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Itroduction.
The relevance of the research topic. Liberalization of international economic relations and
development of integration processes are essential characteristics of the modern world economy,
affecting many aspects of international life. At the stage of integration is changing the nature of
international socialization, which previously resulted in collaboration in the largely autonomous
national economic organisms, internal integrity, which was unity of social reproduction process
nationwide. In today's international economic integration happens the interpenetration and
interweaving of national processes of social reproduction and their internationalization, resulting
in new, more extensive are emerging economic organisms-integration associations on the
international level. This circumstance gives international economic complex nature of the
emerging unified economic organism at the global level.
This new quality of world economy emerges as a result of quantitative economic and political
rise of the interrelationships of certain countries. It comes when underlying the
internationalization of economic life, the international commodification of production in some
regions reaches a level where national processes of reproduction can no longer be carried out
offline, when they extend far beyond individual countries and organically are woven into other
national reproduction processes. While cross-country economic relations become an integral part
of the functioning of national economies of the countries in the region, and their institutional
structures are no longer able to regulate the mentioned processes without very close mutual
coordination of their economic policies. All this speaks of historically and objectively necessary
process due to increasing mutual openness integrating national economies relative to each other.
In these circumstances, a number of countries, such as the countries of Eastern and Central
Europe, as well as the States of the former Soviet Union, embarking on the path of an open
economy building, faced a number of actual problems connected with the need to determine the
degree of liberalization of foreign economic activity, which would meet the requirements for
inclusion of the countries in the world economic system. For the development of such a system
tends to increasing openness of national economies on the unequivocal priority registered
national economic interests. The country's integration into the world economy on the one hand
allows all economic actors to orient its activities on offer and demand not only inside the country
but also abroad, choose markets and partners, guided primarily by the interests of profit
maximization, which is the main criterion for market success, but, on the other hand, making the
national economy more sensitive to foreign trade Wednesday and what is happening there.
In these circumstances, it becomes evident that Moldova should follow such external economic
policy, which responds to the challenges of economic transformation and development of the
economy and is free from flaws and misjudgments of the past years. The country needs to
compensate' internal and external balance in the economy, reduce the possible negative effect of
facing their divergence. Emphasis on active use of their capacities does not obviate the need for
effective cooperation with foreign countries and international integration groupings, particularly
in connection with the intensification of processes of internationalization, integration and
globalization in the world economy as a whole. However, despite the success of most real-world
integration processes in the world, interaction of Russia even with its closest neighbours, the
States of the former USSR, cannot be called effective, despite the huge number of treaties and
agreements aimed at the reintegration of the post-Soviet space.
Economic openness is an indispensable enabler of growth, job creation, and poverty reduction.
The importance of studying of this phenomena is very high , to find out the impact of economic
openness of the countries of the world and the Republic of Moldova until now and in the future ,
to see the changes that ocurred.Some of the big factors that participate in opening of economies
are globalization that began during World War between the years 1920-1930 and the
development of informational technologies that started in 1958 with a sudden increase in the
growth rate since 1995 till now.
For the Republic of Moldova the year 1991 was the first step towards exiting from a closed
system to the open one , after that happened a lot of agreements between Moldova and other
countries.

Chapter I:Theoretical issues concerning global economic openness.

1.1The evolution of the phenomenon of economic openness.
An open economy is considered to be a national economy in which there are no restrictions in
conducting exchanges with the former Soviet republics, where goods and capital are able to enter
and leave freely in the country. At the same time, the economy is open and a theoretical concept,
who studies the influence of external factor on the national economies.
It is clear that the emergence and development of the global economy is the consequence of the
transition of the majority of countries on the closed national economies to open. When and how
did this happen?
History knows the four phases of the process of formation of the world economy. The first phase
occurred at the pre-industrial stage of production. If the search for the origins of common
humanity, they are found in the historic Dali, which is from the US on 10 thousand years. Then
began trading exchange, and people who lived in separate from each other tribal communities
and tribes were laying the foundations for mutually advantageous economic cooperation. His
first targets have become surplus grain, meat and other benefits arising from their neighbouring
tribes, families and individuals. Over time commodity production has created a growing mass
production, which came in a regular exchange between different States. With the formation of
estates merchants began to develop international trade.
The next stage of economic communication arose in industrial production phase. As a result, the
full development of market relations, the emergence of large machine production and
irrepressible desire of businessmen to enrich foreign trade has become an integral component of
almost all national economies. The emergence of a global market-here is a higher economic
achievement of classical capitalism. The third stage of the global economy came at the turn of
XIX-XX centuries. Then first experienced the world economy system.The fledgling equity West
became closely within the internal market. In pursuit of new profits, he rushed to other countries.
Increased export of capital and a broad international exchange generated international monopoly.
They divided between themselves the world's markets, sources of raw materials and the
application area of the capital. This was done through contracts, leases, concessions, etc. Section
of world economic space created for big capital to extract monopoly profits in the territories, a
growing number of countries. According to rough estimates by researchers at the end there were
about in XDC 40 international monopolies, in 1910, about 100. For example, at the beginning of
the 20th century American concern "General Electric" ("General Electric Company") conquered
its control of the German "universal society of electricity" and the English "Metro-Vickers". He
entered also in electrical industry of France, Japan and other countries.

The economic section of the Territorial division of the The new role of the colonies
world world
Fig. 1.1. features of the world economy system of the early 20th century.
But the Economic Division of the world over-monopolies "by force", and the "power" over time
according to different circumstances change. Therefore, the financial capital of the major powers
have emerged strongly desire to accept the territory of other countries by imposing on them the
politico-administrative domination. Due to this, at the end of the .xdc early XX centuries.
increased dramatically earlier colonization of free peoples. As you know, this has led to the
completion of the world's great powers partition territorial and huge colonial empires.
For 70 years the XDC. on our planet were vast lands not yet captured by the great powers. Such
territories was 9/10 in Africa, in Asia-1/2, in Polynesia-about 1/2. From 1876 to 1914 Gg.
conducted enhanced struggle for colonies. Western States have seized more than 25 million
square meters. kilometres, and the population of the colonies increased another quarter billion
and accounted for 570 million. So was taken the final step to the formation of the world
economy. The world economy is a global economic organism in which arose the interdependence
of all countries and peoples of the world. It is characterized by the internationalization of the
productive forces and the creation of a diverse system of international economic relations. As it
develops, the world economy and strong integrity expresses growing in the world. However, in
the first half of this century, this integrity was ensured primarily using noneconomic coercion
with respect to the vast majority of mankind.
With the completion of the territorial division of the world role of colonies in the international
economy varies substantially. Before-and Western countries began to acquire the colony back in
the 16th century.-subordinate territory were mostly favourable marketing area, coming from
metropolitan areas. In the face of the same 20th century colony turned into additional sources of
raw materials, cheap labor, favorable capital application area important military-strategic areas.
Huge revenues from the colonies vykachivalis' via taxes, the various vnejekonomicheskimi
methods. The indigenous populations of the colonial and dependent countries obrekalos' on
poverty, hunger, disease, extinction. To bind more strongly to itself a colony and profitable use of
them, the great powers have formed specific colonial international division of labour. Oppressed
peoples imposed on production specialization, defined needs foreign capital. In the colonies did
not develop industries that could compete with the industry of metropolises. But in areas rich in
minerals, strongly expanded, far exceeding the needs of the dependent countries, mining.
Needs of monopolies was subordinated and specialization of agriculture colonies, often to the
detriment of the needs of its own population. For example, during the second half of the 19th
century the export of grain from India to England increased 11 times. At the same time, the
number of deaths from famine in the colony increased 20 times.

The best land used for cultivation of industrial crops, the right industry metropolises. As a result,
many countries were forced to subdue farm export production of one or two (rarely three-four)
commodities. This specificity of the international division of labour still remains as one of the
legacies of the colonial past. Currently, the overwhelming share of exports comprise copper in
Zambia, Bolivia-Tin, Libya-Chad-oil, cotton, Ghana-cocoa beans.
However, the world system of domination of finance capital carried within itself a sharp socio-
economic contradictions; they made it unstable and led ultimately to the destruction. Thus, the
contradiction between the major capitalist countries have led to world wars-a fierce struggle for
territorial redistribution of the world. The contradictions between the colonies and the
metropolises have created powerful national liberation movement which is erased from the map
of the lands of the colonial system. Since the 60-ies, when most of the colonial countries
emerged from political dependency, came the modern stage of development of the world
economy. At this point, there are new trends of progressive change in the global economy
(figure. 1.2.).

International Increasing global Development of the The

cooperation on the market space. totality of internationalization
basis of material international of production.
interest. economic relations.

Fig. 1.2. Modern trends in world economy

Modern global economy excludes the vnejekonomicheskoe forcing countries. Gone is the
Economic Union of States that existed on the basis of military-political blocs. Ever more
frequent becomes increasing material interest in permanent economic cooperation between the
two countries. In recent decades, a new global economic space. Many economically backward
countries natural or conduct polunatural'noye production, moving to a market economy. Post-
socialist States belonged in closed military-political blocs become countries with open
economies. This helps to ensure that internationally the more intensively the whole system of
market relations. Global linkages between countries are not confined only to foreign trade
relations, as it was in the early stages of world economic history. Economic interdependence is
becoming more multilateral. The current set of linkages with includes the following forms:
Foreign trade;
Chains of production;
Exchange of scientific and technical information and technological developments;

The movement of labour from one country to another;

International credit and foreign investment;
Exchange relationships between States.
Such world economic relations are based on global infrastructure. It primarily consists of the
international transport system (marine, rail, air transport), a global network of communications
information (including InterContinental telecommunications network). The current world
economy is constantly changing under the influence of factors that give a high level of
dynamism. These include scientific-technical revolution, the growing interdependence of
national economies, a radical restructuring of the socio-economic relations in many countries.
The basis of these changes provides a growing internationalization of production.
1.2 The Growth Impact of Economic Freedom
Economic freedom is at its heart about individual autonomy, concerned chiefly with the freedom
of choice enjoyed by individuals in acquiring and using economic goods and resources. The
underlying assumption of those who favor economic freedom is that individuals know their
needs and desires best and that a self-directed life, guided by ones own philosophies and
priorities rather than those of a government or technocratic elite, is the foundation of a fulfilling
existence. Independence and self-respect flow from the ability and responsibility to take care of
oneself and ones family and are invaluable contributors to human dignity and equality.
Living in societies as we do, individual autonomy can never be considered absolute. Many
individuals regard the well-being of their families and communities as equal in importance to
their own, and the personal rights enjoyed by one person may well end at his neighbors
doorstep. Decisions and activities that have an impact or potential impact on others are rightly
constrained by societal norms and, in the most critical areas, by government laws or regulations.
In a market-oriented economy, societal norms, not government laws and regulations, are the
primary regulator of behavior. Such norms grow organically out of society itself, reflecting its
history, its culture, and the experience of generations learning how to live with one another. They
guide our understanding of ethics, the etiquette of personal and professional relationships, and
consumer tastes. Democratic political systems, at their best, reflect societal norms in their laws
and regulations, but even democratic governments, if unconstrained by constitutional or other
traditional limits, may pose substantial threats to economic freedom. A constraint imposed on
economic freedom by majority rule is no less a constraint than one imposed by an absolute ruler
or oligarch. It is thus not so much the type of government that determines the degree of economic
freedom as it is the extent to which government has limits beyond which it may not, or at least
does not, go.
Inevitably, any discussion of economic freedom will focus on the critical relationship between
individuals and the government. In general, state action or government control that interferes
with individual autonomy limits economic freedom.
However, the goal of economic freedom is not simply the absence of government coercion or
constraint, but rather the creation and maintenance of a mutual sense of liberty for all. Some
government action is necessary for the citizens of a nation to defend themselves and to promote
the peaceful evolution of civil society, but when government action rises beyond the minimal
necessary level, it is likely infringing on someones economic or personal freedom.
Throughout history, governments have imposed a wide array of constraints on economic activity.
Such constraints, though sometimes imposed in the name of equality or some other ostensibly
noble societal purpose, are in fact imposed most often for the benefit of societal elites or special
interests. As Milton and Rose Friedman once observed:
A society that puts equalityin the sense of equality of outcomeahead of freedom will end up
with neither equality nor freedom. The use of force to achieve equality will destroy freedom, and
the force, introduced for good purposes, will end up in the hands of people who use it to promote
their own interests.1
Governments excessive intrusion into wide spheres of economic activity comes with a high cost
to society as a whole. By substituting political judgments for those of the marketplace,
government diverts entrepreneurial resources and energy from productive activities to rent-
seeking, the quest for economically unearned benefits. The result is lower productivity, economic
stagnation, and declining prosperity.
Measuring Economic Freedom
The Index of Economic Freedom takes a comprehensive view of economic freedom. Some of the
aspects of economic freedom that are evaluated are concerned with a countrys interactions with
the rest of the world (for example, the extent of an economys openness to global investment or
trade). Most, however, focus on policies within a country, assessing the liberty of individuals to
use their labor or finances without undue restraint and government interference.
Each of the measured aspects of economic freedom plays a vital role in promoting and sustaining
personal and national prosperity. All are complementary in their impact, however, and progress
in one area is often likely to reinforce or even inspire progress in another. Similarly, repressed
economic freedom in one area (for example, a lack of respect for property rights) may make it
much more difficult to achieve high levels of freedom in other categories.
The 12 aspects of economic freedom measured in the Index may be grouped into four broad
categories:
Rule of law (property rights, judicial effectiveness, and government integrity);
Government size (tax burden, government spending, and fiscal health);
Regulatory efficiency (business freedom, labor freedom, and monetary freedom); and
Market openness (trade freedom, investment freedom, and financial freedom).
Rule of Law
Property Rights. In a market economy, the ability to accumulate private property and wealth is a
central motivating force for workers and investors. The recognition of private property rights and
an effective rule of law to protect them are vital features of a fully functioning market economy.
Secure property rights give citizens the confidence to undertake entrepreneurial activity, save
their income, and make long-term plans because they know that their income, savings, and
property (both real and intellectual) are safe from unfair expropriation or theft.
Property rights are a primary factor in the accumulation of capital for production and investment.
Secure titling is key to unlocking the wealth embodied in real estate, making natural resources
available for economic use, and providing collateral for investment financing. It is also through
the extension and protection of property rights that societies avoid the tragedy of the
commons, the phenomenon that leads to the degradation and exploitation of property that is
held communally and for which no one is accountable. A key aspect of property rights protection
is the enforcement of contracts. The voluntary undertaking of contractual obligations is the
foundation of the market system and the basis for economic specialization, gains from
commercial exchange, and trade among nations. Even-handed government enforcement of
private contracts is essential to ensuring equity and integrity in the marketplace.
Judicial Effectiveness. Well-functioning legal frameworks protect the rights of all citizens against
infringement of the law by others, including by governments and powerful parties. As an
essential component of the rule of law, judicial effectiveness requires efficient and fair judicial
systems to ensure that laws are fully respected, with appropriate legal actions taken against
violations.
Judicial effectiveness, especially for developing countries, may be the area of economic freedom
that is most important in laying the foundations for economic growth, and in advanced
economies, deviations from judicial effectiveness may be the first signs of serious problems that
will lead to economic decline.
There is plenty of evidence from around the world that judicial effectiveness is a critical factor in
empowering individuals, ending discrimination, and enhancing competition. In the never-ending
struggle to improve the human condition and achieve greater prosperity, an institutional
commitment to the preservation and advancement of judicial effectiveness is critical.
Government Integrity. In a world characterized by social and cultural diversity, practices
regarded as corrupt in one place may simply reflect traditional interactions in another. For
example, small informal payments to service providers or even government officials may be
regarded variously as a normal means of compensation, a tip for unusually good service, or a
corrupt form of extortion.
While such practices may indeed constrain an individuals economic freedom, their impact on
the economic system as a whole is likely to be modest. Of far greater concern is the systemic
corruption of government institutions by practices such as bribery, nepotism, cronyism,
patronage, embezzlement, and graft. Though not all are crimes in every society or circumstance,
these practices erode the integrity of government wherever they are practiced. By allowing some
individuals or special interests to gain government benefits at the expense of others, they are
grossly incompatible with the principles of fair and equal treatment that are essential ingredients
of an economically free society.
There is a direct relationship between the extent of government intervention in economic activity
and the prevalence of corruption. In particular, excessive and redundant government regulations
provide opportunities for bribery and graft. In addition, government regulations or restrictions in
one area may create informal markets in another. For example, by imposing numerous
burdensome barriers to conducting business, including regulatory red tape and high transaction
costs, a government can incentivize bribery and encourage illegitimate and secret interactions
that compromise the transparency that is essential for the efficient functioning of a free market.
Government Size
Tax Burden. All governments impose fiscal burdens on economic activity through taxation and
borrowing. Governments that permit individuals and businesses to keep and manage a larger
share of their income and wealth for their own benefit and use, however, maximize economic
freedom.
The higher the governments share of income or wealth, the lower the individuals reward for
economic activity and the lower the incentive to undertake work at all. Higher tax rates reduce
the ability of individuals and firms to pursue their goals in the marketplace and thereby lower the
level of overall private-sector activity.
Individual and corporate income tax rates are an important and direct constraint on an
individuals economic freedom and are reflected as such in the Index, but they are not a
comprehensive measure of the tax burden. Governments impose many other indirect taxes,
including payroll, sales, and excise taxes, as well as tariffs and value-added taxes (VATs). In the
Index of Economic Freedom, the burden of these taxes is captured by measuring the overall tax
burden from all forms of taxation as a percentage of total gross domestic product (GDP).
Government Spending. The cost, size, and intrusiveness of government taken together are a
central economic freedom issue that is measured in the Index in a variety of ways (see, for
example, Tax Burden and Regulatory Efficiency). Government spending comes in many forms,
not all of which are equally harmful to economic freedom. Some government spending (for
example, to provide infrastructure, fund research, or improve human capital) may be considered
investment. Government also spends on public goods, the benefits of which accrue broadly to
society in ways that markets cannot price appropriately.
All government spending, however, must eventually be financed by higher taxation and entails
an opportunity cost. This cost is the value of the consumption or investment that would have
occurred had the resources involved been left in the private sector.
Excessive government spending runs a great risk of crowding out private economic activity.
Even if an economy achieves faster growth through more government spending, such economic
expansion tends to be only temporary, distorting the market allocation of resources and private
investment incentives. Even worse, a governments insulation from market discipline often leads
to bureaucracy, lower productivity, inefficiency, and mounting public debt that imposes an even
greater burden on future generations.
Fiscal Health. A governments budget is one of the clearest indicators of the extent to which it
respects the principle of limited government. By delineating priorities and allocating resources, a
budget signals clearly the areas in which government will intervene in economic activity and the
extent of that intervention. Beyond that, however, a budget reflects a governments commitment
(or lack thereof) to sound financial management of resources, which is both essential for
dynamic long-term economic expansion and critical to the advancement of economic freedom.
Widening deficits and a growing debt burden, both of which are direct consequences of poor
government budget management, lead to the erosion of a countrys overall fiscal health.
Deviations from sound fiscal positions often disturb macroeconomic stability, induce economic
uncertainty, and thus limit economic freedom.
Debt is an accumulation of budget deficits over time. In theory, debt financing of public
spending could make a positive contribution to productive investment and ultimately to
economic growth. Debt could also be a mechanism for positive macroeconomic countercyclical
interventions or even long-term growth policies. On the other hand, high levels of public debt
may have numerous negative impacts such as raising interest rates, crowding out private
investment, and limiting governments flexibility in responding to economic crises. Mounting
public debt driven by persistent budget deficits, particularly spending that merely boosts
government consumption or transfer payments, often undermines overall productivity growth
and leads ultimately to economic stagnation rather than growth.
Regulatory Efficiency
Business Freedom. An individuals ability to establish and run an enterprise without undue
interference from the state is one of the most fundamental indicators of economic freedom.
Burdensome and redundant regulations are the most common barriers to the free conduct of
entrepreneurial activity. By increasing the costs of production, regulations can make it difficult
for entrepreneurs to succeed in the marketplace.
Although many regulations hinder business productivity and profitability, the ones that most
inhibit entrepreneurship are often those that are associated with licensing new businesses. In
some countries, as well as many states in the United States, the procedure for obtaining a
business license can be as simple as mailing in a registration form with a minimal fee. In Hong
Kong, for example, obtaining a business license requires filling out a single form, and the
process can be completed in a few hours. In other economies, such as India and parts of South
America, the process of obtaining a business license can take much longer and involve endless
trips to government offices and repeated encounters with officious and sometimes corrupt
bureaucrats.
Once a business is open, government regulation may interfere with the normal decision-making
or price-setting process. Interestingly, two countries with the same set of regulations can impose
different regulatory burdens. If one country applies its regulations evenly and transparently, it
can lower the regulatory burden by facilitating long-term business planning. If the other applies
regulations inconsistently, it raises the regulatory burden by creating an unpredictable business
environment.
Labor Freedom. The ability of individuals to find employment opportunities and work is a key
component of economic freedom. By the same token, the ability of businesses to contract freely
for labor and dismiss redundant workers when they are no longer needed is essential to
enhancing productivity and sustaining overall economic growth.
The core principle of any economically free market is voluntary exchange. That is just as true in
the labor market as it is in the market for goods.
State intervention generates the same problems in the labor market that it produces in any other
market. Government labor regulations take a variety of forms, including minimum wages or
other wage controls, limits on hours worked or other workplace conditions, restrictions on hiring
and firing, and other constraints. In many countries, unions play an important role in regulating
labor freedom and, depending on the nature of their activity, may be either a force for greater
freedom or an impediment to the efficient functioning of labor markets.
Onerous labor laws penalize businesses and workers alike. Rigid labor regulations prevent
employers and employees from freely negotiating changes in terms and conditions of work, and
the result is often a chronic mismatch of labor supply and demand.
Monetary Freedom. Monetary freedom requires a stable currency and market-determined prices.
Whether acting as entrepreneurs or as consumers, economically free people need a steady and
reliable currency as a medium of exchange, unit of account, and store of value. Without
monetary freedom, it is difficult to create long-term value or amass capital.
The value of a countrys currency can be influenced significantly by the monetary policy of its
government. With a monetary policy that endeavors to fight inflation, maintain price stability,
and preserve the nations wealth, people can rely on market prices for the foreseeable future.
Investments, savings, and other longer-term plans can be made more confidently. An inflationary
policy, by contrast, confiscates wealth like an invisible tax and distorts prices, misallocates
resources, and raises the cost of doing business.
There is no single accepted theory of the right monetary policy for a free society. At one time, the
gold standard enjoyed widespread support. What characterizes almost all monetary theories
today, however, is support for low inflation and an independent central bank. There is also
widespread recognition that price controls corrupt market efficiency and lead to shortages or
surpluses.
Market Openness
Trade Freedom. Many governments place restrictions on their citizens ability to interact freely
as buyers or sellers in the international marketplace. Trade restrictions can manifest themselves
in the form of tariffs, export taxes, trade quotas, or outright trade bans. However, trade
restrictions also appear in more subtle ways, particularly in the form of regulatory barriers
related to health or safety.
The degree to which government hinders the free flow of foreign commerce has a direct bearing
on the ability of individuals to pursue their economic goals and maximize their productivity and
well-being. Tariffs, for example, directly increase the prices that local consumers pay for foreign
imports, but they also distort production incentives for local producers, causing them to produce
either a good in which they lack a comparative advantage or more of a protected good than is
economically ideal. This impedes overall economic efficiency and growth.
In many cases, trade limitations also put advanced-technology products and services beyond the
reach of local entrepreneurs, limiting their own productive development.
Investment Freedom. A free and open investment environment provides maximum
entrepreneurial opportunities and incentives for expanded economic activity, greater productivity,
and job creation. The benefits of such an environment flow not only to the individual companies
that take the entrepreneurial risk in expectation of greater return, but also to society as a whole.
An effective investment framework is characterized by transparency and equity, supporting all
types of firms rather than just large or strategically important companies, and encourages rather
than discourages innovation and competition.
Restrictions on the movement of capital, both domestic and international, undermine the efficient
allocation of resources and reduce productivity, distorting economic decision-making.
Restrictions on cross-border investment can limit both inflows and outflows of capital, thereby
shrinking markets and reducing opportunities for growth.
In an environment in which individuals and companies are free to choose where and how to
invest, capital can flow to its best uses: to the sectors and activities where it is most needed and
the returns are greatest. State action to redirect the flow of capital and limit choice is an
imposition on the freedom of both the investor and the person seeking capital. The more
restrictions a country imposes on investment, the lower its level of entrepreneurial activity.
Financial Freedom. An accessible and efficiently functioning formal financial system ensures the
availability of diversified savings, credit, payment, and investment services to individuals. By
expanding financing opportunities and promoting entrepreneurship, an open banking
environment encourages competition in order to provide the most efficient financial
intermediation between households and firms as well as between investors and entrepreneurs.
Through a process driven by supply and demand, markets provide real-time information on
prices and immediate discipline for those who have made bad decisions. This process depends on
transparency in the market and the integrity of the information being made available. A prudent
and effective regulatory system, through disclosure requirements and independent auditing,
ensures both.
Increasingly, the central role played by banks is being complemented by other financial services
that offer alternative means for raising capital or diversifying risk. As with the banking system,
the useful role for government in regulating these institutions lies in ensuring transparency and
integrity and promoting disclosure of assets, liabilities, and risks.
Banking and financial regulation by the state that goes beyond the assurance of transparency and
honesty in financial markets can impede efficiency, increase the costs of financing
entrepreneurial activity, and limit competition. If the government intervenes in the stock market,
for instance, it contravenes the choices of millions of individuals by interfering with the pricing
of capitalthe most critical function of a market economy.
ECONOMIC freedom: A formula for success
As a vital component of human dignity, autonomy, and personal empowerment, economic
freedom is valuable as an end itself. Just as important, however, is the fact that economic
freedom provides a formula for economic success.
We know from the data we collect to build the Index that each measured aspect of economic
freedom has a significant effect on economic growth and prosperity. Policies that allow greater
freedom in any of the areas measured tend to spur growth. Growth, in turn, is an essential
element in building lasting prosperity.
Economic freedom is not a single system, however. In many respects, it is the absence of a single
dominating system. As previous editions of the Index have elaborated, economic freedom is not a
dogmatic ideology. It represents instead a philosophy that rejects dogma and embraces diverse
and even competing strategies for economic advancement. The Index also reveals that it is not
the policies we fail to implement that hold back economic growth. Rather, it is the dreadful
policies that, all too often, we put in place.
In other words, those who believe in economic freedom believe in the right of individuals to
decide for themselves how to direct their lives. The added benefit from societys point of view is
the proven power of self-directed individuals, whether working alone or working together in
associations or corporations, to create the goods and services that best respond to the needs and
desires of their fellow citizens.
No country provides perfect freedom to its citizens, and those that do permit high levels of
freedom differ with respect to which aspects they believe are most important. That is consistent
with the nature of liberty, which allows individuals and societies to craft their own unique paths
to prosperity.
Throughout the Index of Economic Freedom, we explore many aspects of the relationships
between individuals and governments. In measuring economic freedom, we have focused on a
comprehensive yet far from exhaustive range of policy areas in which governments typically act,
for good or ill. However, the concept of freedom, by its very nature, resists a narrow definition,
and each year seems to bring new challenges from those who seek to impose their own views or
control the economic actions of others. As new threats to economic freedom arise around the
world, our definitions and methodologies will continue to evolve so that we can provide as true a
picture as possible of the state of economic freedom around the world.

Economic freedom has advanced in over 100 countries over the past year. Global average
economic freedom increased by 0.2 point to a record level of 60.9 on the 0100 scale used in the
Index of Economic Freedom. In the years since the inception of the Index in 1995, average
scores have increased by over 5 percent.
Behind this record of advancing economic freedom are stories of human progress and the
achievements of countries and their citizensliterally billions of people around the world whose
lives have been measurably improved. There also are stories of policy failure, backsliding, and
continuing repression.
Gains and Losses
In the 2017 Index, 103 countries, the majority of which are less developed or emerging
economies, showed advances in economic freedom over the past year. Remarkably, 49 countries
achieved their highest economic freedom scores ever. Two large economies (China and Russia)
are included in this group.

While two countries (Mauritius and the United Kingdom) recorded no change in score, 73
experienced declines in economic freedom, and 16 countries, including notably the Bahamas,
Bahrain, El Salvador, Pakistan, Venezuela, and the United States, recorded their lowest economic
freedom scores ever.

The AsiaPacific region is home to nine of the 20 most improved countries: Fiji, Kiribati,
Kazakhstan, China, Turkmenistan, Uzbekistan, Vanuatu, Tajikistan, and the Solomon Islands all
recorded score gains of four points or more. On the other hand, Sub-Saharan Africa has the most
countries (Cabo Verde, Djibouti, Ghana, Guinea, Kenya, The Gambia, and Madagascar)
recording notable score declines, followed by the Americas (Barbados, the Bahamas, Venezuela,
Suriname, Saint Lucia, and Brazil).
Score improvements in 19 countries, all of which are developing or emerging economies, were
significant enough to merit upgrades in their economic freedom status in the Index. Notably,
Macedonia and Armenia have joined the ranks of the mostly free, with Macedonia ranked
mostly free for the first time ever and Armenia regaining a level of economic freedom it had
not experienced since 2006. Seven developing countries (Fiji, Tonga, Indonesia, Swaziland, the
Kyrgyz Republic, Uganda, and Bosnia and Herzegovina) have advanced into the ranks of the
moderately free, and 10 others (Belarus, the Democratic Republic Congo, the Solomon
Islands, Laos, Burma, Uzbekistan, the Central African Republic, Kiribati, Iran, and Argentina)
have escaped the status of economically repressed.
Of the 180 economies whose economic freedom has been graded and ranked in the 2017 Index,
only five have sustained very high freedom scores of 80 or more, putting them in the ranks of the
economically free. The five are Hong Kong, Singapore, New Zealand, Switzerland, and
Australia. A further 29 countries, including Chile, the United Arab Emirates, the United
Kingdom, Georgia, the United States, and Mauritius, have been rated as mostly free economies
with scores between 70 and 80.
A total of 92 economies, or about 51 percent of all nations and territories graded in the 2017
Index, have earned a designation of moderately free or better. These economies provide
institutional environments in which individuals and private enterprises benefit from at least a
moderate degree of economic freedom in the pursuit of greater competitiveness, growth, and
prosperity. On the opposite side of the spectrum, nearly half of the countries graded in the Index
88 economieshave registered economic freedom scores below 60. Of those, 65 economies
are considered mostly unfree (scores of 5060), and 23 are considered repressed (scores
below 50).

Despite the global progress recorded over the 23-year history of the Index, the number of people
suffering from a lack of economic freedom remains disturbingly high: around 4.5 billion, or
about 65 percent of the worlds population. More than half of these people live in just two
countries, China and India, where advancement toward greater economic freedom has been both
limited and uneven. In the two most populous economies, structural reforms in a few key sectors
have sometimes boosted growth, but the governments have failed to institutionalize open
environments that promote broad-based and sustainable improvements in the economic well-
being of the population as a whole.

Economic Freedom around the Globe

Patterns of economic freedom are quite diverse both within and among the five Index regions,
reflecting the unique culture and history of the nations and the individuals that inhabit them, not
to mention circumstances of geography or endowments of natural resources. With an average
score of 68, Europe has recorded the highest level of average economic freedom among the
regions. Despite the ongoing economic and political turmoil in a number of countries in the
Middle East and North Africa, the region as a whole has still achieved an average economic
freedom score slightly above 60 due to high ratings of economic freedom in the United Arab
Emirates, Qatar, Israel, and Bahrain. Despite some progress in recent years, the average
economic freedom score in Sub-Saharan Africa continues to be below 60.
As demonstrated in previous editions of the Index, it is notable that despite varying degrees of
economic freedom across the regions, the fundamentally positive relationship between economic
freedom and prosperity is readily apparent worldwide. Chart 3 shows that, no matter the region,
the higher a countrys level of economic freedom is, the higher its income per capita also is.
The diversity of the worlds peoples and cultures implies that there will be many paths to
economic development and prosperity. The whole idea of economic freedom is to empower
people with more opportunity to choose for themselves how to pursue and fulfill their dreams,
subject only to the basic rule of law and honest competition from others.
There is no single answer to the particular challenges of development that we face as individuals
or as members of distinct societies. One thing, however, is proven: Governments that respect and
promote economic freedom provide the best environment for experimentation, innovation, and
progress, and it is through these that humankind grows in prosperity and well-being.
The Proven Impact of Economic Freedom
As successive editions of the Index have documented since 1995, the affirmative link between
economic freedom and long-term development is unmistakable and robust. Countries that allow
their citizens more economic freedom achieve higher incomes and better standards of living.
People in economically free societies have longer lives. They have better health and access to
more effective education. They are able to be better stewards of the environment, and they push
forward the frontiers of human achievement in science and technology through greater
innovation.
It has become quite apparent that despite ups and downs, the principles and lessons of economic
freedom have been widely understood, accepted, and implemented in practice by a significant
number of countries around the globe. Their progress is seen in the score changes. The poorer-
performing countries, by contrast, have tried only some of the ideas, adulterated others, or even
in a few cases rejected them outright.
The economic performance of countries with various rankings in the Index provides numerous
examples of the consequences of the rise and fall of economic freedom around the globe. For
example:

Countries that allow private ownership of property protected by an effective judicial system
encourage more entrepreneurial initiative than do countries that require collective or government
ownership or control of economic resources.
Governments that dominate their countries economies with heavy taxation and deficit spending
end up impoverishing their citizens through prolonged economic stagnation exacerbated by high
debt burdens.
Open competition, facilitated by regulatory efficiency, promotes greater productivity and ensures
better-organized allocation of resources than do systems of central planning.
Countries that practice some version of free-market capitalism, with economies open to global
trade, investment, and financial markets, do better than those that are protectionist or that shun
economic linkages with others.
Policies that promote economic freedom, whether through improvements in the rule of law, the
promotion of efficiency and openness, or suitable restraints on the size and reach of government,
therefore provide the environment that can best inspire people to develop practical solutions to
the economic and social challenges that confront our world.
Economic Freedom Alleviates Poverty and Promotes Overall Human Development>
The free-market system that is rooted in the principles of economic freedom has fueled
unprecedented economic growth around the world. As the global economy has moved toward
greater economic freedom over the past two decades, real world GDP has increased by about 80
percent, and the global poverty rate has been cut in half, lifting hundreds of millions of people
out of poverty.
Achieving greater overall prosperity that goes beyond the materialistic and monetary dimensions
of well-being is equally important. The societal benefits of economic freedom extend far beyond
reductions in poverty. Countries with higher levels of economic freedom enjoy higher levels of
human development in terms of life expectancy, literacy, education, and overall quality of life.
As Chart 5 shows, governments that choose policies that increase economic freedom are placing
their societies on the path to more education opportunities, better health care, and higher
standards of living for their citizens.
Economic Freedom Facilitates Innovation and Better Environmental Protection
The positive link between economic freedom and higher levels of innovation ensures greater
economic dynamism in coping with various developmental challenges by spurring a virtuous
cycle of investment, innovation (including in greener technologies), and dynamic entrepreneurial
growth.
In recent years, government policies and actions concerning the environment have become more
intrusive and economically distortionary. Many governments have promoted programs to tax
carbon emissions and increase taxes on gasoline, have organized non-transparent and sometimes
corrupt exchanges for the buying and selling of carbon emissions, and have provided subsidies
for clean energy to politically favored firms. Such policies impose a huge direct cost on society
and retard economic growthand all for uncertain environmental benefits.
In addition, the fact that the most remarkable improvements in clean energy use and energy
efficiency over the past decades have occurred not as a result of government regulation, but
rather as a result of advances in technology and trade should not be overlooked. Around the
world, economic freedom has been a key factor in enhancing countries capacity for innovation
and, by so doing, in improving their overall environmental performance.
Economic Freedom Ensures Greater Societal Progress
The massive improvements in global indicators of income and quality of life largely reflect a
paradigm shift in the debate about how societies should be structured to achieve the most optimal
outcome. Over the past two decades, this debate has largely been won by capitalism. However,
fears that the immediate benefits of capitalism are fading have led to concerns about economic
mobility and economic freedom.
At the heart of ensuring upward economic mobility is the task of advancing economic freedom
so that ordinary people in a free society can enjoy the fruits of dynamic and inclusive growth.
Economic freedom is critical to generating the broader-based economic growth that brings more
opportunities for a greater number of people to work, produce, and save. In other words,
ensuring greater economic freedom is directly related to preserving and enhancing dynamic
upward mobility.
Not surprisingly, societies based on economic freedom are the ones that have demonstrated the
strongest social progress. As shown in Chart 7, countries that more fully embrace economic
freedom have provided the institutional environments that are most conducive to societal
progress. Countries that have improved their competitiveness and have opened their societies to
new ideas have largely achieved the high levels of societal progress that their citizens demand. It
is not massive redistributions of wealth or government dictates on income levels that produce the
most positive societal outcomes. Instead, mobility and progress require lower barriers to market
entry, freedom to engage with the world, and less government intrusion.
Advancing Economic Freedom: The Source of True Progress
Regrettably, it has been an avoidable human tragedy that not all of the worlds people have
participated in our eras spread of economic freedom. Free-market capitalism, given a chance,
does benefit the greatest number of people. No other systems that have been tried have come
close in terms of providing broad-based prosperity. Countries that have not joined the march of
freedom have left their citizens lagging behind and even, in the worst cases, stuck in poverty or
destitution.
Such failures are inexcusable. Most important, they are preventable.
Advancing the free market is the most democratic and effective way to challenge big
government, concentrated government power, and the status quo. Perhaps one of the critical
lessons of the past years is that the fundamental superiority and value of economic liberty must
be retaught to a new generation of political leaders, either by their peers who have lived in less
free systems and less free times or by their own citizens, who understand instinctively that when
individuals are allowed to decide for themselves how best to pursue their dreams and aspirations,
their collective achievements can add up to a better society for all.
As Friedrich A. Hayek once observed, If old truths are to retain their hold on mens minds, they
must be restated in the language and concepts of successive generations. The Index of
Economic Freedom provides the basis for such a dialogue and a foundation for economic revival
in the years ahead.

Economic freedom has advanced in over 100 countries over the past year. Global average
economic freedom increased by 0.2 point to a record level of 60.9 on the 0100 scale used in the
Index of Economic Freedom. In the years since the inception of the Index in 1995, average
scores have increased by over 5 percent.
Behind this record of advancing economic freedom are stories of human progress and the
achievements of countries and their citizensliterally billions of people around the world whose
lives have been measurably improved. There also are stories of policy failure, backsliding, and
continuing repression.
1.3 Indicators and Factors
A closed economy (net) Economics, which is not included in the international division of
labour, the export and import of goods and services does not participate in the international
movement of factors of production, stands out the international native financial relations. It is an
economic system in which all business transactions were implemented within the country and
calculations are committed national regional currency. In conditions of vneshnejeko connection
economic closed economy countries have either non-existent or strictly dosed and foreign
economic policy is strongly you razhennyj restrictive. You can say that covered economics
economics, development of which shall be determined solely by domestic trends and does not
depend on ten accordingly, taking place in the global economy.Similar eco United called autarky.
Autarky-economic isolation of this country from other countries, creating a closed-economy
udovletvorjajushhegosja itself as a separate State. In its purest form was manifested in their only
autarky conditions of subsistence agriculture in dokapitalisticheskih formations. In the modern
era, the country may not be able to tarkii AB, or due to external circumstances (holding it against
the economic blockade, the imposition of economic sanctions), or by carrying out State policy
Avtar cues (e.g., in the context of the preparations for war that sought to create em all sorts of
obstacles to economic ties with other countries). So, Germany, craved in the 1930-ies.accumulate
material resources with a view to establishing an economic base to wage aggressive wars, official
but proclaimed the autarchy of its economic policies. Due to the economic embargo after the
October revolution and the civil war the USSR was in the situation of forced autarchy aiming at
self-sufficiency the main types of goods. Under such circumstances, economic links with other
national Coun farms were minimal, and all external transactions were carried out only
Government foreign trade organization Rez Che. After the end of the cold war, when the
possibility of autarky members of the country's isolation from the outside world after the
collapse of the Socialist camp closed economy actually yourself dissipated.
The open economy model implies a free economic space activities, both within and beyond its
bounds of Lamy. An open economy is an economy where all actors of economic relations can
make transactions without restrictions on the international market of goods, services, capital and
other factors of production. Unlike the closed economy there is freedom of foreign trade
transactions, set free the exchange rate and regulation of Pro-comes through reserves and
regulations. Open eco logistics means that countries actively participate in the MRI, export and
import a large share of the produced goods and services, export production factors (labour,
capital, technology) and are free to import them that countries receive and provide credit in
world financial markets and included in the system of international financial and economic
relations.The world experience shows that countries with closed economies eventually become
poorer than those who participate in international economic Rela zjah, since the first isolated
from new ideas and technology strategies, from foreign investment, information etc. Special
geographic feature of foreign policy in an open economy is taking maximum advantage of
foreign economic activity to achieve the highest total efficiency of functioning of national
economies Shay Miki. Open economy excludes public Mono poliju in foreign trade and requires
active use of using various forms of joint venture, the Organization of free economic zones (Fez),
and also implies a reasonable internal market availability for the inflow of foreign capital, goods,
technology, information and manpower.The degree of openness of the economy largely depends
on ensuring the pechennosti of natural resources, the population, the capacity of the internal
market and from the demand of the population. In addition, the degree of openness of the
economy will be determined by reproductive and sectoral structure in the national economy. As
practice shows, the more the structure of industry specific gravity basic industries (IU tallurgii,
energy), the smaller the relative involved Ness country in the international division of labour, the
less the degree of openness of its economy. It can be said that the degree of openness of the
economy the better than more developed economic relations with it, the more its sectoral
structure of industries with Advanced Technology Division of labour less than her own MI
prirodny security resources.
On the degree of openness of the economy of the country can be divided into the following
groups: countries with relatively buried Ekonomi (share of exports of less than 10% of GDP);
countries with relatively from the covered markets (share of exports more than 35% of GDP); the
country, situated between the first two. From this perspective, Crete, Riya most open economies
are Hong Kong, Singapore, New Zealand, Switzerland, with the least from the covered North
Korea, Cuba.
However, the share of exports in GDP is not the only indie cator openness of the economic
system. As Ti Lei used to measure the degree of openness of the economy, are most often used:
1.the indicators showing the activity of the country in world trade :
coefficient of intra-industry international specialized organization:

Capitolul II
Development of the economies, based upon private property has several varieties. This is due to
the history, culture, geography of countries. Make four typical models of capitalist economy.
2.1Social-democracy as freedom from political coercion
The ideology of social democracy, formed in 90-ies the 19 century, emerged as a critique,
revision of Marxism. Its main provisions would be elaborated by the German Social Democrat,
Eduard Bernstein and gradually adopted the international social democracy, though not without
severe struggle of opinions. There was a failure of such fundamental provisions of Marxism as a
social (Socialist) revolution, dictatorship of the proletariat, a full replacement of private
ownership of the means of production in the public domain.Revision of Marxism was made
possible and inevitable, because in the last decades of the 19th century, it became apparent that
the situation of the working class does not deteriorate with the development of capitalism, as
Marx predicted, but is improving. From this fact e. Bernstein made far-reaching conclusions,
does not lose its value in our days, and has developed a programme to build democratic
socialism
Because economic development under capitalism leads to increased material well-being of
workers, the task of social democratic parties should be to improve the existing society, rather
than its elimination and replacement of the other, in principle different from bourgeois. A
prerequisite for such improvement is a political democracy. E. Bernstein drew attention to the
fact that consistent implementation of the basic liberal principles political structure leads to the
Elimination of political domination of the bourgeoisie, if the working class will organize and will
keep his party in the elections.
Thus, should fight for the deepening of political democracy, the victory of the working class
party in parliamentary elections, forming the social democratic Government. Such a Government
with the support of the parliamentary majority must steadfastly implement the programme
stretched in time of reforms aimed at strengthening the livelihood of the working class, the
growth of its social protection, improving the cultural and educational level, etc. for this purpose,
as well as for the sake of improving economic efficiency ought to gradually carry out partial
nationalization of industry, first of all, the unprofitable enterprises and industries, to promote the
private sector capitalist state regulation, to develop and implement broad social programs based
on the redistribution of profits from the well-to-do to the poor through taxes.
As a result of consistent and comprehensive reforms liberal economic model should be replaced
by social-democratic model in conditions of continuous improvement and development of
political democracy. Working class party-initiated reforms should ultimately contribute to the
rapid growth of public wealth and general well-being, responding to the interests of all strata of
the population. In formulating the basic provisions of the concept of democratic socialism, e.
Bernstein has consistently emphasized that important not so much for the very purpose, how the
process of traffic to it.
At the beginning of the 20th century, and especially after the first world war the main provisions
of the socio-economic programme of social democracy were perceived liberalism and became
progressively implemented first Liberal, then (in Europe) coalition and the social democratic
Governments. After the second world war the social democratic parties were in power in a
number of European countries and have achieved so impressive success in reforming bourgeois
society that many well-known researchers and politicians that do not belong to social democracy,
not without reason, called the 20 century the social democratic age.
In industrialized countries, the programme was implemented reforms (nationalisation of a
number of sectors of the economy, unprecedented expansion of State social programs, a
reduction in working hours, etc.), which in the early postwar decades of rapid economic
development of these countries and the creation of a "welfare State", without which it is
impossible with modern social and political system of the industrialized world.
Most social democratic parties have made in the Nordic countries-Denmark, Norway and
Sweden, especially in connection with which form "welfare State" prevailing in the postwar
decades in these countries is often called the "Swedish model" of democratic socialism. Features
of the "Swedish model," is generally considered to be a high-performance economy: creating
employment almost the entire working population, the eradication of poverty, the creation of the
most developed in the world of the social security system, to achieve a high level of literacy and
culture.This model is sometimes called "functional socialism, because a democratic State
exercises the function of redistributing national income in order to achieve greater social justice.
It is with the international social democracy is largely due the beginning of the transition of an
industrial society into postindustrial Western civilization in developed countries and the
formation of such traits of this society as a pronounced dominance of the middle classes in the
social structure of the population, past the dependencies between the clear-cut class affiliation the
person and level of well-being, making the State the nadklassovogo of the arbitrator, the parties
desire to any ideological orientation to express the interests of all strata of the population.
However, the success of social democracy in reforming bourgeois society and create a socially-
oriented economic models have proven to be effective are not unlimited. At the end of the 70-ies
of the 20th century saw a crisis model of society based on active state regulation of the economy
and the broad social programs. The economy proved too "overregulated, and social programs,
absorbing up to one-third of national income, reducing the amount of funds that can be directed
to the development of the national economy. As a result, in the developed Western countries have
observed in weakened form of the same phenomenon as in State economy of the USSR and the
socialist countries of the Commonwealth. Resulted in: fall of economic growth, inflation,
unemployment. Traditional Keynesian methods of State regulation, do not stand the
simultaneous struggle with unemployment and inflation, have not acted. Starting from the 80-ies
of the 20 century, social democracy has abandoned further nationalization of the economy, and in
countries where the social-democratic Government remained in power during the 80-IES was
conducted but basically neokonservativnaja policy, that is, reduced government regulation of the
economy and social programs, emphasis is given to targeted assistance to the poor for objective
reasons, conducted partial denationalization. At the beginning of the 21 century, the core values
of the international social democracy continued to be solidarity, freedom, equality, political
democracy, regulated by the State market mixed economy, social protection of the population. A
gradual increase in the public sector of the economy is no longer considered appropriate. At
present, despite the fact that the social-democratic parties periodically come to power in
European countries, the neocons, the crisis of the social-democratic ideology cannot be
considered enough, because the new constructive ideas, capable to update the program and
practices of democratic socialism, the international social democracy is not.
European Social Democrats focused on building a democratic civil society, capable of ensuring
respect for human rights; agree the need to implement public investment in health care and
professional education of the economically active population (the so-called investment in human
capital); advocate professional and territorial labour mobility, promoting scientific and
technological progress and the priority development of information technologies; fighting for
clean nature. Features of socio-economic and political development of the European States, the
programme divisions of Social Democrats determined the emergence of more modern models of
social democracy. A number of authors (p., Peregudov v. Medvedchuk, etc.) are two models of
social democracy: German and Anglo-Saxon. The main features of the German social democracy
are:
-greater role of the State in all spheres of public life rather than allow British laborers;
-in the field of economy-focused industrial policy aimed at making full use of the financial
resources of the country for the benefit of the national economy. The State protects competition
and restricts the activities of monopolies;
-in the field of social relations-focused pereraspredelitel'naja Government policy for the least
protected sectors and groups of society;
-a strong link party structures and unions;
-The EU is seen as a political response to globalisation . The German model gravitate Austrian,
Swiss, Czech and Hungarian Social Democrats.
Anglo-Saxon social-democratic model is based on:
-rejection of individualism and collectivism;
-strong and unequivocal support for globalization, in which see a pledge of public progress and
improve democracy. Globalization makes the State more susceptible to impulses going from the
bottom and top, which means "double democracy;
-positively evaluated the cosmopolitan values and transnational management system that is
World Government;
-a more strongly to use the EU for the implementation of social-democratic policies on
employment, taxation and the environment [3]. Some national social democracy claim the
existence of separate models.
Swiss Social Democrats propose two strategies to overcome capitalism:
1) transfer of the means of production under public scrutiny, the participation of workers in the
capital of the enterprises, in which the sole disposal of the capital is neutralized, and its share
will remain at the company;
2) reversing the erroneous concept of unbridled capitalist development in conjunction with
democratic governance, based on the developed public framework. In the party program of the
Social Democratic Party of Switzerland from November 14, 1982 enshrines the three paths of
democratisation of the economy:
a) the participation of workers in the management of the enterprise; b) participation in the
capital and the distribution of profits; self-managed development) and cooperative enterprises.
National features of the social-democratic ideas in Europe due to different levels of material
production, development of labor movements, political and cultural traditions. Now on changing
the format of social democracy have a noticeable influence determinants of socio-political
development of the European countries in the late 20th and early 21st century The main factors
include: globalization, acceleration of technological advances, the internationalization of capital
and labour, increased competition on world markets, European integration.
As a result of globalization in the manufacture of large industrial economy of economically
developed European States was rendered in third world countries and substituted services.
Technological re-equipment of production, reducing the number of industrial enterprises has led
to a sharp decrease in the number of employees is the main social base of the Social Democrats,
which determined their value orientations and program-policies. The change of social-class
structure in European countries demanded from the leadership of the social democratic parties of
adjusting election programs, since previous work orientation no longer allows the Social
Democrats claim notable involvement in politics .The need to strengthen the competitive
position of nation-States in world markets entails a reduction of taxes and the growing problem
of public social expenditures. In these conditions, the financing of the welfare State is becoming
more difficult, causing a long criticism of the Social Democrats for the well-being of the
population by the neoconservatives and neoliberals. Critics argue that the welfare system relieves
the people responsible and weakens their ability to take the initiative. High taxes on the working
and non-working system of benefits denied the stimulus to work. Welfare costs merely
undermined the economy.
So in conclusion chapter note that social democratic ideology has played and continues to play a
progressive role in public life in Europe. Thanks to the Social Democrats managed to create a
welfare State with 8-hour working day, independent trade unions, collective agreements, paid
vacations and sick were implemented democratic beginning in industrial relations, mitigated the
negative impact of the economic crisis.
2.1 Liberal Model
The liberal model considers the market as the most important sector for the Organization of
human interaction. But it differs from the conservative, at least in two respects. In liberal social
welfare provided residual type, i.e. people should generally be able to exist in society and
without social security. Secondly, at present, the Government is limited, and, however, the
responsibility for the welfare of all citizens. Because of the residual nature of the financing of the
implementation of the model depends on the presence of a large amount of voluntary and
informal care. It should be noted that the liberal model were modified heavily from the moment
she began to take shape. The classical liberal model of countries considered United Kingdom and
United States. The social security system in these countries is based on two main forms:
-Social insurance payments on which produce both employers and employee;
-State social assistance budgets of different levels.
Social insurance in the United States began with the Social Insurance Act 1935 year. The impetus
for its creation was a dramatic situation during the great depression, when millions of people
have lost their jobs, and unemployment benefits do not receive. Federal law of 1935 year
installed two types of social insurance: pensionirovanie on majors and unemployment benefit.
Over time the law accrete and additions have levels at which certain types of insurance acted.
State social assistance is funded from the budget and not from previously paid contributions,
insurances, began to develop in the United States in parallel with insurance and has now reached
heyday. Criteria for the receipt of social assistance one-poverty, poverty, but criteria vary from
State to State.
Economic and social development of any country, despite a common mechanism of functioning
of market economies, has a set of characteristics that define the specificity of corresponds to the
market model. This is the ratio of the market and State regulation and State of the business
climate in the country, and the dominant nature of the relationship of citizens to work, and many
other factors related to the history and traditions of a particular country. Practice shows that all of
these factors together could play hardly bigger role in socio-economic development of countries
than the basic principles of a market economy is the dominance of private ownership, the ratio of
supply and demand, competition. In this context, consideration of socio-economic model of the
United States, itself largely a high standard of living and economic development of the country,
as well as its leading position in the world economy, the United States, is of considerable
interest.
What are the characteristics and peculiarities of American socio-economic model? They can be
divided into two groups: traditional and shaping a new image of the economy. The first group
includes features, inherent in the American economic model:
full promotion to American society and the State of entrepreneurship, a favorable business
climate, public installation on success for every person, regardless of its origin and social status;
the relatively low level of GDP redistribution through State budget (less than 17-18% after
federal and about 30% through the consolidated budget, that is much less than in most other
developed countries);
the relatively low proportion of State produced GDP (around 12%). public ownership
represented only in the nuclear industry, productive infrastructure (bridges, roads, pipelines), in
education and health;
more limited than in many other developed countries, but very effective State intervention in the
economy;
high work ethics, largely based on Protestant ethics, hard work and faith of the majority of
citizens in their own strength.
Named characteristics are the basis of American liberal economic model. But in recent decades,
the great importance of the new features of the economic models that are associated with the
development of scientific and technological revolution. In particular, one of the most important
features of modern economic development of United States-orientation on flexible, diversified
and small-scale production, the ability to adapt to the rapidly changing needs of the economy and
the population. This is achieved through the use of and in material production, and in the area of
services, the newest technologies based on microprocessors, programmable automation and
microelectronics, bioengineering.

Another feature of the concept, describing the State of the American economy, is raising the level
of its research intensity. It is defined, on the one hand, the overall increase in expenses for
scientific research and experimental development (r and d), improve their structures and staffing,
as well as the formation and selection of a group of industries, whose production results
extremely heavily dependent on RESEARCH and DEVELOPMENT costs. Total expenditure on
research and development in the United States exceeded in 2005, $280 billion (around 2.7% of
GDP) is a record in the history of the country level. While civil R and D costs amounted to 2.2%
of GDP. At a fraction of the United States accounts for about 46% of all research and
development spending in the developed world.
A qualitatively new feature of shifts in social production United States at the beginning of the
21st century was the role evolved a comprehensive information infrastructure. Its principal
importance is that it has become an important and necessary element of the entire production
infrastructure. Without it, the effective functioning of the economy and society is currently
impossible.
The basis of the information infrastructure is the establishment of an integrated information
processing industry on the basis of the latest electronic equipment and means of communication.
At a fraction of the United States at the beginning of the 21st century accounted for more than
40% of all workers in the world of computers. An increasingly prominent role in the Internet
economy: it is estimated that the volume of commercial transactions over the Internet in 2003,
reached, 3 trillion. Notable proportions of development reached a new industry-specialized
computer services, which represent more than 80 thousand. Firms.
Another very important feature of the economic development of the United States and their
economic model-the role and scope of services, which have no analogues in other developed
countries. On the role of the services sector in the economy of the United States said that in early
2000-ies. here was focused around 80 per cent of the employed (with more than 85% of all,
highly qualified personnel), about 40% of the basic production assets, about 80% of GDP. The
value of the service sector, however, is not limited to increasing its share of GDP and the
concentration of resources and capital in it. Many service industries acquired the key to the
functioning of the economy in the long term, became the "locomotives" of scientific, technical
and socio-economic development of the country. First of all, this concerns the development of
science and scientific services, education and health, increasing the diversity of professional
services, telecommunications, information services, etc., these industries also make a major
contribution to human development, has acquired particular importance in today's highly
developed economy.
Modern American economic model is undergoing significant changes related to the relations
property. A key feature of the dominant private sector economy is an evolution of the structure of
productive capital. At the beginning of the 21st century, about 90% of all income in the economy
created in the corporate sector of the economy, whose share in the creation of GDP compared
with 1970 . increased by 20 percentage points. Thus, Enterprise, private property became the
dominant United States compared with other forms of private ownership (partnership, private
property) and proved to be the most effective in terms of attracting additional investment
opportunities for the use of the latest management techniques, increasing productivity and
improving labour relations. Spread and occupied their niche market and new forms of private
ownership: investor-owned companies (more than 80% of the share capital of corporate sector of
the country) or workers (8%); the company, owned by consumers, as well as non-profit
organization (collectively, the remaining 12% of the share capital).
Significant changes have occurred in the functioning of the different markets. A characteristic of
the American economic model, which has an impact on the functioning of the labour market and
labour relations is the trend of reducing the coverage of workers in trade unions. Only for the last
12 years it had dropped from 0.1 per cent in 1983 to 1.5 per cent in 2005 . This makes the
market more mobile as a result of reducing the influence of trade unions in the collective
bargaining process, employment and wages.
Along with the introduction of information technologies and the influence of scientific and
technological progress as a whole, the most important factor of change mechanism cycle and
State regulation of economy, in particular, the stabilizing role of fiscal and monetary policy.
Manipulating the size of tax revenues, as well as regulators of monetary policy-the discount rate
of the Federal Reserve system, the rules required reserves of commercial banks, open market
operations with state securities-allow at the right moment is noticeably lower "overheating" of
the economy or, conversely, to stimulate its growth. The whole set of State action in the
economic and social sphere allows us to treat it as an important backbone element of the
economic model.
The role of the State in the economy and the current priorities of socio-economic policies.
Characteristic of State regulation of the economy at the beginning of the 21st century-an
increasing orientation budget for addressing the socio-economic tasks. The proportion of
expenditures of the federal budget for social purposes, including human capital development
(education, health), social insurance and welfare, 2005 exceeded 60%. the proportion of these
expenses in the consolidated budget is even higher. The seeming contradiction between the social
orientation of the budget and the overall low enough share of the redistribution of national
income through the Federal and consolidated budget was due to the achievement of a certain
optimum between economic and social objectives of macroeconomic policy and ways of their
implementation.
Noting the very high efficiency of modern public regulation in the United States, you must mark
it qualitatively new feature is the desire to find the optimum ratio between the market and
Government intervention, regardless of differences in ideological and political views of one or
another of the American administration. Obviously, at the beginning of the 21st century, in spite
of the ongoing political discussions that highlight the differences between liberal and
conservative values in real life there is a clear convergence of the positions of the democratic and
Republican parties of the United States in the socio-economic sphere. On the one hand, the
Republicans have abandoned many seemingly inviolable postulates first oriented to the sharp
reduction of the role of the State in economy and social sphere, and, on the other hand,
Democrats have adopted a lot of conceptual arsenal Republicans. This shows how socio-
economic platforms of the two major parties in the United States election 2000 and 2004, and the
practical activities of the past democratic and Republican administrations.
Basic approaches J. Bush to socio-economic policies were clearly marked them even during his
first presidential campaign. The quintessence of them there was a substantial reduction in taxes
(both individual and corporate income taxes on corporate profits) and the full promotion of
entrepreneurship. I must admit that in the broader context of the Republican economic strategy
differed little from the economic priorities of Democrats. The main points of the economic
strategy of the Republicans:
accelerating economic growth through support for a favorable business climate (including
through tax cuts), the use of tax incentives, active manipulation of the monetary instruments;
accelerating scientific and technological progress through active innovation policy (through the
introduction of tax concessions and depreciation policy) and extensive State support of basic
science;
implementation of massive investment in human capital, that is, the growth in public expenditure
in education, retraining of labour and health, as well as promote private sector costs for these
purposes (it is no coincidence that costs the federal budget for social and economic goals,
including education and health, have exceeded 62 per cent of all budget expenditures and their
share of consolidated budget even higher);
social functions of the State through the optimization of the programs in the field of pension and
medical insurance and welfare, support family values;
a build-up of positive effects from the integration of the American economy into the world
economy and globalization of the world economy;
environmental improvement Wednesday, improved environmental controls, the formulation of
appropriate policies in response to changes in the global climate.
This strategic goal of Republicans who for tactical reasons, often formulated differently, for
example, to emphasize the differences between the Republican economic program from
democratic or to recall the Republicans achieved successes. For example, during the 2004
campaign, j. Bush emphasized that his economic policy and, above all, the law on reducing taxes
for 10 years, 35 trillion allowed to steer the country out of the economic crisis and will continue
to promote its economic growth. Republicans actively advocated the further liberalization of
world trade (in practice, however, this slogan is not always performed), for the development of
bilateral relations with the United States in other countries, particularly within the framework of
NAFTA.
Bush's rival in the 2004 presidential election, Senator J. Kerry stressed the need for public efforts
in the same direction. As a Democrat, he talked about the need for greater social justice in
taxation, spoke out against the privatization of social security and raising the age of retirement up
to 6 years. He also called for more significant than Bush, state appropriations for education and
health.
The new economic strategy J. Bush articulated in his Epistles to the country in 2005 and 2006,
the budget for 2006 and 2007 Epistles, as well as in the economic report 2006, focuses on the
following key areas.
To continue the policy of providing tax cuts and tax breaks. In particular, the President proposes
to make permanent introduced in 2004 on the period up to 2010, 2011. the new tax laws. It
provides for a fourth after coming to power, the Republican tax cuts, relief from the marriage tax,
dividend, increased taxation of income excluded from birth. Also suggested to create a so-called
lifetime savings accounts, deposits that have preferential taxation. Similar preferential taxation is
to be distributed to the so-called individual development accounts, opened by poor families and
intended for large purchases, such as for the purchase of a first home. It is expected to revise the
tax code is to simplify it and make it more understandable to millions of Americans.
Reform of the law enforcement system. We are talking about the need to simplify and reduce the
cost of the justice system in the United States. The cost of litigation, including in the sphere of
business, much higher than similar charges in other countries. For example, a company with
annual revenues in millions annually spends at least 0 thousand. on all sorts of legal costs. The
proposed reform aims to remove from the economy, not least with citizens the burden of these
costs.
Continue the reform in the sphere of State regulation, i.e., significantly reduce administrative
restrictions in the field of business. Its a credit to the administration of j. Bush considers the
reduction of 75% of the increase in the number of all kinds of circulars and binding rules during
the first term.
Reduce the rising cost of medical services, which negatively affects the standard of living and
makes medical services less accessible. Particularly acute problems facing health insurance in
small business, where entrepreneurs are not easy to provide insurance to their employees. It is
proposed to make greater use of collective health insurance plans that will reduce the cost of
insurance for small businesses. The President also proposed to improve the practice of litigation
in the area of health services, which should reduce the cost of health insurance companies and
help reduce prices. The Government intends to actively promote investment in health
information technology and appropriations for research in the field of medicine.
Strengthen the integration of the American economy into the world economy and benefit for
countries (reduction of consumed products, increase exports and create new jobs, attract foreign
investments). It is estimated that the reduction of trade barriers will increase GDP per American
1/3 4 billion a year, and the annual income of the average American family is on thous.
Among the major socio-economic challenges the Administration's second term, J. Bush, no
doubt, a special place is given to social problems. This is a problem of education, especially
schooling, employment, medical care and assistance to young people and, of course, the problem
of social security, which, in the opinion of many experts, one of the most serious challenges of
the country in the foreseeable future.
The problem of social security and, in particular, pensions became lately the subject of heated
public debate in the United States. The Bush Administration proposes a plan, the main purpose of
which is to partially withdraw from the State excessive responsibility for pensions and other
social payments. According to the proposals of the Republicans, for those who are 55 years and
over, nothing will change. Those who are born later than 1950, are encouraged to diversify on a
voluntary basis, their pension contributions, that is part of their allocated to individual
investment accounts. The funds in these accounts can bring in additional revenue, as will be
invested in various profitable assets. However, no guarantees of income will not be. Those
Americans who do not want to risk, should be ready for the size of their pensions are reduced
noticeably.
The proposed system of individual retirement accounts will be managed and controlled by the
State. A similar system is already in place for federal employees-they have five choices of
investment deposits in various mutual funds. Critics of the new system of social insurance,
primarily Democrats, say that the proposed reform of blurs and definitely reduces the social
guarantees. However, while the democratic opposition is not offering any constructive solutions.
If you remain on the traditional point of view, the only way to solve the problem is to raise taxes.
In any case, it is obvious that social problems and, in particular, social security issues become the
focus of the entire socio-economic strategy of the State.
The first years of the 21st century took place in the United States under the influence of the next
cyclical crisis, as well as a number of other factors, oslozhnivshih the socio-economic situation
in the country. After the longest in the entire post-war history, the country's economic recovery,
which had lasted for more than 10 years and was accompanied by impressive results (minimum
for more than 30-year period, inflation and unemployment, high GDP growth rates and
productivity, achieving in the 1998 federal budget surplus g.), 2000 g. economic slowdown
began. It resulted in the next cyclical downturn in the third quarter of 2001 (decline in GDP
amounted to 1.4%). And although subsequent economic growth on an annualized basis were
consistently positive, State of economic stagnation persisted and in 2002 and in early 2003 g.
In addition to the cyclical crisis damages the economy United States caused the terrorist attacks
of September 11, 2001, which led to direct and indirect GDP losses worth more than 0 billion.
(collapsed buildings, rescue work, insurance payments, reducing the demand for airline and
trucking, etc.).
Negative impact on business conditions in the United States have had corporate scandals and
2001-2002 in particular, bankruptcy and financial fraud in largest corporations-Enron and
WorldCom, the auditing company Arthur Andersen. The crisis and the subsequent stagnation and
contributed to the stock market crash, particularly high-tech companies, whose shares in the
wake of rapid recovery 1990-ies. and speculative expectations were considerably overvalued. To
this should be added the United States war in Iraq, which in the first years of the new century
became a significant factor of influence on federal budget, increasing its deficit.
Negative effect of all of these processes has proved to be very significant: unemployment rose
from 4% in 2000 to 6.3% in 2003, the volume of investment in the economy during that time fell
by more than 20%, the scale of private consumption decreased by 22%, corporate profits have
fallen. On world currency markets, the dollar has fallen relative to other world currencies,
primarily the euro (0.95 in 2001 to 1.1 in 2003). Once again, the proportion of Americans living
below the poverty line, up to 1% .1 in 2002 g. In 2002, after four years of surpluses, the federal
budget of the United States was again reduced the deficit in the billions. Hereinafter referred to
as the 2003 f.g. is the federal budget deficit has increased even more, although with 0000 g.
There has been a downward trend in this indicator (3.6%, or $1 billion in 2004, 2.6%, or $1
billion in 2005). Remains high United States public debt is about $ trillion (about 60% of GDP).

Despite all the negative trends in the economy in early 2000-IES, statistics show that the United
States economy, 0000 is mostly recovered from the crisis and entered a period of economic
recovery, however, not too fast and not very stable. While quarterly data for 2003 g. differ
markedly (from 1.9 to 7.4%), the average annual rate of 3.0% looked quite satisfactory. Data for
2004 and 2005 biennium confirms the continuation of economic growth (3.8% and 3.5%
respectively), although it can be observed a certain volatility on individual quarters (from 3.1 to
4.5%).
Compared with the crisis period has improved the situation on the labour market. Only in 2004,
the country was created 2.2 million jobs. The unemployment rate in the United States dropped to
4.7% (January, 2006) compared to 6.3% in June 2003 (maximum level over the past years).
However, employment growth still lags behind economic growth, which many economists
associate with rising productivity, demonstrating the steady rate throughout the post-crisis
period. In the five-year period 2001-2005, covering the crisis and stagnation, the average annual
productivity growth in the non-agricultural sector exceeded 3.6%, which is considerably superior
to similar indicators for all periods in the past 30 years. The most likely explanation for this
phenomenon is the cumulative effect of the constant introduction of new technologies into the
economy, including information that even the post-crisis phases of recovery and recovery has not
led to a marked increase in employment.
Investment growth remains high in the capital-total for 2003, they increased by 9.9% (2003-on
9.4%) in the third quarter of 2005, amounted to 8.5%. investments in housing construction
increased in 2004, 6% (in 2003 .-at 12%) in the third quarter of 2005, at 8.5%, which was
inspired by the lowest mortgage lending rates over the past 30 years (5.8%). In 2005,
construction began on the millions of individual houses is the highest since 1978 g.
The real disposable income of the population increased by mid-2004 compared to 2000, 10%,
and in 2004, at 2.3%. The average amount of accumulated assets of households grew in 2004 to
6%. This is a link to on the initiative of J. Bush's tax cuts in 2001 and 2003 . The maximum
level for all of American history has reached the percentage of Americans living in their own
homes-69.2% in the second quarter of 2004, this indicator among national minorities also
reached a record level-51%. Continue to grow corporate profits. Although in the first quarter of
2003, there was a small decline in corporate profits, they not only regained pre-crisis level, but
also markedly exceeded it in the second quarter of 2004 (73 billion dollars). In the country
remain low inflation despite rising oil prices on world markets. So, the consumer price index
rose in 2005 to 3.4% (excluding the cost of fuel is only 2.2%).
This does not mean that there are no serious problems in the economy of the United States. In
addition to the already mentioned the scale of fiscal deficits, rising government debt, which in
2004, exceeded trillion (over 56% of GDP). Some u.s. experts believe that the authorities have
exhausted the basic tools to stimulate the economy-first of all, a significant reduction in taxes
and a discount rate of the Federal Reserve System (fed)-and switched to its gradual
improvement. It is estimated that only 59 cents of every tax dollar of outstanding economic
growth-the rest can be seen as a net loss to the Treasury.
In addition, Bush's tax policy is criticized not only for its lack of economic efficiency, but also a
blatant disregard for the principles of social justice. , Published in 2004. report of the United
States Congressional Budget Office emphasizes that 1/3 all tax benefits in the past three years
was received one percent of taxpayers who apply to the persons with the highest taxes-more than
.2 million a year. 2/3 all the tax benefits went to 20% of the richest of recipients of income (over
$203 thousand per year). After tax reform Bush income 1% of the population belonging to the
most rich layer, rose by 10.1%, the income of the 20% who is the middle layer-by 2.3%, while
the lowest 20 percent income group-only at 1.6%.
There is no doubt that the growth of consumer spending, which accounts for 70% of GDP, as
well as increased investments have become major factors in the United States release of the 2001
economic crisis, and further economic growth.
Highly controversial was post-crisis development in the sphere of foreign economic relations of
the United States. Against the backdrop of economic recovery in the United States exports in
2005, increased by 5%, import-by 4.6%. This marked drop compared with a rise of 10.6% in
2004, 2011. The volume of foreign trade in goods and services exceeded $ trillion. United States
trade deficit reached in 2005, 5.9 per cent of GDP or. 3 billion. Also increased current account
deficit is over $9 billion (6.4% of GDP). It is these deficits along with the federal budget deficit
(the so-called "triple deficit") are treated in the United States as the most serious threat to
economic growth, stability in financial markets, money market and the exchange rate of the
dollar. However, it would be wrong to unilaterally interpret the phenomenon of trade deficits and
payments of balances as purely negative feature of the U.S. economy. Growing imports (and
exports) promotes greater integration into the world economy, the United States allows to
maximize the benefits of international division of labour, the use of cheap raw materials and
human resources abroad to produce a huge range of products entering the U.S. market. This is
the most powerful factor in the downward impact on inflation.
An important event in the sphere of foreign economic relations of the United States in 2003, is
the emergence of China in the United States's second largest importer (first-Canada). It accounts
for 12.5% of the total imports in the United States (billion). When the nomenclature of delivered
from China in the United States of goods has expanded markedly-this is not the only textile,
clothing and toys, but also increasingly complex engineering-technical products. It is known that
the United States is also the largest international investor and lender. The value of American
assets abroad exceed 5 trillion. Simultaneously, the United States is the largest recipient country
of foreign capital-cost foreign assets in excess of $8.5 trillion. This situation, on the one hand,
helps to increase the negative trade balance of the country, but on the other hand, reflects the
attractiveness of the US economy to other countries, allowing the United States to use the
investment resources of the rest of the world. It should also be borne in mind that a large
proportion of the export of capital from the United States is done through American TNCS
abroad (from 500 largest TNCs have 162 American origin).
It is known that the United States is also the largest international investor and lender. The value
of American assets abroad exceed 5 trillion. Simultaneously, the United States is the largest
recipient country of foreign capital-cost foreign assets in excess of $8.5 trillion. This situation, on
the one hand, helps to increase the negative trade balance of the country, but on the other hand,
reflects the attractiveness of the US economy to other countries, allowing the United States to
use the investment resources of the rest of the world. It should also be borne in mind that a large
proportion of the export of capital from the United States is done through American TNCS
abroad (from 500 largest TNCs have 162 American origin).
United States, of course, occupy leading positions in the world economy. This leadership is based
on the size of the country and its level of development, the powerful scientific and technical
potential, maturity and dynamism to the development of market institutions and mechanisms, the
effectiveness of State regulation of the economy. United States owns the largest share of world
GDP, which according to purchasing power parity of currencies exceeds 21.3%. By this measure,
to the United States nears the only European Union (25 countries in Europe, about 20% of world
GDP). In terms of United States GDP per capita is the second highest in the world (after
Luxembourg)-5th.
Thus, despite the serious socio-economic problems, the United States economy at the beginning
of the 21st century has demonstrated its ability to surmount crises of different nature, which
demonstrated its flexibility and high adaptability to changing conditions. This was largely due to
the very high efficiency of the socio-economic model focused on the formulation and
implementation of national development priorities of the country.
On the effectiveness of existing socio-economic models show high levels of economic and
technological development of the country, the leading position of the United States in the global
economy, the ability of economic mechanism and public institutions generally cope with
emerging crises and challenges.
You cannot however do not see and the serious economic and social problems facing the country
("triple deficit" challenges in the social sphere, etc.). Administration Of J. Bush, trying to
consolidate the positive results of the economic development of recent years, uses all
accumulated an arsenal of instruments of macroeconomic regulation and confronts a rather
ambitious social and economic objectives.

2.2 Globalization of world economy

Today among analysts contemporary international economic life, has outlined a broad
convergence of views in appreciation of the fact that the world has changed profoundly, that is a
major political and economic transition and the decade of the 90s was one -sub many aspects -
totally different from the previous and very difficult in terms of "administration" multitude of
complex issues arising on the stage of international economic relations.
Globalization of the world economy began in the mid 80s gained new values and followers 90s
and continues today to manifest power although it has faced regionalist and nationalist
conceptions.
In a broad sense, the globalization of the world economy can be defined as very dynamic process
of growth interdependintelor of national states due to the expansion and deepening of
transnational ties in increasingly large and varied spheres of economic, political, social and
cultural and having as implication that problems become global rather than national, demanding
in turn a global rather than a national solution.
Approached in terms of economic and financial globalization can be defined as the strengthening
and widening linkages between national economies in the global market of goods, services and
especially capital.
A similar definition is presented in a report by the IMF in 1997: the phenomenon of globalization
of the world economy is growing international integration are closely both markets of goods and
services, and those of capital.
Globalization has become an objective, implacable process, which often takes place with
dizzying speed, including the scope to almost all countries of the world.
Under the purely economic aspect, the efficiency of the allocation and use of resources,
globalization ec 16216d310q onoma appears as a rational phenomenon, likely to provide a
larger volume of goods and services scarce resources. Economic globalization requires,
therefore, essentially the globalization process of creating gross domestic production of the
world countries.
Determinants of world economy globalization

Economic and commercial factors that influenced the deepening globalization of the world
economy include the free movement of goods, services liberalization, liberalization of capital
markets, liberality foreign investors to set up companies and other legislative and administrative
factors favorable to globalization.
Liberalization of trade in services, particularly in telecommunications, insurance and
banking, was the dominant trend of the years
70 in the US, was continued in the 80s in the UK and subsequently in the European Union and
Japonia.Tendinta continues today, including European countries Central and Eastern Europe,
including Romania.
The liberalization of capital markets as uramre phasing out barriers imposed currency
controls and capital is a positive step for the formation of global financial markets. This mobility
of capital reduces the risk of repatriation of capital especially in transnational companies and
recorded, also, reduced costs under normal conditions.
FDI liberalization is another factor that favored globalization.
Since the 70s, the common interest of humanity to preserve the environment has resulted
in the emergence of concepts with global vocation: common property of humanity, sustainable
development and ecological safety, which constituted new factors that have stimulated the
globalization of the economy world.
Common property of humanity are spaces like oceans, marine funds, which for various reasons
are not likely to be divided nor fall under the sovereignty of states. Except oceans, none of these
commons were not polished, it is relative that people possess the technical capacity to exploit
them and damage.
Sustainable development is defined as development that meets present needs without
compromising the ability of future generations to meet their needs. Sustainable development is
designed to reconciliation between the economy and the environment as a new way forward to
sustain human progress not only in some places and for some years, but the entire planet and for
the near future.
Ecological security is one of the fundamental dimensions of global security. Another positive
factor and that globalization is the culture.
Meditating on globalization, in an article entitled "Globalization and moral", published in the
Italian magazine "L'Espresso", Umberto Eco expresses very clear terms: "Instead is it positive
linguistic and cultural globalization? No, and would be very unfortunate for the planet such
globalization. In terms of global contacts must fight to keep the identity of different cultures. "
In the literature different globalization it is addressed and can be drawn more conceptual
approaches.
Globalization is defined by inerdependenta economy of the state, due to the increase
coefficient dependence on the global economy.
Globalization is conceived as a process of customs tariff reductions, the waiver of customs
policy and restrictions of movement of goods, services, technology and capital, as developing
international economic exchanges.
Globalization is considered as a factor narrowing the role of national government action
following the extension of international investment capital and transnational corporations.
Globalization is appreciated as process management world by transnational forces.
Romanian researchers, advocates last two concepts, fill them with the idea that the state
continues to have an important role, citing the example of France and Great Britain.
World Development Report published by the World Bank in 2000 estimated that the world
economy held two parallel processes: globalization and decentralization:
 - globalization consists in trans- to supranationalizare with deosebitre in the areas of trade,
finance and high technologies;
- decentralization consists in the transmission of the national government to local communities
more and more administrative, social, educational, budgeting and consequently the role of the
national state will be limited to diplomacy, army, adopting domestic legislation.
In addressing globalization process starts from a series of real objective processes.
Advancing the needs of production and consumption of a State to national production
possibilities to meet them in the technological and economic criteria optimal efficiency. As a
result, we have witnessed in the last decades of the twentieth century, the development process of
deepening international division of labor, specialization organologica that generated trade
subasamble.
Lately it is noted that increasing foreign trade and world output growth devanseza world.
Because trends mentioned above there is an increase in the dependency ratio of national
economies to the global economy.
There is a large increase in the foreign market, which obliges states to adopt measures to
liberalize foreign trade, leading to the abolition of customs duties.
Liberalizing international movement of goods, capital, services, people, labor and technology
lead to the disappearance of trade borders, but not the national borders (for now).
It remaraca as an objective process to adopt common regulations by states - agreements, treaties
and conventions on the elimination of double taxation regime favorable foreign investments,
granting Most Favored Nation.
Establishment of institutions and bodies common international with responsibilities on a global
scale, regional or subregional - public and private.
State measures on integrated door international economy is achieved as state integration,
transtatale or superstate.
About globalization have structured two opposing views: one that supports this process and one
that opposes.
Proponents of globalization focus primarily on the benefits generated by the process of
globalization: -reducing production costs due to economies of scale;
- accelerating trade transactions which is done almost time communicating - fax, Internet, etc .;
- increase the speed of developing commercial operations, financial and technological;
- strong market expansion and creation of new markets or sources independent of certain
traditional areas.
Consequently there is an increase in efficiency of the entire economic activities at global level as
a result of free movement of capital, investments, technology and workforce to more profitable
fields and areas.
Of course, these arguments and others that highlight the benefits of globalization are worth
taking into consideration, but should not be overrated.

Opponents of globalization claim absolutizes and sometimes negative consequences:

- abolition of nation and national state;
- loss of jobs in developing countries or a lower level of labor productivity;
- specialization of countries in production activities that generate pollution-intensive labor, raw
materials and energy;
- deepening economic disparities (now 258 people has a rich billionaire equal to that possessed
by 2.5 billion people - nearly half of the population of Earth). Also mentions the dangers on the
dissolution of branches, the bankruptcy of some banks, destabilizing economic life, including
some states.
Globalization her contradictory evolution
Capital movements: Globalization has been most often associated lately with increased private
capital flows towards developing countries during the 90s. To these must be added that this
development followed a reduced capital movements in these directions during the 80s.
Meanwhile, official flows of aid and development assistance declined significantly since the
beginning of the ninth decade, and the structure of capital movements privately registered
significant changes.FDI became the most important category. Both portfolio investment and
bank lending developments marked more sinuous, reducing dramatically the financial crisis
began in the second half of the tenth decade.
In terms of trade : developing countries increased their share of participation in trade
internationally from 19% in 1971-29% in 1999. There are also quite important variations
between major regions. For example, the new industrialized Asian countries recorded positive
developments, while Africa as a whole, had a downward trend. Structure for export is also a key
issue. The greatest increase was
Further, the export of manufactured goods. The share of primary products offered especially poor
countries, declined.
Labor migration : workforce moved from one country to another, partly because of attempts of
finding work opportunities. The figures are not great at the moment, but between 1965-1990 the
proportion of the workforce of foreign origin on the whole world has increased by nearly 50%.
The
main directions pursued by workforce were between developing countries and developed
countries.There is a potentially very important movement of
knowledge and production techniques towards developing countries, as well as an increase in
wages in these countries.
Globalization and interests of employees

Developed countries have reason to regard globalization as a contradictory process.

Worth analyzed the threat that countries with low wage levels exert on developing countries in
terms of integration of the first in the new world spectrum, and the extent to which the changes
taking place in these savings come from the expansion of globalization.
Savings are in constant evolution and globalization is one of the phenomena that exercise
continuously. Such a phenomenon is the orientation towards the service sector of the economy
that reach a certain level of maturity. Another is moving to jobs that includes many more skills.
Studies show that these types of development will occur regardless of how the expansion of the
globalization process. In fact, globalization makes the process easier and less costly for the
economy as a whole by bringing the benefits of capital flows, technological innovation and low
import prices. Growth, reduce unemployment and living standards are all much higher than if
we had to deal with a closed economy.
Advantages were but an uneven distribution between different groups and countries,
for some the process is rather a disadvantage. For example, workers in the old industries, now in
decline, are unlikely to recover to serve new industries.

-Saracia globalization and inequalities of development:

Throughout the twentieth century global income per capita increased significantly, but
differences important enough level countries. It is obvious that differences in income between
rich and poor were even deeper periods quite high. A recent issue of the World Economic
Outlook Study 42 countries (representing 90% of the world population) for which data for all the
twentieth century. It was concluded that production per capita has risen appreciably, but the
countries income distribution has become more unequal compared to the situation at the
beginning of the century.
To this it should be clarified that in terms of improving social conditions, poorer countries
have registered significant processes. For example, some low-income countries (eg Sri Lanka)
marks the impressive levels
social indicators. A recent paper concluded that, in terms of Human Development Indicators used
by the UN, taking into account the level of education and life expectancy, the general situation is
quite different than simply comparing the initial indicators.
We must not forget that in the current global world, 200 of transnational societies existing
develop a turnover exceeding GDP made about 150 countries OECD and this in spite of what JJ
Rousseau , "No one shall be so rich that they can buy another and no one should be so poor that
they sell ".

"Improving essential standard of living" for all those underdeveloped "by increasing industrial
production," as promised US President Harry Truman in 1949 the world's poor, will not occur.
The richest fifth of existing states, decides on the 84.7% of global gross national product, their
citizens conducted 84.2% of world trade and account for 85.5% of net domestic savings. Since
1960, the gap between the richest one-fifth and one-fifth of the poorest countries has doubled.
In the opinion of UN experts to obtain improvements noticeable "It is necessary that the growth
rate foreseen in the international strategy of the third decade of the United Nations Development
Program to extend over a much longer period than two decades," meaning beyond twentieth
century.
This rich-poor polarization worsens permanent because rich regions have already gone through
the phenomenon of demographic transition, and their population is relatively weak, while those
from the south will increase further over the next 60 years. In half that time, only 1/7 of the
world population will control at least three quarters of the world's wealth. As a result, the
pressure on those "islands of richness" will be increasingly higher. Development is not only
delayed by the difficult conditions of the permanent historical and commercial disadvantages, but
also a continuing debt crisis, the economic exploitation and political instability.
If during the serious global crisis food in 1947 estimated that about 450 million people
worldwide suffer from malnutrition, 20 years later, 780 million people do not have " enough food
to meet their physical needs basic protein and energy ". While there has been some progress in
terms of development in the South, analysts believe that " massive disparitaii the rich world and
the poor will deepen".
An objective analysis of globalization so far, proving that the economic benefits leaning more
towards developed countries and the major economic powers of transnational corporations where
their origins. In this act and Financial Mechanism world which through its institutions IMF,
World Bank, World Trade Organization dominated by major economic powers favor in
overwhelmingly developed countries involved in lending, achievements FDI, institutions,
transnational corporations and get high returns the lending state.
In conclusion, globalization is an irreversible reality probably any country that seriously prepares
future is forced to interfere with it.

2.3
Capitolul III
The impact of economic openess over the
Republic of Modova
3.1 The exit of R.M from a closed system
For Moldova leaving under a closed system in 1991 was the first step towards economic
openness that has left this country to float on the waves of various sizes and types.After exiting
in new era
Moldova enjoys a favorable climate and fertile ground. Maximum share in the economy held the
agriculture sector. The main Moldovan products are fruits, vegetables, wine and tobacco, with all
this, in the last period, the country exported and wiring, electronic equipment and machine tools
for automobiles. [7] since the 1990s, Moldova has entered into a powerful economic decline,
from which she recovered only in the 2000s. With a GDP per capita of us $5,300 per year [1]
(2017), Moldova imported oil, coal and natural gas, largely from Russia. Construction of the
Giurgiulesti port, has increased access to the international oil market and reduced dependence on
energy from Russia to the front. The port was completed in late 2006.
For the Republic of Moldova to reform intentions have been a constant of political discourse, but
successful in terms of transformations have not been recorded. With some exceptions, the
political class has not been able to assume the responsibility and costs of promoting the
transformation of the cardinal. Obvious that the reforms oriented towards the creation of a
functional market economy, would not have been possible without bearing the social costs, but
these "losses" were inevitable and would have been small compared to the benefits generated by
the creation of a competitive economy, which would have provided a qualitative and sustainable
development.On the other hand, non-involvement in the development of profound transformation
has led to a situation where the national economy has accumulated structural and functional
imbalances. Thus, after 20 years of existence, the Republic of Moldova has a social-economic
situation, which can hardly be catologat at least a satisfactory rating.We now have a pretty
interesting situation, Moldova has good growth rates, but the positive dynamics is not generated
by domestic factors. Consumption, financed from the submissions, determines the economic
dynamics, and Moldova has reduced domestic capacity to generate qualitative growth.At present,
any participants in the development of liberal reform, by essence, because the modern economy
is a liberal economy, will be retained on the long last Echelon development.This study focuses
on three areas: diagnozarea evolution in the sectors of national economy development,
identification of limitations and submission of proposals to improve the situation. This paper
represents a vision relating to economic development, but taking into consideration the
complexity of the problems investigated study did not claim the title of exhaustive synthesis and
consolidation of the role of the platform to investigate aspects related to the development of the
national economy.
In the first decade of the 21ST century, the Republic of Moldova has registered good growth
rates, with the exception of the year 2009. However, the advancement of the pre-crisis economic
crisis in 2010 and did not lead to the creation of prerequisites for ensuring sustainable
development. The evolution of the economic situation of the Republic of Moldova in the first
decade of the 21ST century has highlighted the favourable development, rather than to issues,
but he singled out major imbalances.
Public policies have not spurred enough creating production capacity and currently, our State has
a potentially productive. For his part, delayed reforms, will exacerbate existing problems in
various sectors of the national economy, spurring their transformation in imminent economic
development constraints. The fragility of economic construction makes the growth process in the
Republic of Moldova to be extremely vulnerable to shocks, both external difficulties and
internal. The probability of shocks will constantly hovering over the national economy in the
medium term, which will negatively affect growth.
3.2 Analysis of foreign trade of The Republic of Moldova

The external trade evolution of the Republic of Moldova is influenced by many relevant factors
from 1997-2013. Moldova's adherence to the World Trade Organization in July 2001. Transition
trade arrangements granted by EU Member States. Generalized System of Preferences Plus,
which is the successor of the Generalized System of Preferences (established in 1998), and
offered import duty-free access for approx. 7200 Moldovan goods group, was succeeded by the
Autonomous Trade Preferences granted since 01.03.2008. Moldova has a new scheme of trade
preferences offered by the European Union, known as the Autonomous Trade Preferences (ATP).
ATP allows for nearly all products originating in the beneficiary countries access to the EU
market without quantitative restrictions and customs duties, the only exception being imports of
wine, veal and some fish products on which tariff quotas apply. Another factor is the signing of
the amendment and enlarging CEFTA - CEFTA 2006 to 19.12.2006. The Agreement entered into
force on 26.07.2006 for five signatories (Albania, Macedonia, Moldova, and Montenegro) and
entered into force thereafter for Croatia, Serbia, and Bosnia and Herzegovina. The negative
influence upon foreign trade was volatility process of implementing the free trade agreement
within the CIS with Russian Federation manifested by the embargo on imports of meat,
vegetable products (in May 2005) and wine (in March 2006) in Moldova. The recently initialed
Deep and Comprehensive Free Trade Area (DCFTA) with the European Union presents a major
and historic opportunity to boost private sector growth and economic development. An impact on
the development of foreign trade have had also the following factors: Launch oil terminal in
Giurgiulesti International Free Port for receiving the first oil tankers payload, establishment of
certification of origin of goods exported in accordance with EU requirements, Increasing the
level of financial security for customs brokers.
The year 2009 witnessed Moldova's foreign trade, first-year decrease from 1997 to 1998
repeating global trend in this area. According to data from the National Bureau of Statistics,
diminishing Moldova's foreign trade in 2009 exceeded 29.4%, which is significantly less but at
the same time, comparable to that recorded in 1999 (-36.5%). For the years 1997-2009, the
annual growth rate was 6.94%. The statistics for 2009 show that exports have shown an aversion
to compression to lower imports, so their reduction constituted more than 23% to more than 34%
for imports. In 2009, exports totaled 1297.7 million US dollars, lower than the volume achieved
in 2008 by 18.4%. Exports of goods to EU countries (EU27) totaled 678.5 million USD (by
17.3% less than in 2008), holding a 52.3% share in total exports (51.5 % in 2008)( see Figure
2.1).

Figure 2.1 The export, imports and balance of trade of the Republic of Moldova, (2004-
2009),million U.S dollars
Source: Elaborated by the author based on the data of the national bureau of statistics. Available
at: http://www.statistica.md/
But if we analyze further statistic data from 2009-2013, we will see a continues growth of total
exports from 1297.7 million dollars till 2428 million in 2013.This indicator shows a favorable
tendency in comparison with previous year, an increase of 265 thousand USA dollars.(see Figure
2.2) [13,p.1]

Figure 2.2 Evolution of exports of the Republic of Moldova for the period 2009-2013, million
U.S dollars.
Source: Elaborated by the author based on the data of the national bureau of statistics. Available
at: http://www.statistica.md/
Even if the total volume of exports increase, the total import inflows have increased two times
during 5 years, by 2214 million dollars, it means that is a trade deficit and is increasing
continuously the lowest value was in 2000 with -304 thousand dollars, in 2009 was accounted
-1995million and in 2013 was -3064 million. USA dollars. (See Figure 2.3)
Figure 2.3 the balance of trade of the Republic of Moldova for the period 2009-2013, million
U.S dollars.
Source: Elaborated by the author based on the data of the national bureau of statistics. Available
at: http://www.statistica.md/
According to the statistical information of exports and imports by destination, we conclude that it
is a decreasing tendency of exports to CIS countries, from 62 % in 1995 to 42.9 % in 2012. It is
due mostly to the trade policy adopted by Russian Federation, because the biggest share has
exported in this country. The imports to CIS states have also decreased from 67.7 % in 1995 to
31.2 % in 2012.The next direction of exports is EU market, and it has increased from only 32.5
% in 1995 to 46.9 % in 2012.The largest amount of exports was in 2008 with 51.6 %, and the
imports from this region doubled. The share of imports and exports to/from other countries,
especially China, USA, and Turkey have also increased. (See Table 2.4)

Table 2.4 the direction of the commodities exports of the Republic of Moldova, percentage in the
total exports
Source: Elaborated by the author Elina Benea-Popusoi, based on the data of the national bureau
of statistics. Available at: http://www.statistica.md/
The analysis of exports by countries shows that reducing deliveries to Romania (-28.6%),
Ukraine (-43.1%), Italy (-18.7%), Russian Federation (-8.7%), Poland (-40.0%), Kazakhstan (-
40.6%), Switzerland (-45.3%) and Belarus (-12.9%) influenced the decrease of total exports by
18.0%. (see Table 2.5)
Table 2.5 the provenance of the commodities imports of R. Moldova, percentage in total imports

Source: Elaborated by the author Elina Benea-Popusoi, based on the data of the national bureau
of statistics. Available at: http://www.statistica.md/

The main directions of exports and the potential of our Republic are food industry, including
foodstuff, tobacco, beverages, which represents the highest share in the total exports. Wine
cluster, that supports severe issues, due to the Russian embargoes and high standards adopted by
European Union; Cluster of fruit preparations and vegetables; also the other potential sectors are
organic agricultural stuffs and textile industry that works especially to imported raw materials
and foreign relations by forming Joint Ventures. In the contrary the functions of imports is to
supply the energy and raw materials that Moldova has not and to endowment of national
enterprises of up to day equipment. Imports could serve an important instrument aiming to
modernize economy and business environment but at the same time, there are many negative
consequences as: the low of significant part of domestic market, a large part of imports become
speculative, large part of import starts to promote the snobbism of consumers.
Concluding this information about foreign trade and statistical data of Moldova, the international
business environment in our country is less developed, the balance trade shows a regular
negative indices, the main direction of export nowadays is European Union market and the basic
sectors design for exports are of course agricultural goods, wine and beverages, sugar and textile
industry.
The results of customs surveys from 2014 show that the biggest share of exports was provided by
German-owned company Draexlmaier Automotive Ltd, the largest industrial holding company in
Moldova, which is in first place in the rankings. It is noted that the wineries, called the hope of
Moldovan exports are poorly present in the top 50 exporters. In addition, companies included in
the top are not among the most popular in Moldova - Zolotoi Aist, Suvorov Vin, Renaissance-
Perfect Vale Winery. Consolidated its position in the top and sugar producer,, Sudzuker -
Moldova ', which reached number five after a year ago was only the 21st biggest exporter.
Companies in light industry,, Ionel 'SA,, Dawn' SA,, Tricon 'are also in the top 100 exporters, the
places 39, 52.
2.2 Export and import activity applied by national enterprises.

Moldova should follow an export strategy of selling higher quality and higher-value added
products in its priority export markets. In order to be more competitive in these markets,
Moldovas enterprises need to further develop their capacity to produce such products.
Improvements in firms strategic management, financial management, product quality,
production processes, and other areas are needed in order to increase competitiveness. However,
information asymmetries about the quality of business services that could help exporters make
these improvements reduce companies willingness to pay for them. Another crucial area that
needs attention for Moldova to successfully pursue its export-based growth strategy is the
business-enabling environment. Although there has been some reform progress, the business
environment in Moldova remains characterized by uncertainty, a lack of transparency, and high
costs in firms' interactions with government. The competitiveness of Moldovan enterprises is
also affected by challenges in financial sector development. Banks have limited access to
medium to long term funding, tend to lack suitable products and credit evaluation techniques for
loans to smaller companies, and face general deficiencies in risk management.
Although the main pillar of the Republic of Moldovas national economy are all export
enterprises from agricultural sector. For example our country is one of the largest European
exporters of walnuts, accounting for a total volume of 9 thousand tons and 30 million euros in
sales. The total cultivated area stands at around 5000 ha. Walnuts are exported to around 25
countries across the world, including the European Union, Middle East and some Asian
countries.
In walnut industry the major producers and exporters are The Company Monicol Ltd, its
clients are some of the largest French companies, Owing to their excellent quality and
competitive prices it sells products in the European countries; other enterprise is Prometeu T
is specialized in acquisition; processing of shelled walnuts, walnut kernels and exporting them to
EU countries such as Turkey, Cyprus etc., The export volume represents 3.23.5 million euro.
About 90% of the production is exported to EU countries.
The export strategy applied by walnuts producer companies is the direct export method entry and
usually work with foreign distributors who purchase nuts and resell it to local customers or to fill
their own inventories, especially distributors are from export-oriented countries like France,
Turkey, Germany, and Spain. Often, they set the selling price in foreign market, provide buyer
financing and look after warranty and service needs. Payment terms and length of contract time
have usually initiated with a short trial period. There are a lot of benefits of using this strategy,
for example, the company got only one customer, who picks up the credit risk for all sales; the
distributor holds firms stock in-market and provides back-up service to clients. Also the
distributor helps pay for and undertake marketing and promotion of products in the market ,
develops a customer base for companys product and handles more of the in-market work, saving
the time and costs, which is so precious for agricultural enterprises.
The modern way of direct exporting applied by national companies that cultivate walnuts, is the
internet and electronic commerce that allows companies both large and small to engage in direct
marketing quickly, easily and inexpensively. It is especially important for small and medium-size
firms that wish to reach distant mark. In Moldova, the companies, which apply this strategy, are
Anevgrup limited liability company, Nova Nut, Pronibur, Aksav-Group, Walnut etc.
The basic internet export channel is Alibaba.com that is the best choice to reach large share of
foreign consumers, is less expensive than other entries methods and easier to advertise, promote
and attract foreign direct investments. [17,p.1]
Although, not only agricultural industry is well developed. We have to consider the evolution of
exports from textile industry, which is one of the most performed sectors after the collapse of
Soviet Union. The most oldest and popular brand is Joint- Stock company Zorile.It is the first
shoe factory that was created in 1945, during the period of 1969 year, the annual capacity was 5
million pairs of shoes, the production volume and number of offices increased considerably,
over 6000 of employees, articles were approved by the State Quality Mark. By 1982, global
production volume was over 7 million pairs of shoes per year. "Zorile" cooperated with 16
enterprises in the country and seven from abroad.
The export strategy of this firm was direct selling, company market, sell and deliver products
directly to the client. It was established the export department within organization. Exporter
knew personally customers, because factory production have exported to Russia, USSR Kazakh,
USSR Uzbek, Lithuania, this countries felt more secure in doing business. For company an
advantage was a full control over the brand and price; easier to develop a better understanding of
the marketplace and of course firm had greater flexibility to improve or redirect marketing
efforts. In 1989, Zorile became one of the largest enterprises of light industry from Moldavian
Soviet Socialist Republic. Besides leather factory in Chisinau, the company bought materials
from Moscow, Leningrad, Minsk, and Kiev. In 1991 the direct exports of this company has fallen
due to the collapse of Soviet Union. [15,p.1]
In 1995 the export strategy was oriented to overcoming economic crisis and collaboration with
an Italian company Loncar Due, and it was made the first export in Italy. In 2008 , 63% of
state shares were purchased by US investment fund Done Invested Limited, that lead to
launching of new plant development program geared not only towards cooperation with foreign
customers regarding the production of shoes, but also for retail sale. Nowadays Company
"Zorile" is the largest producer of leather shoes from Moldova and claim the title of the first
national brand of shoe. The company exported 95% of its output every year, mainly to Italy,
Germany, United Kingdom, and the remainder was sold domestically. It is using direct export
through the collaboration with the Italian company Loncar Due and German firm Rieker and
through outsourcing agreements that help the company to activate properly by the means of
modern machinery, well-developed export relations. The direct exporting strategy used by
Zorile necessitate larger capital investment in marketing, but the degree of control over export
strategies is greater, also the company hire an export manager who elaborate the export program.
The main type of foreign market entry of the enterprise are distributers that purchase the product
and are always responsible for payment of the goods. They assume financial risk and generally
provide support and customer service. Payment terms and length of contract have usually
initiated with a short trial period. The basic distributers are companies from Italy and Germany
that are investing in national company, buying the majority of production and then selling abroad
under their brand. This strategy is the best choice for the enterprise because it provides continues
investments, technology, labor employment and potentially greater sales and therefore greater
profits.[5,p.1]
Another national enterprise from light industry that succeeded during the time and have a greater
share of exports is the joint stock company Ionel. The main direction is the production of suits
for women and men. The company was implemented quality management system ISO-9001 and
automatic design system SAPR services. It is a company with great experience and great ability
to produce qualitative products. Ionel is familiar with European market requirements by
working directly with customers was a prerequisite for launching their own brands of clothing
that have been become known on the foreign market. This are the brands "Primo Giovanni" and
"Prima Bella". Currently 84% of production has exported to such countries as Germany, Italy,
Romania, France, USA, Canada, Austria, Poland, and Norway. Since last year began to
collaborate with new partners of international renown. Also firm, want to return to the Russian
market, where 20-25 years ago Factory had a massive presence. The future of light industry
enterprise is to work on own brands and to export directly through sales agents, as well as their
task is to support the fiscal policy namely the development of brands, not just services of
outsourcing. The company sell and manufactures products for successful brands such as Gerry
Weber, Villa Vasari Gold, Luisa Spagnioli, Ugo`s collection, Tommy Hilfiger, Hackett London,
Pink Sand, David Scott, JW Sax, Pizza Rome, Patrizia Pepe, Hildebrand, J. W. Tabacchi, El
Corte Engels, Oviesse, Upim, Conbipel, Trussardi, E. Klein, Bickemberg. Even if the more than
80 % of production has designed for exports, the company does not have an export department or
management team that could coordinate, control and organize the export activity. The
outsourcing activity is very developed and has its advantages as high investments, trainings for
stuff, supplying of raw materials or schemes for production. Even if the company tend to apply
direct export, nowadays, due to less financial resources, is using indirect methods that suppose
collaboration with foreign companies, for example Join Ventures and Strategic Alliances.
Especially Ionel collaborate with Italian and German businesses. This strategy has some tax
advantages, same goals that make easier the export activity and is an alternative for capital-
intensive investment approaches to foreign market entry. In the case of light industry in
Moldova, this entry strategy is the key for recovery of enterprises from Soviet Union.[16,p.2]

http://asm.md/administrator/fisiere/cadru/f248.pdf
http://www.heritage.org/index/book/chapter-2
https://www.webkursovik.ru/kartgotrab.asp?id=-32643
http://www.scritub.com/geografie/Globalizarea-economiei-mondial2121631010.php