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Project „Joint Degree Study programme “Technology and “ No. VP1-2.2-ŠMM-07-K-02-087 Aim of the course unit is to (1/1): 1. Give insight on  the process of globalisation, its characteristics as well as causes and effects on economy;  the role of corporations, NGOs, governments and multilateral institutions in shaping world economy; Aim of the course unit is to (1/2): 2. Build knowledge of students in  the current state of world with focus on major economies of the world;  the of world financial markets;  economic implications in terms of national economic development and inequality; Aim of the course unit is to (1/3):

3. Develop skills of students in  analysis of economic charaxteristics of globalization and increased flow;  analysis of impacts and effects.

The main topics

1. Theories of globalization. 2. Globalization characteristics 3. Globalization – causes and effects on world economy 4. Government and the multinational corporations 5. Economic implications – development 6. Economic implications – inequality 7. Financial markets 8. Multilateral organizations 9. The Triad and the BRICs The introduction to the course The core essence of globalization is often misunderstood because the process of globalisation is confusing due to its multifaceted nature and oftentimes it is being confused with other processes and misinterpreted. Apart from the complexity of the process of globalization itself, it is important to point out that the word “globalization” entered a dictionary (of American English) in 1961 [by the reference of, which is only almost half a century ago. Nevertheless, the word for globalisation was quickly adopted in other languages. As the same source states: “…The many examples include lil ’alam in Arabic, quanquihua in Chinese, mondialisation in French, globalizatsia in Russian and globalisación in Spanish. Among the major world languages, only Swahili has not (yet) acquired a globalization concept, and that exception is perhaps largely explained by the widespread use of English in elite circles of the African countries concerned. In minor languages, too, we now find globalisaatio in Finish, bishwavyapikaran in Nepalese, luan bo’ot in Timorese, and so on.” As the phenomenon of global scale globalization has generated a number of processes that are reflected in literally all spheres of the development of the civilization: from the blurred geographical boundaries of markets to the progressive complexity of distributed network of labor relations, to the progressive convergence of the and to the globalization of the power of multinational corporations, consortia and companies to the intensification of the struggle for limited resources of raw materials to the explosive development of the world in “intellectual consumption” to the weakening of cultural isolation of to the emergence and use of industry of discursive power technologies to reduce the role of national elites and simultaneously to increase the role of transnational elites in the regulation of global processes. Thus, the manifestations of globalization are: .synchronization of customs, fiscal and monetary policies of countries; .aggravation of the opposition between global players and authoritarian and totalitarian regimes; .consolidation of national monetary systems in certain regions of the world; .regionalization of socio-economic processes; .growing influence on the socio- economic development of supranational governance structures; .attracting ever larger amounts of material and financial resources in the circulation of multinational corporations; .internationalization and commercialization of natural resources (primarily in production, transportation and processing of energy resources). Topic 1. Theories of globalization. Economic globalization Short overview: . Introductory general information on the topic of the Workbook. . Provides overview on distinguishing manifestations of globalization in general and in economy in particular. . Homework. . Reading materials etc. Aim of the chapter: . To learn the theories of globalization, . To help students shape their opinion on the process of globalization in economic sphere. Learning outcomes: (knowledge and skills learner will possess after reading the chapter and having done the practical assignment) . Know the theories of globalization, . Get a proper understanding on globalization in economy and the general trends. “Globalization requires taking a broad contextual and long-term view.”

Helen Fisher The author of this Workbook believes that one accurate definition of globalization was made by Jan Aart Scholte [19] who refers to globalization as “…the spread of transplanetary – and in recent times more particularly supraterritorial – connections between people.” and explains that: “…From this perspective, globalization involves reductions in barriers to transworld contacts. People become more able – physically, legally, culturally, and psychologically – to engage with each other in ‘one world’.” Since globalization can be perceived as the spread of transplanetary – and in recent times more particularly supraterritorial – connections between people, as a summary, it can be concluded that the main aspects of the theory of globalization narrow down to the following: .Global communications systems are gaining an increasing importance every day, and through this process all nations are interacting much more frequently and easily, not only at the governmental level, but also within the citizenry;

(continued in next slide) .Even though the main communications systems are operating among the more developed nations, these mechanisms are also spreading in their use to less developed nations; .In terms of economic activities, the new technological advances in communication are becoming more accessible to local and small businesses. This situation is creating a completely new environment for carrying out economic transactions, utilizing productive resources, equipment, trading products, and taking advantage of “virtual monetary mechanisms”;

(continued in the next slide) .The concept of minorities within particular nations is being affected by these new patterns of communication. Despite the fact that these minorities are not fully integrated into the new world system of communications, the powerful business and political elites in each country are a part of this interaction around the world. Ultimately, the business and political elite continue to be the decision makers in developing nations; .Social and economic elements under the influence of the current phenomenon of globalization are determinant circumstances which affect the standards of living of every particular . Overall, main assumptions of the theory of globalization can be summarized in three principal points: 1. cultural and economic factors are the determining aspect in every society. 2. under current global conditions, and when we are studying a particular system -i.e., financial or trade sphere- it is not as important as previously thought to use the nation-state category as a unit of analysis. 3. with more standardization in technological advances, more and more social sectors will be able to connect themselves with other groups around the world, which implies faster and easier communications and economic transactions. Topic 2. Globalization characteristics Short overview: . General information to the topic . Provides overview on main characteristics of economic globalization . Homework . Reading materials etc. Aim of the chapter: . To teach the students globalization characteristics through different dimensions of globalization . To help students shape their opinion on characteristics of economic globalization. Learning outcomes: (knowledge and skills learner will possess after reading the chapter and having done the practical assignment) . Know the key characteristics of economic globalization . Get proper understandings on globalization process including its causes and effects of economy. “It has been said that arguing against globalization is like arguing against the laws of gravity.”

Kofi Annan Thus, we now can define the characteristics of globalization: 1. Liberalization which is manifested in freedom of international business economic activities (e.g. expanding business, trade, commerce etc.), free exchange of capital, goods, services and technologies between countries. 2. Free Trade which is manifested in free trade between countries and absence of excessive governmental control over trade. 3. Globalization of Economic Activities which is manifested in expansion of economic activities onto (bigger number of) international markets, coordination of national economy and world economy and the raise of their interconnectedness. (continued in next slide) 4. Connectivity which is manifested in ever raising connectedness of different locations with the world by breaking national boundaries; establishment of linkages between different countries and nations in all spheres of globalization (cultural, scientific, technological, economic etc.). 5. Borderless Globe which is manifested in diminishing national barriers and creation of inter- connectedness of countries, territories and regions. (continued in next slide) 6. A Composite Process characteristic is directly connected with the previous one & manifested in integration of nation-states across the globe by common economic, commercial, political, cultural, scientific and technological ties, which leads to creation of a new world order with no national boundaries. 7. A Multi-dimensional Process characteristic is manifested in globalization of economic (opening up of national market), political (limited powers & functions of state, more rights and freedoms granted to the individual and private sector), cultural (exchange of cultural values between societies and nations), ideological (the spread of liberalism and ) spheres. (continued in next slide) 8. A Top-Down process characteristic of globalization is manifested in predominance of developed countries and the MNCs (multinational corporations) in globalization processes that are based on their interests. Technologies, capital, products and services come from them to developing countries. 9. Global State vs. Global Civil Society characteristic is manifested in protests against the harmful effects of globalization on the vast majority of people all over the world, particularly in developing countries, protest marches, demonstrations and meetings have been organized in different countries. Topic 3. Globalization – causes and effects on world economy

Short overview: . General information the topic . Covers major benefits and costs of globalization . Provides overview on drivers of globalization . Homework . Reading materials etc. Aim of the chapter: . To show the connection of causes and effects of globalization . To help students shape their opinion on both negative and positive effects of globalization. Learning outcomes: (knowledge and skills learner will possess after reading the chapter and having done the practical assignment) . Know the causes and effects of economic globalization in the world. “Globalization has created this interlocking fragility. At no time in the history of the universe has the cancellation of a Christmas order in New York meant layoffs in .”

Nassim Nicholas Taleb Likewise physical processes, all economic ones also have causes. Prerequisites of the process of globalization at present are: .international specialization of production and trade in ; .combining of sets of technologically connected production using the same type of process chains; . for markets in terms of overproduction in developed countries; .depletion of the planet’s natural resources and the intensification of the struggle for their use; .increased risk of global ecological disaster; .internationalization of capital; .information revolution - creation of global information networks. Negative effects •strengthening of uneven development of countries in the world (the polarization of the world); •increasing domination of stronger economies and the intrusion of their will; •increasing vulnerability related to the negative effects of global economic relations as a result of intensification of the latter; •concentration of the most of the intellectual and technological potential of humanity in the post-industrial world; •concentration of major trade flows within developed countries; •direction of migration flows from the "third world" into the developed regions of the world etc. Positive effects •dissemination of new information technologies and related benefits (reducing the time and cost of transactions, improvement of working and living conditions); •transition to resource saving technology; •increased attention to the important global issues of humanity and others etc. Topic 4. Government and the multinational corporations

Short overview: . General information and terminology to the topic . Covers the connectedness of governments and Multinational Corporations . Provides overview on peculiarities of cooperation of governments and Multinational Corporations . Homework . Reading materials etc. Aim of the chapter: . To explain the essence of connectedness between governments and corporations . To help students shape their opinion on peculiarities of cooperation of governments and Multinational Corporations. Learning outcomes: (knowledge and skills learner will possess after reading the chapter and having done the practical assignment) . To know how governments and Multinational Corporations connect with and influence one another. “We cannot wait for governments to do it all. Globalization operates on time. Governments tend to be slow moving by nature, because they have to build political support for every step.”

Kofi Annan MNCs become more rich and more powerful. At the same time, governments have power too due to the broad scope of their sphere of influence. And those who have power are in a tight bunch. Thus, even though government makes direct influence on Multinational Corporations through its wide range of trade regulatory and fiscal instruments and mechanisms (e.g. trade tariffs, taxes, labeling and product quality standards, antimonopoly legislation rules etc.), they are also influenced by corporations. Such connectedness of government and Multinational Corporations is obvious. Quite often individuals who are appointed as ministers, heads, chairmen, and advisors to many government departments and independent committees in the government body previously had high corporate positions (mostly as directors, chairmen or chief executives) and therefore maintain links to industry even after they take up the duties in the government sector. This results into direct conflict of interest with their governmental roles. Such cases are known in European countries as well as US, where government officials in highest positions in the country have a strong bond with oil industry. Another example of corporate influence on government is lobbying. Despite the common perception of the term, in most circumstances it remains within legal boundaries: in the form of party political donations, philanthropy, legitimate business dealings as well as through funding, part founding or donating toward the cost of ‘public’ projects. Likewise, corporations may do favors in return to the government; like with the help of controlled media or media sources that are favorable to them, who can shape the public opinion on government policies and decisions (e.g. the war in Iraq) as well as on particular politicians. This leads to establishment of symbolic relationship in which government and representatives of Multinational Corporations at highest managerial levels sustain each other’s legitimacy. Topic 5. Economic implications - development Short overview: . General information and terminology to the topic . Provides overview on what causes the economic implications of development . Homework . Reading materials etc. Aim of the chapter: . To explain the implications of world economic development through global issues . To help students shape their opinion on economic implications of development. Learning outcomes: (knowledge and skills learner will possess after reading the chapter and having done the practical assignment) . Know the global issues and economic implications of global development. “Globalization was a deep trend pushed by technology and right ideas, as much as anything else.”

Jeffrey Sachs In fact, all issues of global development make a contribution to the economic implications of development of the humanity. Thus, by virtue of globalization, the financial crisis 2007-2008 hit the real economy and became a global economic crisis, it was then rapidly transmitted to many developing countries through a contraction in trade finance and a slowdown in demand affecting bilateral trade flows. These transmission channels were particularly visible in sectors composed of global production and supply chains. Since most developing countries are greatly dependent on markets of developed countries, the slump in demand from latter due to the crisis has had an adverse impact on the former. Most developing countries are nowadays closely linked to the global economy by trade and FDI flows. As a consequence of the crisis, the significant reduction of these flows is starting to restrain their development perspectives. Developing countries are currently seriously hurt through falling commodity prices, demand-driven drops in exports exacerbated by the deficit of credit and trade finance, capital outflows, declining remittances, and contracting investment. The prospects are more dire for export-oriented developing countries, especially those with a small domestic economy, where the reduction in international demand is more likely to curtail their exports and raise . These impacts are being combined with the effects of the ongoing food crisis, volatile energy prices, and the change challenge. Many developing countries are also dependent on Official Development Assistance (ODA), which may shrink during the crisis. Potentially, the aggregate of all these effects could bring millions of people back into poverty, and worsen the conditions of those presently living in extreme poverty. This threatens to stall and reverse many years of efforts to achieve internationally agreed development goals, including the MDGs. In early 2008, before the financial crisis, the global economy confronted a sharp surge in food prices, leaving many developing countries with citizens facing the threat of hunger. The food crisis arose from a number of factors. Investing in , including with increased ODA, will have to be a priority in attaining food security. Reducing distortions in agricultural trade is another priority. Moreover, towards the middle of 2008, energy prices shot up dramatically and raised concerns about energy security for development. Since then, energy prices have declined equally dramatically. The volatility in energy prices has implications on both net energy exporters and importers, on sources of energy supply and interface with , and on energy efficiency measures. The high level of volatility in energy prices has led to much introspection over the impact on economic growth and in developing countries. On top of this, there is an ongoing need to address climate change by reducing greenhouse gases. This requires an increasing use of more climate-friendly development strategies. Thus, it is high time to review development strategies that will make economies more resilient, by addressing the deep-seated causes of the crises, and by fostering a process of economic growth and development that is sustainable, spreads the benefits widely and especially to the poor, and caters for the needs of future . The crisis affecting development may require rethinking of the whole economic and social paradigm that has prevailed over the last decades and has nurtured the process of liberalization and globalization. Topic 6. Economic imlication - inequality Short overview: . General information and terminology to the topic . Provides overview on economic implications for inequality in the world as well as in developed and developing countries . Homework . Reading materials etc. Aim of the chapter: . To dispel the wrong believes about economic implications for inequality and whether they are caused by globalization . To help students shape their opinion on economic implications for inequality. Learning outcomes: (knowledge and skills learner will possess after reading the chapter and having done the practical assignment) . Get a proper understanding of economic implications for inequality. “Where globalization means, as it so often does, that the rich and powerful now have new means to further enrich and empower themselves at the cost of the poorer and weaker, we have a responsibility to protest in the name of universal freedom.”

Nelson Mandela The author of the Workbook shares the points stated in the “Economic Globalization and Political Stability in Developing Countries” by Nicolas van de Walle under Project on World Security Rockefeller Brother Fund:

(see next slides) 1. The gap between the poorest and the richest nations is not getting any smaller, but this results from continuing inability of the poorest countries to attract FDI. With regards to this a great role in turning the globalization processes into benefits for the country is carried out by governments. Domestic factors like government policies in determining the distribution of income and assets make a greater influence on growth of social inequalities in developing countries than the international economic environment. If done wisely, in combination with progressive liberalization and linkaging with world economy, government is able to prevent the inequality within the country and assure the economic growth from FDI. 2. The growing inequality in developed countries is not related with their trade with developing countries and is argued, instead, to be driven largely by recent domestic technological breakthroughs, notably the new information technologies, which have lowered the demand for low-skilled labor. Even though, the causes are yet still being studied by scientists, but only few of them claim now that economic globalization can be blamed for the rise of inequality. 3. The growing inequality in developing countries is denied to occur at all, although, to be fair, the data on income and asset distribution gathered in those countries is imperfect. Developing countries are characterized by “substantially greater variation in inequality across countries at a given time than at a given time for a given country”. The absolute numbers of the poor in developing countries have risen together with the rise of the population. Moreover, the reason for variation in inequality among developing countries with similar “output data” so to say and levels of development, is rather internal factors within each country. Topic 7. Financial markets Short overview: . General information and terminology to the topic . Provides overview on globalization of financial markets . Homework . Reading materials etc. Aim of the chapter: . To analyze the globalization of financial markets . To help students shape their opinion on the globalization of financial markets. Learning outcomes: (knowledge and skills learner will possess after reading the chapter and having done the practical assignment) . Get a proper understanding on the nature of financial markets in the context of globalization. “Today, the forces of competition, technology, and globalization have converged to spur innovation and to transform the way business is done in the securities industry.”

Arthur Levitt There are different types of financial markets:

•The Foreign Exchange Market (also known as Forex or FX); •The Market; •The Commodities Market; •The Futures Market; •Other types of financial markets are Markets, Insurance Markets, Bond Markets, Derivatives Markets and some other. The elements of financial globalization are:

•the development of cashless payment systems; •increase in international capital flows in the form of direct and portfolio investment; •evolution of derivatives markets; •growth of trade in the markets; •formation of regional currency groups; •integration of international bank capital; •development of offshore banking business; •reform of the financial architecture for globalized world. analysts say that the globalization of the financial system is based on the interaction of the following phenomena (1/2): •technical progress that allows to conduct international financial transactions in real time and significantly reduces the cost for and communication; •increasing competition: on the one hand, between credit and financial institutions on financial markets, on the other hand between financial markets themselves as a result of significant gap in information technology and telecommunications; •restructuring of credit and financial institutions through M&As among them as a consequence of increasing competition between these institutions; Financial market analysts say that the globalization of the financial system is based on the interaction of the following phenomena (2/2): •wide internationalization of business due to the strengthening of transnational nature of corporations’ activities; •consolidation of regional integrational unions; •relaxation of strict control on the implementation of international agreements relating to the movement of capital of stock exchanges; • macroeconomic stabilization and reforms in some developing countries and countries with transitional economies, have created favorable climate for foreign investors; •widespread use of “the principle of the lever” & development of the process of assets’ securitization in industrialized countries. Topic 8. Multilateral organizations Short overview: . General information on the topic . Covers the functioning of such multilateral organisations as UN, WTO, IMF, and . Provides overview on the role of multilateral organisations in world economy . Homework . Reading materials etc. Aim of the chapter: . To learn the importance of multilateral organisations in globalization . To help students shape their opinion on the role of multilateral organisations in world economy. Learning outcomes: (knowledge and skills learner will possess after reading the chapter and having done the practical assignment) . Get a proper understanding on the role of multilateral organisations in world economy. “NAFTA recognizes the reality of today's economy - globalization and technology. Our future is not in competing at the low-level wage job; it is in creating high-wage, new technology jobs based on our skills and our productivity.”

John F. Kerry The most important functions performed by multilateral organizations, in terms of international include (1/3):

A. Promotion - the spread of international experience by organizing international conferences, gathering and analysis of statistical and analytical data, their publication and distribution, etc. B. Observation - observe the processes taking place in the member states, with the ability to formulate and disclose the official point of view on certain issues, the creation of public opinion and thereby to influence economic policy. The most typical example of an organization that serves as observant is the UN, who can urge the country (through resolutions of the General Assembly) to carry out certain economic policies. The most important functions performed by multilateral organizations, in terms of international economics include (1/3):

C. Supervision - a solid observation is related to the obligations of countries to report regularly and in the prescribed form data on their economic situation and to listen to advice on the basic principles of economic development. Governments that have signed the statutes carry out the supervision of international organizations. A typical example is the IMF, the main function of which is a rigid supervision of economic policies of member countries and providing international experience based recommendations for the prevention of the possible macroeconomic imbalances and choosing the most effective ways to solve existing problems. The most important functions performed by multilateral organizations, in terms of international economics include (1/3):

D. Regulation - supervision based on forcing countries to implement the recommendations of the international community through the development of relevant international standards and forcing mechanisms for their implementation. An example is the WTO, in which established certain rules for international trade &tough anti-dumping and other practices used against violators of the rules.

"Promotion - observation - supervision - regulation" - all these functions of multilateral organizations are based on the good will of their member countries. Despite having common characteristics, international organizations differ in the functions and activities. Thus, the is an international organization founded in 1945 after the Second by 51 countries committed to maintaining international peace and security, developing friendly relations among nations and promoting social progress, better living standards and .

The of the United Nations reaches every corner of the globe. Although best known for peacekeeping, peacebuilding, conflict prevention and humanitarian assistance, there are many other ways the United Nations and its System (specialized agencies, funds and programmes) affect our lives and make the world a better place.

UN works on a broad range of fundamental issues, from sustainable development, environment and refugees protection, disaster relief, counter terrorism, disarmament and non- proliferation, to promoting , human rights, gender equality and the advancement of women, governance, economic and social development and international health, clearing landmines, expanding food production, and more, in order to achieve its goals and coordinate efforts for a safer world for this and future generations.

World Trade Organisation can be looked at in different ways. It is an organization for trade opening. It is a forum for governments to negotiate trade agreements. It is a place for them to settle trade disputes. It operates a system of trade rules. Essentially, the WTO is a place where member governments try to sort out the trade problems they face with each other. The WTO is run by its member governments. All major decisions are made by the membership as a whole, either by ministers (who usually meet at least once every two years) or by their or delegates (who meet regularly in Geneva). While the WTO is driven by its member states, it could not function without its Secretariat to coordinate the activities.

International monetary relations are characterized by extensive institutional structure of monetary and financial institutions at global and regional levels, where the International Monetary Fund and the World Bank take a central place. Thus, without complying with generally applicable rules of the IMF regulations it is practically impossible to develop foreign trade of the country or to realize the benefits of participation in international division of labor. IMF foresees strict conditionality of granting credits and loans to member countries, intervention in the development and implementation of national economic programs. That is why an effective use of its membership in the IMF and other international financial institutions in the interests of the national economy is a key objective for every country. At the same time, it should be noted that the IMF still partly functions as supranational regulatory body in those countries that borrow from IMF, since economic reforms program agreed with the government of a country is IMF's condition for granting loans. Furthermore, the cooperation with the World Bank Group also plays an important role in international economic activities. It is an international organization for development whose aim is to assist the member countries along their way to economic and social development. The World Bank Group involves five closely associated institutions:

•The International Bank for Reconstruction and Development, •The International Development Association, •The International Finance Corporation, •The Multilateral Investment Guarantee Agency, •The International Centre for Settlement of Investment Disputes.

The first two organisations can be considered as main ones in the World Bank Group. Their key purpose is to facilitate the borrowers in the fight against poverty and improvement of living standards in countries with medium and low levels of economic development. It is also important to mention the Group of Twenty (G20) in the course of overview on multilateral organisations and supranational governance of world economy. The G20 is the premier forum for its members’ international economic cooperation and decision-making. Its membership comprises 19 countries plus the . Each G20 president invites several guest countries each year. The G20 is supported by international organisations, including the Financial Stability Board, the International Labour Organisation, the International Monetary Fund, the Organisation for Economic Co-operation and Development, the United Nations, the World Bank and the World Trade Organization. These and several other organisations are invited to attend key G20 meetings. The G20 committed in its Fifth Anniversary Vision Statement to listen carefully to institutions and countries which are not in the group. Accordingly, continues to work with non-members to develop international understanding of the G20’s 2014 agenda, to promote the agenda's benefits to the global economy and to seek views and input. According to the information given on its official website, the Fifth Anniversary Vision Statement also noted the G20’s intention to strengthen engagement with the G20’s official engagement groups, the B20, C20, L20, T20 and Y20, comprising business, civil society, organized labour, academia and youth. Topic 9. The Triad and the BRICs Short overview: . General information and terminology to the topic . Provides overview on the two macro-regional groupings as the Triad and BRICs and the economic trends within them . Homework . Reading materials etc. Aim of the chapter: . To learn the two macro-regional groupings as the Triad and BRICs . To help students shape their opinion on the economic trends within the Triad and BRICs Learning outcomes: (knowledge and skills learner will possess after reading the chapter and having done the practical assignment) . Get a proper understanding on development of scientific thoughts in the field of biophysical economics as a lead up to the creation of Sustainable Development concept. “The caused a centuries-long shift in power to the West; globalization is now shifting the balance again.”

Dennis C. Blair A characteristic feature of the last three decades of XX century was dynamics and depth of the socio-political processes. International economic relations system does not only stand aloof from these processes, but is the integral part, which interacts with them through a complex system of forward and backward linkages. Consequently, the degree of the openness of every national economy is increased together with the economic interdependence and integrity of the world. As a result of this trend’s intense actions, now it can be clearly outlined the three main economic poles of the world. These three centers are , the USA, and the EU also referred to as the Triad. They have a strong impact on economic development at regional and global level. The relationship between these poles has a noticeable influence on the development of the international economic relations in other countries. Understanding these relationships helps to orient in a complex spectrum of modern international economic relations. The redistribution of the positions among the three global centers is a reflection of the important features of modern economic development and the competition in the global market. None of the countries today can ensure its complete superiority in all positions. Taking a leading position in the process immeasurably depends on the international division of the labor and is possible only in the certain areas of the world economy. Generally speaking, in the Triad markets today, companies are driven by quarterly financial results, while the focus of their governments is driven by political systems shaped by short election cycles. At the same time, the outlook and focus of many BRIC companies and governments is on long-term investment and positioning for the future. BRIC is a group of four world economies, the rapidly developing countries. According to analysts, by 2050 the total economy of the group will exceed the total size of the economies of the richest countries of the world. Analyst Jim O'Neill, author of acronyms BRIC, in one of his reports emphasized attention on a strange phenomenon: four not similar countries like , , and China for various reasons have been developing very rapidly. At the same time, the BRIC countries have 20 % of the world’s economy (for comparison, the EU countries - only 16%) and about half of world reserves. Moreover, by 2025 the BRIC will own 40% of the global economy. To sum, up BRIC countries somehow manage to develop very fast and can become the powerful force in the world economy.

At the same time, the formation of the BRIC made the situation in the dividing of the power sources in the world more complex. In BRIC all four countries have different opinions on the politics and economy.