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
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)
Total GDP or
Top five corporations 871.4
Least developed countries
* 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.
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.
* 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%.
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
'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.
* 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%.
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.
* 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
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.