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The international division of labor

The history of the world economy begins with the international division of labor (IDL) associated with the exchange of activities and it products between nation-states.

IDL, or the division of labor between countries is a step in public territorial division of labor. It is based on the cost-effective production specialization of individual countries and reveals by the interchange of specialized production results in certain proportions.

The international division of labor exists in two basic forms: the international specialization and international production cooperation.

International specialization

International specialization is a form of division of labor between the countries in which the increase in the concentration of homogeneous production is based on the progressive differentiation of the national production. Specialization in the international division of labor will eventually provide the specialization of countries and regions in the production of certain products and parts for the global market.

International production cooperation

The international production cooperation is the result of the specialization of national industries, which interact in the international division of labor. International clustering based on subject specialization and is the form of the private and public division of labor in the global economy.

The international production cooperation is meant to include the country in the international division of labor within the so-called vertical model of the international division of labor, that is, while maintaining the autonomy of the production process within the national borders.

The theory of international division of labor takes its rationale and development in the classical school of political economy, especially in the works of its founders - Adam Smith and David Ricardo. The main achievement of the classics is the theory of comparative costs of production. The basis of this theory is the idea of the existence of cross-country differences in the production costs of certain goods. This leads to the conclusion that it is more profitable to concentrate on the production of certain goods with lower costs than on all demanded goods. Specialization in the production of this product will provide an opportunity, through the exchange, to buy goods in foreign markets, domestic production of which requires highest costs than in other countries. The biggest economic impact will be giving specialization in the production of the commodity in which the advantage - the maximum. If the country cannot produce any products with costs below the international level, then it will be relatively more efficient to specialize in the production of goods for which the excess of international level will be the lowest cost.

The classics' ideas embodied in the life and have been further developed in modern theories of international trade.

The world economy as a set of national economies

The international division of labor was the unifying element that created the world economy as a set of interrelated international exchange of national economies, projecting its subsystems. Exit of trade links across national boundaries, that is, the internationalization of the circulation (heading stage of the capital), and now is the general active trend for countries all over the world, which want to get the economic benefits of the international division of labor and international trade. But today the trade relations between the countries and serving their monetary and credit relations constitute only a primary level of integrity of international relations, as since the middle of the 20th century the supranational level of the world economy took shape.

In the second half of the 20th century in the evolution of the international division of labor is a qualitative shift, which has resulted in the export of capital across national borders. Internationalization has covered all stages of the movement of capital (monetary, industrial, commercial), has found some form, as follows:

• the integration of national economies into the regional economic complexes with the structure and proportions of the opening on the consumption of the whole region, as well as the regulation of interstate economic relations;

• transnationalization, that is excess of production and business corporations (companies ) in the form of branches and subsidiaries across national boundaries. Division of transnational corporations (TNCs), in the territory of nation-states, operating largely as economically, organizationally and legally independent entities, whose relations with the national states are built on special contracts.

One of the consequences of the integration processes and transnationalization is the emergence of a new phenomenon of the global economy - world economic division of labor: a) intra-and inter-regional and b) global (transnational) division of labor.

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