Empirical
Evidence for Trends
towards Globalization
The Discovery of Hot Air
Beginning from a quite
recent, albeit wholly undetermined date, the world economy at large entered a
new qualitative phase of its history, marked by the predominance of the
international market over national markets. This is the basic refrain that
everybody is nowadays sentenced to listen to dozens of times per day. This
proposition, like any good piece of rhetoric, is all but clear-cut. Several
different interpretations are possible, and, hence, different types of
empirical examinations. The relative growth of the world market for goods and
services is one thing; the internationalization of capital accumulation is
another matter; and a third, very different field is provided by international
short-term speculative transactions.
Extreme confusion similarly prevails about the dynamics of
internationalization. Globalization enthusiasts never make clear whether they
use this horrible neologism to indicate a given critical threshold - one that
the world economy has already crossed? - a tendency which is at work, a
stabilized state already reached by the planet, a rate of growth in the
international dependency of all economic relations more rapid than in the past...
or whatever.
International Trade (IT)
The first and most general
measure of the degree of internationalization in the commodity production of
goods and services is the ratio of international trade to Gross World Product
(GWP). Whereas it is obvious that this measure is higher today than at the end
of World War II, the trend towards further growth in the international
dependency of production is decidedly lower. Graph 1 shows that within the
interval 1950-1970, the average yearly growth in the share of world export as a
proportion of GWP was about 2%, while in the subsequent period, 1970-2000, it
nearly halved to 1.2% - exhibiting a good deal of correlation with the
long run trend in GWP as well as the GP of the OECD area.
Graph 1. World Export as %
of GWP. 1870-2000.
Source: UN, Handbook of
International Trade, 1994 ; A. Maddison, 1985 ; WTO, 2001
As regards the OECD area (representing slightly less than 80% of GWP), Graph 2 demonstrates that internationalization tendencies during the postwar period were almost entirely concentrated within the subperiod 1967-1980, and most pronounced during 1967-1975, when the average level of about 8% of exports to GWP ratio jumped rapidly up to about 14% (1975-1993). The subperiods 1950-1967 and 1975-2000 thus appear as phases of relative stagnation or slow growth in export growth relative to world market.[1]
Graph 2. OCDE area: Export as % of OECD GP. 1950-2000.[2]
[3]
Source: UN, Handbook of International Trade, 1994; Unctad,
World Trade Statistics, 2001
Things get more complex,
however, if we set up an abstraction of relative growth in intra-European trade
- i.e. if we consider trade among members of the EC as national trade, which
thing should anyway be made for the Euro area after the introduction of the
Euro currency that has rendered domestic trade within tha intra-Euro area. The
consequence in that case is that indicators of international trade dependency
even started to shrink starting in the mid-seventies with a weak
recovery in the second half of the 90s, as shown in Graph 3.
Graph 3. International Trade (Export) as % of GDP
excluding Intra-UE trade. 1960-2000
Source: UN, Handbook of
International Trade, 1994; WTO, International Trade Statistics, 2001
The relation between growth in IT and growth in gross product is
clearly expounded below, in Table 1, where we have the percentage rate of
growth in the real volume of exports for various world areas over a series of
subperiods beginning in 1950.
Table 1. Average yearly rate of growth (%) of real exports. 1950-2000
% |
1950-93 |
1950-60 |
1960-70 |
1970-80 |
1970-75 |
1975-80 |
1980-90 |
|
World |
11.2 |
6.4 |
9.2 |
20.4 |
26.1 |
18 |
6.1 |
|
OECD |
11.4 |
7 |
10 |
19 |
23.6 |
17.6 |
7.6 |
|
DevCoun |
11 |
3.6 |
6.7 |
25.8 |
35.9 |
20 |
3.2 |
|
East Euro |
9.8 |
11.9 |
8.4 |
18 |
21.8 |
14.7 |
2.4 |
|
% |
1980-85 |
1985-90 |
1989 |
1990 |
1991 |
1992 |
1993 |
|
World |
-0.7 |
12.3 |
7.4 |
13.3 |
1 |
5.8 |
-0.4 |
|
OECD |
0 |
13.6 |
7.1 |
15.2 |
2 |
5.9 |
-3.7 |
|
DevCoun |
-3.6 |
12.2 |
13.3 |
13.9 |
5.7 |
7.9 |
8.3 |
|
East Euro |
2.6 |
0.6 |
-10.8 |
-10.8 |
-37 |
-12.9 |
8.5 |
|
% |
1995-00 |
1994 |
1995 |
1996 |
1997 |
1998 |
1999 |
2000 |
World |
8.40 |
10.1 |
9.8 |
6.2 |
10.2 |
4.8 |
5.4 |
12.3 |
OECD |
7.33 |
9.2 |
8.5 |
5.2 |
8.7 |
4.1 |
5.0 |
10.6 |
DevCoun |
8.79 |
12.1 |
11.4 |
6.1 |
10.5 |
1.2 |
6.5 |
13.7 |
East Euro |
7.96 |
7.5 |
14.1 |
10.1 |
11.5 |
5.1 |
-4.8 |
12.2 |
Sources: UN, Handbook of
International Trade, 1994; WTO, International Trade Statistics, 2001
It is fun to note that as far as trade is concerned, some
countries belonging to the OECD group are less internationalized today
than they were before the First World War. For these countries, the massive
growth in international trade since the end of the Second World War has barely
been able to fill the immense gap produced with the collapse of international
economic relations during the commercial wars of the twenties, the Great
Depression of the thirties, and the Second World War. Tables 2 and 3
demonstrate precisely that if one takes a long-term view, considering the whole
of history of contemporary capitalism, the tendency towards a rising level
of internationalization in trade is nothing recent, being as old as capitalism
itself. It has been disrupted only once since the middle of the nineteenth
century, in the period comprising the two world wars and the Great Depression.
Table 2.
External Trade Dependency. Selected Countries and Years. 1913-1999
% |
1913 |
1950 |
1973 |
1990 |
1999 |
France |
15.5 |
10.7 |
14.6 |
17.8 |
18.5 |
Germany |
18.1 |
10.1 |
17.7 |
23.7 |
23.5 |
Japan |
15.1 |
8.2 |
9.1 |
8.4 |
9.2 |
Nether. |
50.0 |
35.5 |
37.4 |
43.5 |
44.8 |
UK |
23.6 |
18.6 |
18.8 |
21.6 |
22.5 |
USA |
5.6 |
3.5 |
5.4 |
8.0 |
8.9 |
Sources: A. Maddison (1995), OECD
(2000)
Table 3 shows
the relation between changes in GWP growth and in IT over six consecutive
periods of relative expansion and stagnation, beginning with the middle of the
19th century.
Table 3.
Average yearly % rate of change of GWP (A) and International Trade (B).
% |
1853-72 |
1872-99 |
1899-1913 |
1913-50 |
1950-73 |
1973-90 |
1990-94 |
1994-01 |
A |
3.7 |
3.3 |
3.6 |
1.9 |
5.3 |
2.3 |
1.61 |
2.51 |
B |
4.3 |
3.1 |
4.1 |
0.5 |
9.4 |
3.4 |
4.9 |
7.42 |
B / A |
1.16 |
0.94 |
1.14 |
0.26 |
1.77 |
1.48 |
3.04 |
2.48 |
Source: A. Maddison (1995), UN
Handbook of International Trade (1995) and WTO, International Trade Statistics
(2001).
The fastest growth in both GWP and IT occurred during the
so-called "golden age of capitalist development" (1950-73), which
appears as a rather outstanding performance (the expansion in world market was
2.8 times higher than during the 1973-90 period). By contrast, the relatively
fast growth in world trade share of GWP over the last 25 years was mainly the
result of a relatively stagnating GWP, and not that of an accelerating IT. IT
currently appears to be growing rapidly only because the GWP is exhibiting
rates of growth which are relatively low over the era made up of the last 150
years, of course excluding the greatly disturbed and unique interval 1913-1950.[4]
Nonetheless, the
acceleration of IT in the most recent period seems to be quite a serious
matter. It is mainly explainable through two interrelated phenomena, the very
high growth of imports in the US economy greatly financed by debt and not by
accumulation of profits and/or expenditure of wages and the shift of some
segments and types of manufacturing production to third world sites which has
taken place in the same period.
The globalization stereotype proves just as
useless when we turn to the issue of trade tariffs and international agreements
such as GATT. The idea that recent times have witnessed a massive and rapid
collapse in a rigid tariff system which was "distorting" IT is
revealed as ridiculous. If the tendency towards a steady increase in IT regulation
through protection was a hallmark of the epoch between the wars, an opposite
tendency set in immediately after 1945, with the dismantling of about 80% of
all tariffs through GATT within less than 15 years (see Graph 4).
Graph 4. Tariff Reduction
after each GATT Round (1945=100).
Source: J. Baghwati (1988).
Compared to the situation at the end of the war, in the last
twenty years the OECD capitalism has been facing less than 5% of the whole body
of trade tariffs. The OECD nations are nonetheless engaged in quite a heated
struggle around this rather trivial relative amount - not because of an
allegedly very recent sudden sea change of the removal of high tariff levels, but
because of a higher degree than ever of competition both internationally and
domestically, entirely independent of any kind or level of tariff or
regulation.
Equally weak of factual basis is the idea
that the "Western area" (OECD) has lost or is losing terrain in the
competitive IT struggle to the benefit of a section of the underdeveloped part
of the world. Table 4 offers us a geographic breakdown of world export for the
entire postwar period.
Table 4. Shares (%) of World
Export. 1950-2000.
|
1950 |
1960 |
1970 |
1980 |
1985 |
1990 |
1995 |
2000 |
World |
100.00 |
100.00 |
100.00 |
100.00 |
100.00 |
100.00 |
100.00 |
100.00 |
OECD |
60.66 |
65.88 |
71.51 |
63.55 |
66.13 |
72.04 |
68.50 |
66.70 |
Europe |
32.91 |
39.27 |
43.27 |
39.67 |
38.72 |
45.75 |
42.35 |
39.50 |
N.America |
21.03 |
19.55 |
18.78 |
14.54 |
15.82 |
15.03 |
15.87 |
17.10 |
Japan |
1.41 |
3.31 |
6.42 |
6.73 |
9.43 |
8.57 |
8.21 |
7.82 |
DCs |
32.97 |
23.93 |
18.86 |
29.02 |
25.24 |
23.64 |
31.50 |
33.30 |
EastEuro |
6.37 |
10.19 |
9.63 |
7.43 |
8.63 |
4.90 |
3.72 |
4.32 |
Source: UN, Handbook of International Trade, 1994; WTO,
International Trade Statistics, 2001
It is apparent that the OECD countries
have been able to raise their IT share until the early 70s and to substantially
preserve it afterwards, while movements in IT shares have become more and more
erratic since the seventies. The developing countries (DCs) have lost about
one-thirs of their IT share over the period 1950-90 and recovered it in the latest
decade. Despite the somewhat dramatic performance of some newly-industrialized
countries (NICs), the DCs have succeeded in keeping up with the expansion of IT
solely because of the collapse of export capacity in the Eastern European
region (from 10.2% in 1960 down to 4.32% in 2000). This circumstance gives rise
to the suspicion that most of the DC exports, apart from primary goods, consist
of light manufactures, as might be shown through a sectoral analysis.
Table 5. DC Export Shares (%) by Types of Goods and
Provenance. 1970-1992.
Shares (%) by Provenance
(World = 100)
|
|
OECD |
|
|
|
DCs |
EastEu |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
USA |
Japan |
Europe |
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
All types |
1970 |
71.6 |
18.4 |
10.6 |
39.2 |
19.9 |
6.0 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
1980 |
69.3 |
20.2 |
13.8 |
32.2 |
25.1 |
3.6 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
1992 |
60.5 |
22.6 |
10.8 |
23.9 |
31.1 |
1.6 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
2000 |
63.0 |
26.0 |
9.0 |
22.0 |
30.0 |
3.0 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Food |
1970 |
73.8 |
23.4 |
5.5 |
42.4 |
15.3 |
9.5 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
1980 |
58.9 |
16.5 |
6.5 |
33.5 |
24.5 |
13.7 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
1992 |
61.6 |
15.3 |
12.9 |
30.2 |
29.6 |
4.9 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
2000 |
63.0 |
16.0 |
13.0 |
29.0 |
30.0 |
5.0 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Agric. |
1970 |
62.4 |
7.5 |
17.6 |
34.7 |
22.0 |
12.5 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
1980 |
57.3 |
7.6 |
18.6 |
29.2 |
29.3 |
7.3 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
1992 |
53.9 |
10.3 |
15.9 |
25.7 |
36.3 |
1.7 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
2000 |
61.0 |
12.0 |
17.0 |
27.0 |
37.0 |
2.0 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mining |
1970 |
85.2 |
17.4 |
18.9 |
47.3 |
6.7 |
4.5 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
1980 |
77.5 |
14.6 |
20.1 |
41.6 |
14.8 |
6.0 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
1992 |
63.3 |
10.4 |
20.3 |
30.7 |
26.6 |
2.2 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
2000 |
68.0 |
12.0 |
22.0 |
31.0 |
26.0 |
2.0 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fuels |
1970 |
74.3 |
12.6 |
12.8 |
44.2 |
20.7 |
0.4 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
1980 |
75.4 |
21.2 |
17.0 |
34.3 |
22.3 |
1.1 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
1992 |
67.1 |
22.2 |
18.6 |
24.6 |
28.3 |
1.2 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
2000 |
72.0 |
25.0 |
20.0 |
24.0 |
27.0 |
2.0 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Manufact |
1970 |
59.4 |
27.0 |
4.5 |
23.3 |
32.5 |
8.0 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
1980 |
56.3 |
23.1 |
5.6 |
23.5 |
36.5 |
4.6 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
1992 |
57.9 |
25.2 |
6.8 |
22.0 |
32.6 |
1.1 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
2000 |
63.0 |
28.0 |
7.0 |
21.0 |
32.0 |
2.0 |
Shares (%) by Type
|
|
World |
OECD |
|
|
|
DCs |
EastEu |
|
|
|
|
USA |
Japan |
Europe |
|
|
Food |
1970 |
26.30 |
27.10 |
33.90 |
13.60 |
28.40 |
20.20 |
42.10 |
|
1980 |
11.30 |
9.60 |
9.40 |
5.30 |
11.70 |
11.00 |
43.10 |
|
1992 |
11.00 |
11.10 |
7.60 |
13.00 |
13.90 |
10.40 |
34.70 |
|
2000 |
8.40 |
8.20 |
6.40 |
11.00 |
10.00 |
9.10 |
27.80 |
Agric. |
1970 |
9.90 |
8.60 |
4.20 |
16.50 |
8.70 |
10.90 |
20.60 |
|
1980 |
3.60 |
3.00 |
1.30 |
4.90 |
3.30 |
4.20 |
7.40 |
|
1992 |
2.80 |
2.50 |
1.30 |
4.10 |
3.00 |
3.30 |
3.00 |
|
2000 |
1.90 |
1.50 |
1.10 |
2.50 |
2.10 |
1.70 |
2.10 |
Mining |
1970 |
12.60 |
15.00 |
12.00 |
22.50 |
15.20 |
4.30 |
9.50 |
|
1980 |
4.30 |
4.80 |
3.00 |
6.30 |
5.50 |
2.50 |
7.20 |
|
1992 |
3.60 |
3.80 |
1.60 |
6.70 |
4.60 |
3.10 |
5.10 |
|
2000 |
2.80 |
2.90 |
1.20 |
6.20 |
4.20 |
2.70 |
4.50 |
Fuels |
1970 |
32.40 |
33.60 |
21.80 |
39.40 |
36.50 |
33.70 |
2.40 |
|
1980 |
61.30 |
66.70 |
64.50 |
75.40 |
65.10 |
54.40 |
18.00 |
|
1992 |
22.50 |
25.00 |
22.20 |
38.40 |
23.20 |
20.60 |
17.30 |
|
2000 |
23.80 |
25.90 |
23.50 |
41.40 |
27.60 |
23.30 |
23.50 |
Manufact. |
1970 |
18.50 |
15.40 |
27.70 |
7.80 |
11.00 |
30.30 |
25.00 |
|
1980 |
18.50 |
15.10 |
21.10 |
7.60 |
13.50 |
26.90 |
23.90 |
|
1992 |
59.00 |
56.40 |
65.90 |
36.90 |
54.40 |
61.90 |
39.70 |
|
2000 |
63.10 |
61.50 |
67.80 |
38.90 |
56.10 |
63.20 |
42.10 |
Source: UN, Handbook of
International Trade, 1994.
Table 5 shows an impressive rise in the export of manufactured
goods by DCs over the last fifteen years (from 18.5% of DC total exports in
1980 to 2.0% in 2000), which has nonetheless left their share in world trade
(more or less 1/3) unaltered - having been paralleled by the growth of
manufactured export in world IT over the same period. Really noteworthy is the
decline in the Eastern European share of manufacturing (from 8% to 2%) which
has somewhat opened up the way for DCs.
These data teach us something. After having easily determined the
tendency to decline in the rate of growth in real export and in relative export
(the Export to GWP ratio), one can associate it with the weakening of the
correlation between tendencies in the exports of the major world areas at the
beginning of the eighties, after a long period of harmony dating back to the
end of the war; and also to an increasing volatility in the rates of IT growth,
a phenomenon which, in economic life, is often connected to some form of
long-term decline. It is precisely this coupling of long-term decline and
higher short-term volatility which has set up the field for the triumph of the
rhetorical notion of globalization and the contemporary comic revival of
seventeenth-century mercantilist doctrines, according to which profits only
come from IT or - in a somewhat emasculated version - extraprofits can
only be gained in IT.[5]
The growth in IT
is no mystery at all, and one can hardly imagine the necessity of a special
theory to explain it.[6]
Exactly as with the expansion of intranational trade, IT is based on
development in the division of labor, which in turn is made possible by
sectoral productivity advantages.[7]
[8]
The following, Graph 5, which only has illustrative purposes, shows the
correlation between the average annual percent-rate of change in the export
share of goods, and the rate of change in GDP per head (a kind of proxy for
labor productivity) for a group of 16 advanced capitalist nations over the
period 1870-1990 (split into 12 ten-year periods).
Graph 5. Correlation between
average yearly rates of change in GDP per head and average yearly rates of
change in export shares. 16 OECD countries. 1870-1990.
Source: A. Maddison (1995); UN,
Handbook of International Trade (1994); OECD (2001)
Over the last 120 years, we always get a positive correlation
except in three decades, namely the ones from 1910-1940, covering the two world
wars and the depression of the thirties, while the decades of the golden age
(1950-1970) lie in the positive quadrant well above the straight trendline of a
linear change in correlation. During times of normal accumulation and growth,
the relatively faster increases in productivity do cause a relatively greater
growth of export. That is the other side of a more developed division of social
labor on a world scale.[9]
Transnational Corporations
“A bunch of two or three
hundred multinational firms accounts for about one-third of world production:
it is awful!” Et voilá, one of the most usual complaints of the standard
"radical-chic" leftist of the new anti-global tendency. Instead of
seeing in this type of phenomenon a wide potential for labor socialization on a
world scale, they only feel a terrible threat to their quiet life, compelling
them to think of the planetarian society as being wholly ruled by a small set
of multinational executives endowed with absolute multinational power.
The recognition of the rise of Multinational Corporations (MNCs)
gives much impulse to the idea that world economy has at some recent point
entered a qualitatively new historical phase, marked by the predominance of a
global market over national realities. This is nonetheless a non sequitur,
and for two basic reasons: The rise of the MNCs is much less recent than
normally thought, and they have always had a very strong national bias, both of
which can be ascertained only through empirical study. As is the case with
virtually everything else, the roaring epoch of MNC growth was the postwar
golden age; whereas the last twenty years have witnessed quite a substantial slowing
down in the increase of the degree of capital concentration, despite the big
upsurge of the eighties.
According to the fashionable theory, national states and
governments have been displaced by a new system of fully internationalized
firms, forming a supranational block within the OECD area - basically in the
US, Europe and Japan.[10]
These companies are thought not to have a national basis, as though they sold
their output uniformly in all countries of the block.
To examine the evidence for this thesis: Most of the trade of
these MNCs indeed occurs among them as intertrade. Nearly 95% of MNCs are
located within the OECD area, and slightly less than 75% of them within the 14
richest countries. In 1994 the MNCs that held stocks of foreign accumulated
capital - more or less 2.2 trillion U.S. dollars - realized total sales of
about 5.6 trillion dollars, which is about 20% higher than total world trade.
More than 80% of US external trade is being carried on by MNCs, and nearly 70%
of European foreign trade. Everybody knows quite well that the MNCs on average
exhibit a very high degree of capital concentration - otherwise they presumably
would not be multinational capitals - where the 500 biggest companies (less
than 1.5% of the total number of MNCs) hold around one third of total
assets.
Anybody would be strongly impressed, if not scared, by stories
like this one. Unfortunately, all this is frankly irrelevant to the present
debate over "globalization"; the point is whether the MNC system has
undergone a sudden increase in relation to OECD or the world economy in recent
times, such as to give rise to a new structure and physiology of world
capitalism. This has not happened. The impression of the existence of a
supranational system of interlinked giant companies is old and banal and at the
same time misleading, because of the intrinsic mystic power that certain words
possesses.[11] It is
self-evident that the relative growth of capitals of transnational or
multinational type does imply interconnection, both intra- and interfirm; yet,
the growth of MNCs does not itself necessarily entail uniform internationalization
of sales and assets. A geographical breakdown of assets and sales for all MNCs
indeed provides a very different view: of a system of MNCs still having a very
strong national bias.
Table 6. Geographic Breakdown (%) of MNC Sales and
Assets. 1993.
|
Sales
|
|
|
|
|
Assets
|
|
|
|
|
Sectors
|
Home |
USA |
Europe |
Japan |
Others |
Home |
USA |
Europe |
Japan |
Others |
USA
|
|
|
|
|
|
|
|
|
|
|
Primary |
|
48 |
7.5 |
0.8 |
43.7 |
|
55 |
7.5 |
0.7 |
36.8 |
Industry |
|
64 |
17 |
1 |
18 |
|
70 |
11 |
1.4 |
17.6 |
Services |
|
75 |
6 |
1 |
18 |
|
74 |
6.1 |
0.8 |
19.1 |
Japan
|
|
|
|
|
|
|
|
|
|
|
Primary |
|
1.3 |
1.6 |
86 |
11.1 |
|
0 |
0 |
50 |
50 |
Industry |
|
1.6 |
3.1 |
75 |
20.3 |
|
0 |
0 |
97 |
3 |
Services |
|
7.1 |
5.3 |
77 |
10.6 |
|
4 |
0 |
92 |
4 |
Germany
|
|
|
|
|
|
|
|
|
|
|
Primary |
73 |
3.2 |
8.2 |
0.5 |
15.1 |
|
|
|
|
|
Industry |
48 |
7.6 |
27 |
0.7 |
16.7 |
|
|
|
|
|
Services |
65 |
7.5 |
13.4 |
0.6 |
13.5 |
|
|
|
|
|
France
|
|
|
|
|
|
|
|
|
|
|
Primary |
68 |
3.3 |
8.6 |
0.8 |
19.3 |
|
na |
na |
na |
na |
Industry |
45 |
8.5 |
31 |
1 |
33.5 |
54 |
31 |
5.5 |
0.7 |
8.8 |
Services |
69 |
2.6 |
13.7 |
0.7 |
14 |
50 |
34 |
1.2 |
0.8 |
14 |
UK
|
|
|
|
|
|
|
|
|
|
|
Primary |
62 |
15 |
7.8 |
0.8 |
14.4 |
40 |
6 |
24 |
0.6 |
29.4 |
Industry |
36 |
17 |
26.5 |
0.8 |
19.7 |
39 |
18.5 |
17 |
0.7 |
24.6 |
Services |
61 |
14 |
15 |
1 |
9 |
61 |
5 |
7.6 |
0.7 |
25.2 |
Source: P. Hirst - G. Thompson
(1996)
Table 6 shows us that on average, more than 50% of MNC sales are
concentrated within domestic markets - while domestically held assets account
for about 70% of total assets. Taking the European Union as a national unity,
domestic sales for EuroMNCs would exceed 75% of total sales, and domestic
assets would be larger than 85% of the total. This very simple picture
contrasts with the notion of an interlinked "Triad" economy, which to
be meaningful would require a relatively uniform international distribution of
sales and capitals.
Foreign Direct Investment
(FDI)
The phenomenon of FDI flows
in recent times has been emphasized by current literature to an such an extent
that it almost seems as though FDI is the main form of capital accumulation in
today’s economy, or even the only one left.[12]
Reality is radically different. The absolute and relative (FDI/GDP) volume of
FDI has exhibited a rising tendency since the end of the war, yet it has always
made up a very small share of total investments.[13]
The rapid rise in absolute and relative FDI over the second part of the
eighties was due to rather clear factors, which had very little to do with an
alleged intrinsic tendency towards globalization.
Graph 6. FDI to GDP Ratio
(%). 1980-1999.
Source: OECD International Direct
Investment Statistics Yearbook (1995); UNCTAD, FDI Report (2000).
Graph 6 shows both the still low relative level of FDI, and an
acceleration in the rising trend in FDI/GDP ratio for the whole of the OECD
countries around the middle of the eighties,
reabsorbed during the first part of the nineties, and in the second part
of the 90s. This two upsurges correlates rather well to the huge wave of
mergers, mainly involving MNCs, which took place in the same years, mostly on a
speculative basis, and came to an end with the recession of 1990-91 and with
the ongoing decline of the speculative boom and the stagnation of 2001.
Obviously, merger transactions, basically among MNCs, must show up in accounts
as a sudden increase in the relation between FDI and GDP. Only US accounts are
so detailed as to allow a verification of this hypothetical relation. Table 7
indeed enables us to see the overwhelming importance of mergers in FDI in the
second part of the eighties, while for the second half of the 90s explicit data
are not yet available but anecdotical evidence.
Table 7. FDI inflow into the US for purchase of
already existing companies (A) and for creation of new companies (B). Billions
of Current US$. 1980-1993.
|
1980 |
1981 |
1982 |
1983 |
1984 |
1985 |
1986 |
1987 |
1988 |
1989 |
1990 |
1991 |
1992 |
1993 |
A |
9.0 |
18.2 |
6.6 |
4.8 |
11.8 |
20.1 |
31.5 |
33.9 |
64.9 |
59.7 |
55.3 |
17.8 |
10.6 |
23.1 |
B |
3.2 |
5.1 |
4.3 |
3.2 |
3.4 |
3.0 |
7.7 |
6.4 |
7.8 |
11.5 |
10.6 |
7.7 |
4.7 |
3.1 |
A/B |
2.81 |
3.57 |
1.53 |
1.50 |
3.47 |
6.70 |
4.09 |
5.30 |
8.32 |
5.19 |
5.22 |
2.31 |
2.26 |
7.45 |
Source: E.M. Graham -
P.R. Krugman (1995).
The notion of globalization of investments is of
course not neutral, for it invariably implies a transfer of capital in the
direction of the low wage areas of world economy, as if the relative level of
wages were the main regulator of capital movements. Table 8, below, can provide
a contribution to the critique of this sort of principle.[14]
Table 8. OECD nations. Shares (%) of FDI outflows
toward OECD and nonOECD countries. 1970-2000
COUNTRY/GROUP |
1970 |
1980 |
1985 |
1990 |
1995 |
1997 |
1998 |
1999 |
2000 |
World |
100.00 |
100.00 |
100.00 |
100.00 |
100.00 |
100.00 |
100.00 |
100.00 |
100.00 |
Developed countries |
99.84 |
96.77 |
91.01 |
93.14 |
86.09 |
85.16 |
94.40 |
94.03 |
90.99 |
Developing countries |
0.16 |
3.19 |
8.99 |
6.85 |
13.79 |
14.11 |
5.30 |
5.76 |
8.66 |
Eastern Europe |
|
0.04 |
0.00 |
0.02 |
0.13 |
0.73 |
0.30 |
0.21 |
0.35 |
Least developed countries |
|
0.05 |
0.41 |
0.00 |
0.00 |
0.23 |
0.05 |
0.02 |
0.01 |
Source: UNCTAD, World Investment
Report (2001)
Despite the popular belief that OECD capitalists are transferring
their accumulation into the underdeveloped - and hence low wage - areas, the
imbalance between inflows and outflows of FDI to and from the OECD area,
tantamount to a matter of secular belief, has actually weakened over the last
fifteen years. While the average relation between cumulative FDI outflows and
inflows was about 1.5 in the decade 1971-80, it decreased to 1.2 in the
subsequent period - for the main part owing to a considerable increase in
direct investments into OECD nations from Japan, the UK, and other secondary
economic powers, only partially counterbalanced by a decrease of FDI from the
US.[15]
Along with the illustrative geographic breakdown (Table 9) of FDI for Germany
and Japan, Table 8 is useful as a first step in discrediting the widespread
notion that capital accumulation follows wages - a dynamic hypothesis also
contradicted by the existence of a positive correlation between the
increase in the FDI/GDP ratio and the slight improvement of the rate of
accumulation within the OECD countries during the so-called 1983-1990 boom, as
well as a positive correlation between the fall in the FDI/GDP ratio and the
parallel decrease of the accumulation rate in the following period.[16]
Table 9. Geographic Breakdown (%) of FDI from
Germany and Japan. Year 1990.[17]
Germany 1990 : FDI / GDP = 1.60 % ; FDI = 37379 millions of DM
Japan 1990 : FDI / GDP = 1.68 % ; FDI =
56912 millions of US$
|
Germany |
|
% |
|
Japan |
|
% |
OECD |
|
|
96.05 |
OECD |
|
|
79.65 |
|
Europe |
|
75.63 |
|
Europe |
|
24.9 |
|
|
Belgium |
13.8 |
|
|
Belgium |
0.8 |
|
|
France |
5.7 |
|
|
France |
1.9 |
|
|
Italy |
4.1 |
|
|
Italy |
0.3 |
|
|
Eire |
10.5 |
|
|
Eire |
irr |
|
|
Nether. |
9.8 |
|
|
Nether. |
4.2 |
|
|
Spain |
5.2 |
|
|
Spain |
0.5 |
|
|
UK |
16.0 |
|
|
UK |
11.9 |
|
N.America |
|
18.0 |
|
|
Germany |
2.2 |
|
|
USA |
13.6 |
|
N.America |
|
47.8 |
|
OtherOECD |
|
2.4 |
|
|
USA |
45.9 |
|
|
Japan |
1.8 |
|
Other
OECD |
|
7.0 |
nonOECD |
|
|
3.95 |
|
|
Australia |
6.45 |
|
Est
Europe |
|
0.8 |
nonOECD |
|
|
20.35 |
|
|
ex-URSS |
0.088 |
|
Est
Europa |
|
irr |
|
|
Other |
0.712 |
|
|
ex-URSS |
|
|
Asia |
|
1.1 |
|
|
Other |
|
|
|
NICs |
1.0 |
|
Asia |
|
12.4 |
|
|
Other |
0.1 |
|
|
NIC |
9.2 |
|
|
|
|
|
|
H.Kong |
3.1 |
|
|
|
|
|
|
Other |
3.2 |
Source: OECD International Direct
Investment Statistics Yearbook, 1995.
A sectoral analysis of FDI outflows from the three main OECD areas
also yields interesting information. As far as Japan is concerned, the peak
year was 1990, with an increment of about 57 billion US dollars compared to
1984. Of this increment, 73.5% is attributable to services, 23.5% to industry,
and only 3% to the primary sector. Disaggregating services, one can see that
the spheres of Credit, Insurance, Finance and Real estate (CIFR) jointly
realized nearly 64% of the cumulative increment in FDI outflows from Japan
during the boom period. The rest was more or less equally distributed over
commerce, production of electronic equipment, and production of means of
transport. The remaining sectors only got crumbs.
The pattern of FDI outflow from the UK in the same period is
slightly different. Cumulative FDI magnitude (about 88 billion pounds sterling)
went into industry for 48%, services for 37%, and the primary sector for 15%.
In contrast to Japan, British FDI had a relatively uniform composition, with
traditional industries, for example food and chemicals, showing a bigger share,
although CIFR accounts for the 80% of all FDI in services and industry exhibit
a clear upward trend in the nineties (see Table 10).
The US followed a timetable that was rather different from the
rest of OECD, but the sectoral pattern was rather similar to Japan’s. After a
big fall in 1988 and stagnation in 1990-91, FDI outflow has resumed growth in
relation to GDP, reaching 1.1% in 1993. Of total FDI from the US in the period
1984-1993 (less than 300 billion US dollars), 1.5% was devoted to the primary
sector, 42% to industry, and 56.5% to services (which are responsible for about
64% of total increase in FDI over the same period). Within the service sector,
CIFR accounted for around 73% of cumulative total of FDI: while in 1983 CIFR
was covering only 27.7% of the yearly outflow of US FDI, in 1993 this value had
risen to 45.2%. For the remaining of the decade tha path followed has been
quite akin.
Table 10. FDI Outflows in
CIFR as Percent Shares of Total FDI Outflows. 1985-1999.
|
France |
Germany |
UK |
Japan |
USA |
1985 |
38.2 |
8.4 |
27.2 |
49.1 |
52.8 |
1990 |
48.2 |
36.7 |
29 |
53.5 |
15 |
1995 |
56.3 |
47.2 |
67.4 |
46.3 |
47.2 |
1999 |
63 |
51 |
70.2 |
50.4 |
52.6 |
Source: OECD International Direct
Investment Statistics Yearbook, 2000.
Table 10 shows that the export of capital, excluding the merger
wave of the eighties, was driven by sectors more or less directly tied to
finance and short-term speculation, in a way very similar to domestic accumulation.[18]
In virtually all cases, FDI and CIFR are very sensitive to the course of
economic growth. They display a rising trend, but with large fluctuations -
also owing to the low relative magnitudes involved.
International Finance
Capital exports and global
trade are the main ideological arguments employed in justifying and propping up
the steady degradation in the conditions of sale and use of labor-power for
workers in the West. Nonetheless, thanks to the media effect, it is the daily
transnational movement of short-term capital, above all in speculation on
exchange rates, which more than anything else has struck the popular
imagination. This is somewhat ironic, for in the mushrooming globalization
literature, almost entirely concentrated on trade and foreign investment, one
can hardly find reference to finance, which is by far the most globalized
economic sphere. This is basically because of the radical worldwide
deregulation implemented by governments in the eighties which has anyway simply
responded to strong pressure stemming from the everday economic life of
capitalism beginning in the second half of the 70s. (the very origin ..)[19]
It is certain that the simultaneous action of deregulation and of
a technology of instantaneous transfer capacity have created a very favorable
environment for impressive growth in financial transactions from the beginning
of the eighties onwards. However, the rise in speculation cannot be explained
primarily as a politically determined (i.e. exogenous) change. On the contrary,
the end of the postwar boom of accumulation and growth set up a powerful
combination of declining profitability in industry and traditional services,
low real interest rates, and low asset prices (the "Tobin's q,"
which measures the ratio of the nominal value of financial assets to the value
of physical capital, was well below one in the second half of the seventies).
These were the most effective endogenous factors in triggering the
massive shift towards speculative use of liquidity. - which expressed itself in
a strong push to legislative deregulation, as well as to expansion and creation
of new forms of credit money. The last was even more decisive than deregulation
itself.[20]
On these grounds, it is impossible to see the shift towards finance as a purely
or even as a mostly international phenomenon. It is absolutely true that in
principle, money capital today is instantaneously transferable everywhere
without obstructions, but this does not prevent the daily national movements of
money capital from being much larger in quantity than the anyway huge
international transactions.
Table 11. Trends in Portfolio Transactions. Average
Yearly Flows of Cross Border Transacuion in % of GDP. 1975-1999.
|
|
1975-79 |
1980-89 |
1990-94 |
1996 |
1998 |
1999 |
|
USA |
5.9 |
43.2 |
94.1 |
129.0 |
166.3 |
125.8 |
|
Japan |
2.8 |
73.0 |
108.7 |
156.2 |
222.8 |
178.9 |
|
Europe |
4.6 |
6.2 |
27.7 |
82.1 |
148.1 |
168.7 |
Source: BIS Annual Report, 2000.
Table 11 presents sufficient
evidence to dismiss the standard theory of financial intermediation - according
to which finance is rationally necessary in the efficient allocation of
productive investment. If we take the whole of postwar history, we can instead
easily derive the conclusion that the correlation between growth of
transactions in bonds, stocks and exchange markets, and growth of accumulation
in productive sectors is, if anything, evidently negative. From Tables
12 and 13, it is quite apparent that the growth of finance has been as much
international as national, and has followed a path not very different from that
of FDI, with an acceleration in the rising trend of the international to
national transactions ratio in the nineties.[21]
But this has not yet challenged the superiority of domestic investment due to
the functioning of the US financial market which accounts of more the two
thirds of total world market.[22]
Table 12. Portfolio Net
Investments - 1999
|
Domestic |
Interna-tional |
Intl/
Domestic |
US$ |
1030.2 |
268.1 |
0.26 |
Yen |
-32.1 |
0.0 |
0.0 |
Euro |
259.0 |
625.2 |
2.41 |
Source:
BIS Annual
Report, 2000.
Table 13. Portfolio
Allocation (%) of Pension Fund Assets. 1992
|
International |
National |
Intl/Nat |
||||
|
Bonds |
Equit. |
Bonds |
Equities |
Cash |
Property |
|
UK
|
1 |
19.9 |
9.2 |
53 |
8.5 |
8.4 |
0.264223 |
USA |
0 |
5.2 |
40.9 |
44 |
5 |
4.9 |
0.054852 |
Japan |
6.7 |
7.5 |
44 |
23.5 |
17 |
1.3 |
0.165501 |
Germ. |
1.4 |
0.8 |
68 |
8.7 |
8.5 |
12.6 |
0.022495 |
Source: see A.K. Jain (1994).
As far as finance is
concerned, the globalizing rhetoric clearly misses the point. There has been a general
shift towards short-term investment, while apparently only its international
dimension is perceived. Thus the real consequence, another crucial feature of
contemporary economic physiology, is no longer grasped: increased financial
fragility, quite apart from the geographic shape of financial movements.
Conclusion
The notion of "globalization" is a good example of how a
long-term slowdown in growth is frequently misinterpreted as a new qualitative
phase in the history of modern capitalism. The emergence of "globalization"
is actually the process of birth of an ideological slogan, whose fertile ground
is provided by the increase in the intensity of competition over the last 25
years. This in turn is generated by a long-term decline in accumulation and
growth: more or less as the increase in the inner temperature and pressure of,
say, a gas, is produced by the reduction in the volume available to molecular
displacement. As with any ideological notion, "globalization" is
useless, and even detrimental to objective empirical analysis (in the Galilean sense)
of contemporary dynamics. But it is also a very useful propaganda tool in
helping to push down the living conditions of wage workers and stimulating
improvements of capital profitability via a forced rise in the rate of
exploitation.
As far as IT is concerned, globalization offers as a historical
novelty something - world market - that is actually a logical outcome of the
past "golden age" of rapid accumulation. As for FDI, as well as in
dealing with powerful MNCs, the "globalizers" simply seem not to know
how to use global statistics.19 Last but not least, in
finance, the global ideology prevents us from fully appreciating the weight and
possible effects of the huge rise in national and international
short-term movements of money.
Notes
[1] The relatively good performance of intra-Euro trade following the mid-seventies is likely related to the European Monetary System. In principle, a system of flexible changes is not the best environment for the development of IT. Although with a good deal of trouble, to a certain extent the EMS has tried to mimic the working of the fixed rate system prevailing until 1973 - under which IT surpassed all previous historical records.
[2] The estimate of the IT/GDP ratio raises several questions. Firstly, it can be performed using constant or current prices. Constant prices are source of big false impressions since they distort the actual flows of moneys which must accompany trade in relation to the differentials of productivity rates of changes between export and nonexport sectors. Secondly, whereas GDP is net of intermediate inputs, export and import are not, what implies that imports have an export content and the other way around too. To avoid misleading results, before calculating the IT/GDP ratio the two magnitudes involved should be homogenised, but this in quite rarely done. On this see Hirst and Thompson (1999) pp.62-65
[3] The estimate of the IT/GDP ratio raises several questions. Firstly, it can be performed using constant or current prices. Constant prices are source of big false impressions since they distort the actual flows of moneys which must accompany trade in relation to the differentials of productivity rates of changes between export and nonexport sectors. Secondly, whereas GDP is net of intermediate inputs, export and import are not, what implies that imports have an export content and the other way around too. To avoid misleading results, before calculating the IT/GDP ratio the two magnitudes involved should be homogenised, but this in quite rarely done. On this see Hirst and Thompson (1999) pp.62-65.
[4] In reality, the period 1913-1950 is rather uneven. The collapse of IT was almost entirely concentrated in the subperiod 1930-1945. Between 1920 and 1928, IT grew at an average yearly rate of about 3.7%, while GWP was increasing at 3.4% per year. The dramatic collapse of IT during the thirties and the war was caused both by the depression and the absolute disruption in the system of international payments. This quite openly contrasts with the course of the first Great Depression (1873-1896), when GWP and IT varied more or less at the same speed, and with the current stagnation dating back to the early seventies, where IT, although decreasing in rate of change by about 2/3, grew slightly more than GWP
[5] Here we have a very instructive example of how an ideological notion can be created. Increased overall competition is posited as an entity ("globalization") which requires a change away from a smoother and easier past. This entity has to be a qualitative one (positing increased competition as a function of decline in accumulation and growth is quantitative, hence not as suitable for ideological conversion). All participants in the competition war - wage laborers above all - have to submit. The function of bringing people’s minds under the subordination of the new entity falls to the intellectuals, i.e. all those working in the "extended media sphere" of the social division of labor. They don’t create the "ideas" - intellectuals are able to create exactly nothing - but simply rework spontaneously born notions with the aim of assuring the perpetuation of the socioeconomic order.
[6] 4. A useful empirical survey on the relation between IT and growth is in R. Maurer (1994).
[7] Taking a long-term perspective, it is not difficult to show that growth in productivity is strictly associated with growth in fixed capital formation. It is obvious that when we link fixed capital growth, productivity, and division of labor with respect to IT, we are abstracting from the political factors, and accidents that can rather easily disrupt the system of international connections.
[8] The case of transfers of light manyfacturing to backward regions linked to what is nowadays called “lean production” and downsizing is somewhat different. This organizational practice, whose stimulus is engedered not ony bu competiotn but also by the necessity of rapidly inflate the cash flow to be speculatively employed is possible only because the fixed capital/labour ratio of the whole of the production process is not homogenous bur rather split into segments with very different capital/labour ratios. The sections having a relatively low ratio can more easily be transferred to other places to exploit the local chepaness of labour even through obsolete and backward technologies. This process obviously puts preessure on the workers still working on the productions left at home. We are still awaiting for a rational explationation of what seems an endlless process of leaning and downsizing of western industrial capital. See K.Moody (1999).
[9] In a very interesting analysis of the automobile industry, (Williams, Haslam, Johal, Williams, 1994) - where a clever critique of many tenets of another big contemporary pillar of rhetoric, post-Fordism, is developed - it is argued that the crucial competitive factor is the “reduction in the labor content of output.” Since labor is remunerated with wage, this principle very often gets confused with a different one: “the crucial competitive advantage is the reduction of wage per unit output.” It is straightforward that this kind of principle would completely mystify the IT performance of countries like, say, Germany and the Netherlands. It is rather easy to show, even mathematically by means of linear or differential production models, that price competition, i.e. competition through reduction of selling prices per unit of use value, is the same thing as increase in labor productivity, quite independently of the wage level and the wage share in value added. A steady decrease in the labor content of output, that is to say a steady increase in productivity, is perfectly compatible with a rising labor share in national income - however only when the overall conditions of accumulation and growth are exploitable by the workers’ economic class struggle, as happened during the postwar boom.
[10] The view that international investments have come to dominate over national accumulation is held in Chesnais (1995). Unfortunately, the empirical material supplied in support of this view is very erratic, and always expressed in absolute and not relative terms. Often relying on simple anecdotes, the emphasis on MNCs is not quantitatively shaped. As in all other "globalizing" studies, there is no effort to identify the qualitative change that world capitalism should have undergone - if globalization is a reasonable and verifiable hypothesis.
[11] One of the most influential studies supporting the idea of MNC globalization is in J. Dunning (1993). Despite spending plenty of pages for this notion in his generally very interesting book, Dunning is not able to show how, when, and through what indices big business has undergone the globalizing mutation during the last twenty or thirty years. In reality, the flourishing of analyses and works on MNCs is rather a matter of the past, having basically taken place in the sixties and the seventies. Let us recall, for instance, the pioneering works of Stephen Hymar (1971) and Raymond Vernon (1971). According to the theory of "Interlinked Triad Supranational Economy" (ITSE), the MNCs of ITSE are effectively a separate supranational power able to successfully challenge and circumvent all national political powers. The sales and assets distributions show that an ITSE simply does not exist. Virtually no MNC is nationless, all MNCs make use of a given state power. Despite the great deal of interlinking, with a big share of MNC IT as intraMNC trade, assets and sales are still very much nationally based (assets assuredly more than sales).
[12] The view that international investments have come to dominate over national accumulation is held in Chesnais (1995). Unfortunately, the empirical material supplied in support of this view is very erratic, and always expressed in absolute and not relative terms. Often relying on simple anecdotes, the emphasis on MNCs is not quantitatively shaped. As in all other "globalizing" studies, there is no effort to identify the qualitative change that world capitalism should have undergone - if globalization is a reasonable and verifiable hypothesis.
[13] According to some historians, FDI in relation to GDP for some European countries - above all the UK - was on average much higher in the period 1880-1913 than today. These same authors also remark that the capitalism of that age was well able to offer more or less the same type of international financial services which are now available. To come closer to our own time, in the period 1948-1966 - a time when the term "globalization" was mostly unimaginable - the outflow of FDI from the US into the rest of the world grew at an average yearly rate of 7.2%, more or less 175% of the yearly rate of the US GDP growth over the same period.
[14] FDI inflow into the US, from an average level of about 0.27% of GDP in 1974-1978, rose to 0.4% in 1980 and 0.8% in 1982, then fell to 0.3% in 1984. The boom that began in 1986 reached its peak in 1989 (1.3%), and was followed by a rapid decrease: 0.9% in 1990, 0.5% in 1991, 0.35% in 1993. The maximal inflow of 1989 and 1990 had the following provenance: 36% Japan, 24% UK, 28% Rest of Europe, 12% Rest of the World. By the same token, the decline in FDI into the US after 1989 depended entirely on the drying up of the three main sources: Japan, UK and Europe (see E.M. Graham and P.R. Krugman, 1995).
[15] One of the factors that can help explain the remarkable increase in Japanese FDI towards the OECD - mostly into the US - from 1985 onwards is the rise of the Yen in relation to the US dollar and other currencies, which, ceteris paribus, has cheapened the unit cost of capital and thus rendered all kinds of investment abroad more profitable.
[16] The (low) wage theory of capital flows is also contradicted by the movements of capital within the OECD and nonOECD areas. Capitals do not flow according to the geographical wage hierarchy; otherwise the distribution and trends of external accumulation would be inexplicable. In Europe we should see the bulk of investments going to Greece and Portugal; in the developing world one should observe a massive transfer of resources towards Africa. We see exactly the opposite, and a kind of universal polarization seems rather to be one of the glaring features of contemporary faltering growth on a worldwide scale.
[17] The year 1990 has been selected as it was the peak year in FDI/GDP ratio for both countries in the postwar period.
[18] It must be remarked that during the sixties and seventies, the average share of OECD FDI in CIFR was lower than 15%. In capital export, as well as in domestic investment, the rise of financial activities started in the late seventies/early eighties, before the FDI boom in the second half of the eighties.
[19] The very origin of the speculative boom is to be found in the foreign exchange sphere following the collapse of the Bretton Woods system of fixed rates; but its hayday has naturally been in the arena of the trade of shares of stocks. The sharp change in the global nominal value of stocks of the last twenty years has been clearly impulsed by the movement of mergers and fusions of the 80s, which has then interacted with the rising tendency of stock prices to create a speculative type of growth in late 80s and in the 90s. In turn, this process has set in motion further easing in credit deregulation, which has further strongly contributed to the financial boom, and has, above all, prompted the very fast creation of the incredibily huge world derivatives market, which certainly is one of the distinctive hallmarks of the the recent phase of capital accumulation.
[20] On the rise of speculative investments and the changing financial market, see the interesting analysis in M. Wolfson (1994). As far as the role of interest rates is concerned, when the speculative wave began at the end of the seventies, real rates of interest were at the lowest levels in the entire postwar period. In some years the effective value after subtracting inflation from nominal rates was actually negative. Low real rates of interest (RRI) are most effective for speculative liquidity since they signal the possibility of credit expansion. An upward trend in RRI started by end of the seventies, and continued throughout the eighties. Nevertheless, many people falsely think that the aim of speculation is to gain on a higher interest rate. Short-term transactions are instead mostly concerned with the daily change of prices of assets such as land, bonds, equity, etc. and not with the rate of interest. Since so many speculators do borrow money from banks in order to invest on the financial markets, they should normally be scared by the prospects of increases in RRI. One of the likely causes of the 1987 October stock market crash was the fear of a sudden relatively high jump in interest rates around the world.
[21] For example, US net purchase of foreign bonds and stocks increased from an average nominal total annual value of about 10 billion US dollars, in the period 1980-1986, to $22 billion in 1989 and $52 billion in 1992, and has declined since.
[22] It has to be pointed out that, notwithstanding the mounting daily stream of tribute to the new orthodoxy, all available studies based on the use of detailed and comprehensive statistics invariably reach opposite conclusions; among the best ones, see P. Hirst and G. Thompson (1996), D. Gordon (1988, 1994), and R.J. Barry Jones (1995).