59.0
58.5
58.3
57.9
54.5
49.4
38.5

Countries with a higher index of innovativeness are more open to the


influence of processes of globalization and even set the pace of these processes.
The most important priorities are the protection of information and intellectual
property rights, as well as the high level of investment in innovation.
Another outspoken example of comparing countries and their activities
under the circumstances of the globalization is the Index of Economic Freedom is
very. It is an annual index and ranking created by The Heritage Foundation and
The Wall Street Journal in 1995 to measure the degree of economic freedom in the
world's nations. The creators of the index took an approach similar to Adam
Smith's in The Wealth of Nations that basic institutions that protect the liberty of

individuals to pursue their own economic interests result in greater prosperity for
the larger society. The main components of this index: business freedom, trade
freedom, fiscal freedom, freedom from government, monetary freedom, investment
freedom, financial freedom, property rights, freedom from corruption, freedom of
labor relations.
Table 1 The freest countries in the overall ranking (top 5)
2016
Rank

Country

Score
Free (80100)

1.
2.
3.
4.
5.

Hong Kong
Singapore
New Zealand
Switzerland
Australia

88,6
87,8
81,6
81,0
80,3

It goes without saying, that in the post-Soviet countries, this indicator is still
unable to reach a high level, so it is reasonable to present them in a separate
ranking.
Table 2 Post-Soviet countries in the ranking
2016
Rank

Country

Score
Mostly Free (70.079.9)

9.
14.
23.
36.

Estonia
Lithuania
Georgia
Latvia

54.
68.
91.

Armenia
Kazakhstan
Azerbaijan

96.
117.
149.
153.

Kyrgyzstan
Moldova
Tajikistan
Russia

157.
162.

Belarus
Ukraine

77.2
75.2
72.6
70.4
Moderately Free (60.069.9)
67
63.3
60.2
Mostly Unfree (50.059.9)
59.6
57.4
51.3
50.6
Repressed (049.9)
48.8
46.8

There are more favorable conditions for national development in the


countries with more open economies. Nevertheless, it does not always mean that

the foreign companies can easy enter the markets of these countries. While in those
countries whose economies are more closed, the processes of globalization have
less impact on the economy, but also is it more difficult for national producers to
develop in such conditions.
Every country should choose the tools for protection in accordance with its
own conditions and policies. At the same time, different countries in varying
degrees prepared to participate in the processes of globalization and these decisions
should be taken by governments in accordance with national interests.

List of references and sources of the Internet


1. Bishop, T., Reinke, J., Adams, T., Globalization: Trends and Perspectives
Journal of International Business Research, 1, 2011, 10-22
2. Pologeorgis, N., How Globalization Affects Developed Countries,
University of California Press, 2014
3. Spence, M., Globalization and Unemployment: The Downside of
Integrating

Markets,

Foreign

affairs,

2011

URL:

www.foreignaffairs.com/articles/united-states/2011-06-02/globalization-andunemployment
4.

The

Global

Innovation

Index,

analysis,

2016

URL:

www.globalinnovationindex.org/analysis-indicator
5. Index of Economic Freedom, 2016 URL:www.heritage.org/index/ranking