New Internationalist

The Facts About Globalization, Including The Winners And Losers Of Gatt And Details About Which Corporations Make More Money Than Which Countries

Issue 296

GLOBALIZATION
THE FACTS

The integration of the world's economy may look as if it's gathering pace. But the trends conceal more than they reveal about the way the world's economy works - and about whose interests would be served if 'globalization' ever achieved all its ambitions.1

CORPORATE POWER

Transnational corporations (TNCs) have almost total control
over the process of 'globalization' - their grip is tighter here
than at a national or local level.

* 2/3 of international trade is accounted for by just 500 corporations.

* 40% of the trade they control is between different parts of the same TNC.

* Of the world's 100 largest economies, 50 are TNCs.

THE STATE AND CORPORATE POWER 1994 ($billions)

Country or
corporation
Total GDP or
corporate sales
Indonesia 174.6
General Motors 168.8

Turkey

149.8
Denmark 146.1
Ford 137.1
South Africa 123.3
Toyota 111.1
Exxon 110.0
Shell 109.8
Norway 109.6
Poland 92.8
Portugal 91.6
IBM 72.0
Malaysia 68.5
Venezuela 59.0
Pakistan 57.1
Unilever 49.7
Nestlé 47.8
Sony 47.6
Egypt 43.9
Nigeria 30.4
Total sales:
Top five corporations 871.4
871.4
Total GDP:
Least developed countries
76.5
South Asia 451.3
Sub-Saharan Africa 246.8


* The 10 largest TNCs have a total income greater than that of 100 of the world's poorest countries.

* Many TNCs have larger corporate sales than some developed countries.

DRIVING GROWTH

International trade is expanding faster than the world's economy - at the moment. This means that trade is argued to be one of the main 'engines' of economic growth.

* International trade has grown 12-fold in the post-War period and is expected to grow 6% annually for the next 10 years.

World trade trends

* In 1947 the average trade tariff on manufactured imports was 47%; by 1980 it was only 6%; it is set to fall to just 3%.

BUT

Since 1973 growth has slowed as trade has accelerated. Both the absolute importance of international trade and its novelty are often exaggerated.

* The total value of foreign trade was little more than a quarter of total output (GDP) in the Western hemisphere between 1980 and 1989.

* In 17 countries for which there are data, exports as a share of GDP were 14.5% in 1993, not much above the level (12.9%) 80 years earlier in 1913.

Winners and losers from GATT

Projected annual gains and losses from trade liberalization to the year 2000
(based on a 30% cut in tariffs and subsidies)

European Union $80 billion gain
China $40 billion gain
Japan $25 billion gain
US $18 billion gain
Upper Income Asia $18 billion gain
Other Industrialized countries $18 billion gain
Latin America $8 billion gain
India $5 billion gain
Eastern Europe and former USSR $2.5 billion gain
Low Income Asia $2.5 billion gain
Other $1 billion gain
Africa Loss of $3 billion

* The bulk of international trade is not 'global' but between a small number of 'developed' economies in the North.

* These countries are the main beneficiaries of the trade-liberalizing 'Uruguay Round' of the
General Agreement on Tariffs and Trade (GATT) which was completed in the early 1990s.
The least developed countries are expected to lose $600 million a year; sub-Saharan Africa $1,200 million.

MONEY MAKES THE WORLD GO AROUND

Foreign Direct Investment 'Global' financial transactions, dominated by a small number of banks - most of them still based in the US ­ have been growing even faster than trade.

* Flows of foreign direct investment (FDI) in 1995 reached $315 billion, almost a 6-fold increase over the level for 1981-85: over the same period world trade increased by little more than a half.

* Total borrowing on international capital markets increased from an annual average $95.6 billion between 1976 and 1980 to $818.6 billion in 1993 ­ a 34.3% increase on the previous year alone.4

* Between the mid-1970s and 1996 the daily turnover of the world's foreign-exchange markets increased a thousand-fold from around $1 billion to $1,200 billion.

BUT

* 2/3 of these transactions are between the few already-rich countries of the Organization for Economic Co-operation and Development (OECD).

* Capital transfers as a share of industrial countries' economies are still smaller than they were in the 1890s.

* Although the share of poor (non-OECD) countries in FDI has increased, China alone accounts for about a third of this share and just 9 countries for another third.

* The remaining third is split between 135 countries: the Least Developed get just 0.5%.

Host economics for foreign investment.

NETWORKED

The speed of worldwide transport and communication has increased, while the monetary cost has fallen sharply.

* Between 1960 and 1990 operating costs per mile for world's airlines fell by 60%.

* Between 1940 and 1970 the cost of an international telephone call fell by more than 80% ­ between 1970 and 1990 by 90%.

* Since the 1980s telecommunications traffic has been expanding by an average 20% a year.

* The Internet is now used by upwards of 50 million people and the numbers are doubling every year.

* In 1995 the number of messages sent by e-mail in the US exceeded those sent by post for the first time.

* The global trade in TV programing is growing by 15% a year.

BUT

* A small number of corporations control this global expansion. Just 6 of them control the world's recorded music business.

Recorded music: world market share

Polygram 19%
Time Warner 18%
Sony 17%
EMI 15%
Bertelsmann 13%
Universal 9%
The rest 9%

Footnotes

1 Unless otherwise stated, source is UNDP, Human Development Report 1997, OUP, New York and Oxford, 1997.
2 World Trade Organization, Annual Report 1996, Geneva.
3 I Goldin et al, Trade Liberalization: Global Economic Implications, OECD/World Bank, Paris, 1993.
4 Paul Hirst and Grahame Thompson, Globalization in Question, Polity Press, Cambridge, 1996.
5 Edward S Herman and Robert W McChesney, The Global Media: The New Missionaries of Global Capitalism, Cassell, London, 1997.

Contents

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