such as the domestic output gap and inflation expectations ). today, inflation is becoming increasingly less local, and in turn, becomes more and more dependent on global factors, i. e. the relationship between global demand to global supply. research that analysed the course of inflation in 22 oecd countries between 1960 and 2003 has shown that 70 % of inflation volatility may be explained by a common factor 7. this global, common factor explains not only the change in the inflation trend ( the increasing inflation between 1960 and 1980 and its subsequent decrease ), but also inflation fluctuation over a business cycle. the research has also shown that, where domestic inflation deviates from the “ global ” inflation, it exhibits a “ global - inflation - reverting ” tendency. as a consequence, modelling and forecasting of domestic inflation may be improved significantly by taking into account the “ global inflation ”. the fast - progressing globalisation is closely related to offshoring and outsourcing, whose scope is also growing. unfortunately there is not much hard data that would allow for assessment of the scale of the phenomenon. offshoring analysis is available only for selected countries and covers only selected industries. however, the growing scale of the phenomenon is reflected by data on global trade in goods and services and on foreign direct investment. over the past 15 years, the shares of individual regions in the global trade have changed significantly, whereby the decreasing share of the eu is accompanied by increasing shares of the developing countries, including the asian countries. globally, foreign trade expressed as percentage of the gdp increased from the average 19 % of the gdp between 1980 and 1989 up to 25 % between 2000 and 2004. table 1. shares of individual regions in global trade % total developed countries us ue15 developing countries asia source : imf direction of trade statistics bis 75 annual report, 2005. th ciccarelli, mojon “ global inflation ”, central bank of chile working papers no 357, december 2005. global capital flows keep growing even more dynamically, whereby the share of the global fdi in the global gdp increased from 8 % in 1989 to 22. 1 % in 2003, and foreign assets expressed as percentage of the gdp increased from 62. 6 % of the gdp to 186. 1 % of the gdp, respectively. as evidenced, the role of trade and financial links between enterprises in various countries has become more important over recent years. previously, in response to growing fuel prices or costs of living, trade

joined the structures, our part of the world has also seen an increase in migration, which is shown in table 3 below. in some cases, a significant part of the domestic work force took up employment in other countries. the estimates show that, for example, ca. 5 % of lithuanians took up employment in countries that opened their labour markets for the new eu member states following 1 may 2004. table 3. number of work permits in the uk, ireland and sweden issued to citizens of new member states following the eu accession in thousands uk * ireland * * sweden * * * total in % of workforce † lithuania 44. 72 26. 37 0. 37 71. 46 4. 4 latvia 23. 03 12. 94 0. 16 36. 14 3. 2 estonia 4. 68 3. 39 0. 36 8. 43 1. 3 poland 204. 90 70. 14 2. 16 277. 20 1. 6 czech republic 20. 01 6. 39 0. 07 26. 47 0. 5 hungary 10. 35 3. 83 0. 20 14. 37 0. 3 slovakia 36. 36 10. 93 0. 09 47. 38 1. 8 * source : accession monitoring reports, http : / / www. ind. homeoffice. gov. uk. the data include the period between may 2004 and december 2005. nbp calculations. * * source : skills needs in the irish economy : the role of migration, a submission by the expert group on future skills needs and forfas to the minister for enterprise, trade & employment, http : / / www. skillsireland. ie. the data include the period between may 2004 and august 2005. * * * source : migracje specjalistow wysokiej klasy w kontekscie członkostwa polski w unii europejskiej. centre for migration research, warsaw university. the data include the period between may 2004 and december 2004. † workforce – people of 15 and more years of age in q1, 2004. hsbc “ the great migration. how china ’ s 200 million new workers will change the economy forever ”, hsbc global research, october 2005. a conclusion may be drawn that opening of the low cost economies, especially of the chinese economy, and the increasing international competition on the market of goods and services related thereto, changes the methods of setting prices by enterprises and determining wages on the labour market. enterprises are