Mill did not use mathematical symbols in his reasoning and proofs.

At the same time, the idea of ​​the profitability of production specialization based on the use of comparative advantage was developed by another English economist – Robert Torrens in his "Essay on Foreign Trade in Grain" published two years before the work of D. Ricardo. This has led Western historians of economic thought to disagree on who is the founder of the theory of comparative advantage. However, even those who give priority to Torrens believe that Ricardo went further, developing his idea to the level of theory.

John Stuart Mill is also considered to be a representative of the "classical" school. In his book "On the laws of exchange between countries" (1844 p.), Was set out "the law of international value." The modern American economist John Chipman considers this law "one of the greatest achievements of human intelligence." The fact that the work was recognized only 100 years later, Chipman explains that "this law was too great a discovery for its time."

If Ricardo-Torrens’s theory of comparative advantage only defined the principles of the international division of labor, Mill’s idea of ​​"competing equilibrium" theoretically substantiated Ricardo-Torrens’s position and revealed its mechanism. Mill did not use mathematical symbols in his reasoning and proofs. However, modern econometrists believe that the course of his reasoning and evidence is so logical that only having a modern mathematical apparatus, you can appreciate his contribution to economics.

Mill’s laws of international competition are basically reduced to two most important provisions. First. The natural desire for international production specialization leads to a balance in the benefits of this specialization. Other. Terms of full or partial specialization are determined by inequality in income from production. The possibilities of full production specialization depend on the elasticity of substitution in consumption that exists between the goods produced and the tendency to relative equalization of the absolute benefits of the states participating in international exchange.

Modern management theory is based primarily on two main currents of economics: Keynesianism and the classical approach, or neo-Keynesianism and monetarism (neoclassical approach). It is these two theoretical areas that have created and define today’s mechanisms, tools and criteria for assessing the management of foreign economic activity of market economies and international economic and financial institutions.

The entire system of managing foreign economic activity and the economy in general, from terminology, statistics, multifactor economic models to the development of foreign economic policy and strategy, is based on the teachings of John Maynard Keynes and the classics of monetarism.

In the late 20’s – early 30’s of XX century. Keynes worked on the theory of economic management. Economic crises even then necessitated a theoretical understanding and creation of a system of economic management, including foreign trade. "Great Depression" 1929-1932 pp. tragically reaffirmed this need and forced political circles and the government to reconsider their liberal views on the possibility of active intervention in economic life based on the principles of free enterprise.

In other words, the scientific views of Keynes, who called for a greater role of the state in economic governance, coincided with the historical need for the development of institutional governance. In the early 1930s, macroeconomics became not only the main branch of economics, but also the most important branch of public administration.

Keynes’s final work, The General Theory of Employment, Interest, and Money (1936), became the foundation of modern economic thought and practice.

A new step in the development of economic thought about has been taken in the last three decades, when the internationalization of economic life and interdependence have become a comprehensive process and the role of foreign economic relations as a factor of growth and prosperity has grown significantly … It was during this period that the coordination of the national foreign economic policy of individual countries and its coordination at the international level became especially important for stability and economic growth.

The country’s participation in the international division of labor, on the one hand, and https://123helpme.me/write-my-lab-report/ ensuring its international economic security, on the other, are strategic areas of management of the country’s foreign economic sphere.

The well-known truth – "Theory precedes practice" – has been confirmed by the practical application of both Keynesianism and monetarism.

Back in the 50-60’s Keynesian direction got a worthy opponent – monetarism, which, however, began to be used in the practice of state regulation only in the early 80’s. Milton Friedman, a professor at the University of Chicago, became the intellectual leader of the monetarists.

Monetarists explained the need for liberal methods of governance (which do not violate the principles of sovereignty), the essence of which is the widespread use of financial and credit, anti-inflation, price and monetary instruments, as a theoretical position on the inadmissibility of a rigid Keynesian approach to regulating the world economy.

Monetarists argue that the money supply is the main determinant of short-term changes in gross national product and long-term changes in prices. Of course, Keynesian macroeconomic theory also recognizes the role of money in determining aggregate demand.

The main differences between the two currents are:

in the approach to determining the factors influencing the change in aggregate demand (Keynesians believe that aggregate demand is formed under the influence of many factors, and monetarists call the main supply of money); in the interpretation of the role of the state (Keynesians advocate a greater degree of intervention, monetarists – for less, for deregulation).

In the early 1980s, at the end of the second most complex period in the economic history of advanced capitalism, monetarist concepts became relevant under the influence of a ten-year structural crisis in the world economy in the already established dependence between countries.

Structural reforms and macroeconomic adaptation, which took place first in the United States and then in Western Europe, provided for deregulation in the macro- and foreign economic spheres at the national level, a shift towards international competition mechanisms, and a shift to more liberal and democratic forms regulation of financial and monetary instruments, in particular to the coordination of domestic macroeconomic policy.

This approach, applied in practice by the US administration of President Reagan in the early 80’s, and then in Western Europe, allowed to overcome the stagflation process, to build a new system of regulation of world economic relations by monetary means, which did not restrain growth, took into account realities of national sovereignty and did not create excessive supranational directiveness.

Structural reforms and macroeconomic adaptation have been at the heart of the Strategy for the Fourth Decade of UN Development, discussed and adopted in 1990 at the 18th Special Session of the UN General Assembly. The Ukrainian delegation made a significant contribution to the development, coordination and adoption of the final document of the "Declaration on the Strategy for the IV Decade of UN Development".

The implementation of the goals of the Strategy in developed and newly industrialized countries resulted in a long, almost ten-year period of crisis-free development, high rates of economic growth and the formation of a new system of multilateral regulation and national management of foreign economic activity.

In the modern economic literature there are wide discussions about the future mechanism of regulation of the world economy, the ratio of national and international regulatory mechanisms. Most views are that the role of multilateral institutions will grow. However, the question remains debatable: will the current monetary (neoclassical) system remain effective, or will it give way to supranational institutions with a significant restriction of national economic sovereignty?

The development of the world economy has not yet provided science with practical evidence of the declining efficiency of monetary forms of regulation and management of foreign economic activity.

Neoclassical economists added little to Mill’s theory of international trade. In general, we call the theory of international trade a theory whose main question is: if the balance of payments is maintained in equilibrium, then what are the revenues from trade and how these revenues are distributed among countries depending on the terms of trade? However, in our time this theory has been reworked by Heckscher and Olin, two Swedish economists.

Heckscher-Olin’s theory proposes a model of trade in terms of comparative supply of countries with factors of production. A country will have a relative advantage in those products whose production requires the intensive use of a factor that is abundant in the country, and therefore it will import those products whose production requires the intensive use of a factor that is relatively rare in the country.

This theory is based on Ricardo’s "law of comparative cost", supplemented and reinforced by Mill’s concept of mutual demand, but it goes further, linking the model of international trade with the structure of the economies of trading countries.

Thus, Heckscher-Olin’s theory offers a tool for analyzing the impact of changes in trade on countries’ own economic structures and, in particular, on the internal distribution of profits.

This theory clarifies the old classical theorem, according to which trade replaces the movement of factors between countries, and therefore it raises the question of whether trade alone – in the absence of full international mobility of factors – can equalize prices for all factors of production in all countries. trade. In this regard, it should be noted that although Ricardo-Mill’s theory of international trade has been tested more successfully than many other elements of classical political economy, even this theory has been thoroughly reworked today.

literature

Blaug M. Economic thought in retrospect. – M., 1994. Keynes J.