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© Copyright ESB Monetary Inc., 2022About the company and its business. An offer that cannot be rejected
Who we are and what we do is briefly described in the last section of this document. You can immediately go to it and familiarize yourself with it. However, for a full and comprehensive understanding, we highly recommend reading the full text of the document, which begins directly with the next paragraph.
Negative phenomena of globalization of markets and methods of their elimination
In 1983, Harvard Business School professor Theodore Levitt published the scientific work "Globalization of Markets", in which he was one of the first to use the term globalism as a modern phenomenon in the world economy.
This global trend has divided humanity into two large categories - those who have increased their fortunes from the processes of globalization, i.e. economically won, and those who have lost certain values important to them, i.e. lost.
There are no clear statistics on how many people have benefited from globalization and how many have lost. It is only known that among those who have benefited from globalization is the wealthy part of humanity, and it is a minority. Among the poor part are also those who have improved their lives to some extent, but what percentage they make up is not known. That is why humanity has conditionally divided into ardent supporters of globalization and opponents. Who are also called anti-globalists.
However, we can clearly cite examples of those who clearly lost from globalization. These are primarily those who make jewelry in private workshops, manufacturers of custom-made furniture and tailoring of clothes by a designer. In addition, losses were incurred by all cottage industries and any other activity that was home-based. In addition, losses were incurred by workers of all handicraft industries. The so-called folk artistic crafts suffered a significant loss, including carpet weaving, embroidery, cooper craft, pottery, metal, leather, and wood products. These crafts provided the peasants with additional income in the winter, when they were not engaged in agricultural work. Geographically, they were located in poor, agriculturally overpopulated areas, with insufficient development of the factory industry, with local cheap raw materials, for example, localized in forest belts. Artisanal production has long been the basis of the national economy.
Globalization threatens culture. In the process of economic globalization, along with goods and services, culture is also subject to export and import. States that qualify as empires have the ability to influence the cultures of weaker ones in such a way that the latter cease to exist as such. During globalization processes, environmental degradation and the growth of social inequality are also observed.
One of the methods of resisting globalization is the development of a group of businesses in a closed financial ecosystem, with repeated multiple use of both natural and financial resources of this ecosystem. This approach makes it possible to provide each willing participant of the ecosystem with financial resources for rapid business development, regardless of whether he has run a business before, whether he owns 30% of the market in the field in which he runs a business, whether he has a collateral or sufficient cash flow in the past to pay interest on the loan. The effect of a closed financial ecosystem grows exponentially if it is supplemented by the so-called "circular model of the use of natural resources." However, it should be noted that the financing of businesses in the monetary circulation of a closed ecosystem is carried out regardless of whether the business follows a circular model of using natural resources or not.
Circular model of using natural and financial resources
Circularity means effective (re)use and processing of natural resources, materials, products, including financial resources in closed cycles. Moreover, the circular use of natural resources and the circulation of finances are carried out in opposite directions.
For the effective development of a circular approach in cities, it is necessary to implement eight principles of transition:
1. All materials are reused and endlessly recycled (Closed Loops).
2. All energy is produced from renewable sources (Reduction of emissions).
3. Resources are used to create shared (financial and social) value (Value Creation).
4. All products are designed in a modular and flexible manner, and production chains ensure the adaptability of systems (Modular design).
5. All new business models are built in such a way that it is possible to move from owning goods to using goods through services (Innovative Business Models).
6. Logistics systems are more focused on the region of the service with reverse logistics capabilities (Regional oriented reverse logistics).
7. All human activity positively contributes to the development of ecosystems, ecosystem services and the reconstruction of "natural capital" (Modernization of natural systems).
8. Concentration of resources, including those listed above in points 1-7 (Concentration).
9. Multiple use of financial resources in a closed business ecosystem (Circulation of cash flows)
In the implementation of each of these principles, a closed cycle of financial calculations is used, that is, all calculations are conducted using the accounts of one financial institution. Such a model ensures sustainable development due to the transition from a linear model of the use of financial resources, where they are used only once, to a model of closed, cyclical multiple use of financial resources, which gives them the characteristics and features of a circular economy.
“Closed-loop economy or circular economy is a model of economic development based on recovery and rational consumption of resources, an alternative to the traditional, linear economy. It is characterized by the creation of new alternative economic approaches, the task of which is to minimize the negative human impact on the environment.” (Wikipedia)
The circular economy is designed to change the classic linear model of production, focusing on products and services that minimize waste and other types of pollution.
The main principles of the closed-loop economy are based on the recovery of resources, the processing of secondary raw materials, the transition from fossil fuels to the use of renewable energy sources.
This type of economy is considered a part of the "fourth industrial revolution", as a result of which the rationality of the use of resources, including natural ones, will increase in general, the economy will become more transparent and predictable, and its development will be fast and systematic.
The closed cycle economy is not efficient enough without the application of a closed cycle of finance, which makes the closed cycle economy more productive, which was proven in Switzerland as early as the 20s of the 20th century by the Wir bank. Applying the principle of asset concentration makes the positive effect quantitatively more significant.
Meeting the needs of the participants of the closed ecosystem
The needs of all subjects of economic activity must be satisfied through the provision of appropriate financial services to the participants of the financial ecosystem, which can be grouped into four main groups: financial service providers are companies that directly provide financial products and services to end consumers. Infrastructure and technology are companies and institutions that provide products, services and solutions to financial service providers and other participants in the financial sector, enhancing their value proposition to consumers of financial services. Regulation and control are institutions that create rules for the interaction of ecosystem participants and monitor compliance with these rules. Expertise is market participants and institutions that, with their services and solutions, create the basis for the professional development of ecosystem participants. The strategy takes into account the current and future needs of representatives of all groups of the ecosystem, both consumers of financial services and key players involved in the creation of these services, and also contributes to the realization of the mission of the financial sector of a closed ecosystem. Achieving the goal according to the target scenario means a significant development of traditional and the emergence of new sectors of the economy; multiple increase in the size of the internal market of a closed ecosystem and simplification of access to new foreign markets; equal access to long and cheap financial resources for business development; ease of business start-up and tax reporting; low tax burden; growth of business capitalization.
Innovative component of success
A stable advantage of the enterprise compared to competitors cannot be ensured without the involvement of an innovative component. Only new ideas, technologies, processes, management solutions, such as a closed cycle of circulation of funds, are able to provide the necessary resource due to which any significant separation from competitors is possible. Therefore, it is not surprising that modern economic discourse pays great attention to the concept of innovative activity. At the same time, there are significant disagreements among academic economists regarding the nature of the emergence and mechanism of the manifestation of innovative activity, in particular in the field of the closed model of the circulation of financial resources, and, as a result, there is a debate about the methods of evaluating the innovative potential and innovative activity of such a model.
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