Influence of international economic entities on the state regulation of economy

Abstract

Based on the concept of jointly-divided activities, the paper reveals the essence of the government’s regulation of economy as a sub-function of state’s economic functions, where the government is a bearer of society’s general economic interests. The work substantiates the positive and negative sides of the influence of international economic entities on economic policy by splitting up state’s own functions and state’s applied functions, so that the latter may contradict the former and be not corresponding to the essence of state. The author reveals the main interests of the triad of globalizers – TNCs, international organizations and developed countries. The study shows the asymmetric nature of the interaction between the open economies and the main international economic entities – international organizations and TNCs, which is due to the difference in their interests and opportunities to influence each other. The paper outlines the main causes and consequences of the negative influence of international organizations and TNCs on the government’s economic regulation in developed countries and other open economies. Revealed the problems of imposing unified rules on economic policy in transition economies by international organizations, of setting requirements for crediting, and of promoting the neoliberal concept and the austerity policy. The work analyzes the negative consequences of the influence of TNCs on state economic regulation, namely: the weakening of employees’ bargaining power and the fall of their incomes, the growth of inequality, the reduction of the tax burden on corporations, offshorization, the hypertrophied development of the financial sphere, etc. The study shows various methods to mitigate the consequences of the negative influence of TNCs on open economies. The paper highlights the main mechanisms of influence of international economic entities on state economic regulation. Revealed the main challenges of state economic regulation caused by the increasing influence of international economic entities and globalization in general. Based on these challenges, the paper highlights the following main necessary transformations of state economic regulation: (1) increasing the level of subjectivity of the state as a bearer of national interests, (2) ensuring institutional foundations for inclusive global development based on the principles of equality, justice and transparency, and (3) neutralizing the negative impact on national socio-economic security exerted by international actors.