The contemporary processes in the global economy and methodology of economic sciences

Stanojević, Nataša (2023) The contemporary processes in the global economy and methodology of economic sciences. In: International thematic proceedings : Fundamental Researches. The Institute for Serbian Culture, Priština – Leposavić, pp. 307-317. ISBN 978-86-89025-86-6

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Abstract

The paper explores the shortcomings of the fundamental assumptions of economic methodology and the limitations of their application due to the modern processes that have led to radical changes in the very foundations of the world economy. The focus of the research is the incompatibility of the methods of positive economic science with the goals of applied economics. The general hypothesis is: If the fundamental postulates of positive economics are applied consistently, without including actual, especially radical changes in the functioning of the modern world economy, their reliability and precision are significantly reduced. The paper has two key parts that relate to the two most critical contemporary processes that pose new challenges to economic methodology in the world economy. The first is the impact of technological development, which leads to an increase in the unexplained values of economic growth in classical econometric models. The second analyzed process is the economic globalization that has placed global value chains (GVCs) at the centre of international business. The increase in the volume of international trade within GVCs has led to distortions of statistical data on trade and the devaluation of fundamental research results. The results showed that fundamental research can still be important for economic policies, but with continuous monitoring of real processes and their inclusion in basic methods, either by including new factors, corrections of input data or models.

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