Theoretical Basis of Economic Globalization

from time immemorial among nations, and therefore, the power of nations will

adjusted, restructured [58].

ë Vietnam, according to author Nguyen Duy Quy and some other authors:

“..., the new high level and quality of economic internationalization, now

called globalization, has only appeared for more than a decade. Considering the causes that create the driving forces of globalization, most researchers in the world believe that the globalization process is only in its early stages..." [31, p. 58]. The authors also emphasize: "... globalization is the major trend of the times, but no matter how objective that trend is, it is still created by humans, it is the complex result of many factors, each of which is a product of humans..." [31, p. 65].

According to author Do Loc Diep and some co-authors of Capitalism in the Early 21st Century, globalization began when:

“... the information revolution becomes the center of the scientific and technological revolution. Information becomes the main resource besides traditional resources (natural resources, finance, human muscle labor ) . This change makes the production of the relevant countries carry within it a tendency towards globalization. It promotes a higher integration process domestically and in the world economy, bringing the socialization of production to a high level of globalization” [13, p.25].

This is one of the views on economic globalization that is most shared by scholars in both developed and developing countries. In the book “Beyond Globalization: Shaping a Sustainable Global Economy”, author Hazel Henderson stated:

“... The process of globalization is driven by two main factors. The first is technology - the factor that accelerates innovation in electronics.

telecommunications, computers, fiber optics, satellites, and other media. The combination of these technologies with television, global mass media, etc. The second factor was the 15-year wave of deregulation , privatization, liberalization of capital flows, opening up of national economies, expansion of global trade, and export-led growth policies that led to

to the collapse of the Bretton Woods fixed exchange rate regime in the early 1970s” [68, p.24].

Thus, according to Hazel Handerson [68, p.24], in addition to information technology and the subjective political will of governments, international institutions are also one of the important factors promoting the globalization process in recent years.

Views on globalization are also different from the political perspective. According to most developing countries (or the group of Southern countries, as some scholars call them to distinguish them from developed industrial countries (mainly concentrated in the North), globalization is simply a strategy of re-colonization by the United States. According to this strategy, the United States will gradually establish its influence in developing countries through international economic institutions, through bilateral free trade agreements with individual countries or multilaterally with groups of countries in different regions of the world. Although this assessment has not been verified, it is undeniable that the United States, with a GDP accounting for 1/3 of the world's GDP, may have enough potential to expand its influence and dominate the world economy.

Thus, it can be said that the views on globalization in general and on economic globalization in particular are very diverse, even contradictory and contradictory both in academic and practical aspects. However, regardless of the views,

However different views on globalization may be, there is no denying the fact that the world economy in the late twentieth century has

Major changes in infrastructure are moving towards a new mode of production ; in which the process of production management and product distribution is carried out with a new nature and scale.

The author of this thesis believes that economic globalization is an objective process in both theory and practice . Economic globalization is a stage in the development process of the world economy, in accordance with economic and social laws and imbued with the world's political colors in the last decades of the Second Millennium. During this stage, the production factors of the world economy have undergone qualitative changes, as a result of a long-term accumulation process from before, depending on and intertwined with cultural and political factors and forming a new productive force. This new productive force has, is and will form a new production relationship on a global scale, in which economies are moving in a more liberal direction and are also more interdependent.

Within the framework and objectives of the thesis, although globalization takes place in many fields, Chapter I of this thesis will only focus on analyzing the theoretical and practical basis of economic globalization, the characteristics of globalization and the impact of globalization on world FDI flows.

1.1.2. Theoretical and practical basis of economic globalization - some characteristics of economic globalization

1.1.2.1. Theoretical basis of economic globalization

Most economic theories, both classical and modern, suggest that there will be interactions between economies as international economic activities bring benefits to different economies. Despite some shortcomings, classical trade theories all affirm the important role of international trade. Adam Smith's trade theory based on absolute advantage is the basis for explaining the process of specialization.

in some manufacturing industries of some countries in the process of world economic development in the past 200 years. However, in the globalization period, because it is based on the assumption that trade only occurs between two countries, transportation costs are zero and labor is the only factor, but does not move outside national borders and under conditions of perfect competition, this theory only partly explains the trend of labor specialization in each individual country but does not explain the trend of specialization in industries on a global scale, even in countries that do not have an absolute advantage in that field.

Ricardo's theory of comparative advantage explains the dynamics of international trade in a simple economic model, demonstrating that trade is beneficial if a country has a comparative advantage in a particular industry, even if it does not have an absolute advantage in that industry compared to other countries. In other words, a country will gain more than it loses if it trades with other countries and specializes in the field in which it has the greatest strength.

The Hecksher-Ohlin model has gone a step further in introducing the concept of factor content and abundance of production factors to explain the nature of comparative advantage. According to this theory, the basis of international trade is the relative abundance of production factors of each country and the content of production factors used for production. However, like the theory of comparative advantage, the disadvantage of the Hecksher-Ohlin model is that it is based on many assumptions, in which the assumption that production factors cannot move between countries and the environment of perfect competition are assumptions that are completely contrary to the reality of trade in the globalization period.

Thus, although it is not yet possible to fully explain the aspects of economic globalization in the current period, classical economic theories have also

shows that international trade is an important driving force, and also reflects the nature, of the economic globalization process over the past two decades.

The theoretical basis of international economic integration and the operation of FDI capital flows also helps explain the globalization process in recent years. According to He Liping, a Chinese scholar, international economic integration means “the interaction between the forces of the domestic economy and the forces of the world economy” [69, p.01]. This interaction is carried out through the movement of factors of productive forces beyond the territorial borders of an economy quickly and on a larger scale globally. Similar to the above viewpoint, Deepack Nayyar of the World Institute for Development Economics said: “The world economy has undergone a process of international economic integration since 1950. However, the level of globalization has become prominent in the last quarter of the 20th century. This phenomenon is manifested in three major aspects: international trade, international investment and international finance, the factors that create the characteristics of globalization” [61, p.12]. According to some other authors such as Chase Dunn, Tehranian, Modelski...[65], international economic integration is one of the aspects of globalization and is closely linked to globalization. According to these authors, globalization is a process that has been going on for 5,000 years, but has developed most strongly since the collapse of the Soviet Union. The most prominent aspects of globalization are economics, politics, ecology, culture and information. In which economic globalization is characterized by the cross-border movement of factors of production forces such as capital, labor, technology, knowledge and management skills, information... The driving force behind the movement of these factors is the activities of transnational corporations, organizations in the field of information and communication, intergovernmental and non-governmental organizations.

John Dunning's model (Owership - Location - Internalization/OLI) on foreign direct investment (FDI) activities also shows that the process of economic globalization is strongly promoted by global FDI flows. According to this model, a company will carry out investment activities when the conditions

The following conditions arise: (1) The company has a comparative advantage over other companies through the possession of special production factors. These factors can be capital, technology, know-how, skills, etc. and create conditions for this company to have a competitive advantage over other companies in the country as well as abroad; (2) The proposed investment location also has advantages and can be combined with the production factors of the company with the capital to invest. These advantages can come from labor resources, resources, infrastructure, political and economic environment, etc. (3) The process of localizing resource factors. In fact, under the impact of science and technology, especially information technology; with the increasingly stronger activities of transnational corporations (TNCs), with the trend of liberalization and deregulation in the past two decades, FDI has become one of the important driving forces of globalization.

From the perspective of political economy, according to the Marxist-Leninist political economy theory, human history has gone through a number of different modes of production. The later mode of production always has elements of inheritance, development, mutation and progress compared to the previous mode of production. The transformation from a backward mode of production to a more progressive mode of production is due to the movement and interaction between the productive forces and the relations of production, and is an objective law of movement and development. We can see that the development of the world economy in the past few decades has had the inheritance of elements of the productive forces, had sudden development, and changed the correlation in the productive forces; and there is an initial adjustment in the relations of production. It can be said that globalization is a special stage of development of the world economy, especially since the 1980s when science and technology have made outstanding achievements, have been widely applied and are leading to qualitative changes in the productive forces. This is also the way in which the capitalist mode of production was born in the late 16th and early 17th centuries, when the productive forces of the world economy, especially in Western Europe,