SUSTAINABLE DEVELOPMENT IN A GLOBALIZED
ECONOMY? THE ODDS*
by Róbinson Rojas Sandford (September
1999)
The world economy began to be globalized in late XV century when
Western European pillage of the rest of the world resources became the
main occupation of the ruling classes in Portugal, Spain, Netherlands,
Britain, France, and finally United States. Genocide, slaughtering, and
robbery acquired the category of heroic deeds giving to the
perpetrators the right to become national heroes in their countries of
origin. The heroes developed a set of colonial powers, the victims, a
set of colonized societies. The world was globalized.
Aldo Ferrer (1), in 1998, stated that "ever since the advent of an
economic order encompassing the whole planet, countries' relations with
the international environment have determined their level of
development. Capital formation, technological change, the distribution
of resources, employment, the distribution of income and macroeconomic
equilibria are, indeed, strongly influenced by relations with the
international system"..."The current debate on globalization's nature
and range is nothing new. It goes back to the same historical problem
of how can each country solve its development dilemma in a global world
so as to avoid getting caught in a network of relations administered by
the main interests and powers for their own benefit".
In the 1990s, of course, the "main interests and powers" are connected
to transnational corporations and five major economic powers: United
States, Japan, Germany, France and United Kingdom. From here, "styles
of development" in former colonies in Africa, Asia and Latin America
are shaped by the "main interests and powers". Globalization today has
a name: structural adjustment programmes. Globalization today has a
philosophy: deregulation of the market. Globalization today has a
gospel: the dynamics of the capitalist market, otherwise advertised as
free market.
John Eatwell (2) described how in the late 1990s the trend toward
liberalization of international financial flows had accelerated
dramatically, and that "liberalization is now spreading rapidly to
emerging economies. Yet it is not clear that the optimism that
underpins this global libralization effort is warranted"..."An
examination of the record of financial liberalization reveals that many
hoped for benefits have failed to materialize. Liberalization failed to
improve the allocation of global capacity by moving resources from
capital-rich to capital-poor countries, and only produced opportunities
for savers, not lower costs for borrowers"..."Moreover, the potential
for instability in today's massive capital markets induces both
governments and private- sector investors in the real economy to pursue
highly risk-averse strategies. The result is lower growth and higher
unemployment".
In 1996, L. Taylor and U. Pieper (3) argued that the economic and
social effects of structural adjustment programmes could be summarized
as "slowing growth", make income distribution even more concentrated,
"increase poverty and reduce social well-being".
On 12th July 1999, Human Development 1999, arguing for the need to put
a human face to globalization, stated:
"Globalization is more than the flow of money and commodities, it is
the growing interdependence of the world's people through shrinking
space, shrinking time and disappearing borders. This offers great
opportunites for enriching people's lives and creating a global
community based on shared values. BUT MARKETS HAVE BEEN ALLOWED TO
DOMINATE DE PROCESS, and the benefits and opportunities have not been
shared equitably. The result is a GROTESQUE and DANGEROUS POLARIZATION
between people and countries benefiting from the system and those that
are merely passive recipients of its effects."
To illustrate the above, Human Development Report 1999 wrote that "the
fifth of the world's people living in the highest income countries has
86 per cent of world gross domestic product (GDP), 82 per cent of world
export markets, 68 per cent of foreign direct investment, and 74 per
cent of telephone lines. The bottom fifth, in the poorest countries,
has about one per cent in each category".
The Report argues that the "inequitable effects of globalization driven
by markets and profit are far wider and deeper, touching all aspects of
human life"..."Care, the invisible heart of human development, is
threatened because today's competitive global market is putting
pressures on the time, resources and incentives for caring labour,
without which individuals do not flourish and social cohesion can break
down".(Box 1)
By and large, a style of development as an outcome of capitalist market
liberalization is taking place. The model explaining this style of
development is as follows:
|
|
Structural adjustment programmes call for:
1) Fiscal discipline (reducing expenditure in social welfare)
2) Trade and financial liberalization (opening up weak economies
to powerful capitals)
3) Stronger emphasis on market mechanisms (reducing the capacity
of a large sector of the
population to feed itself)
4) Greater reliance on private investment (which will misallocate
scarce resources to the
production of luxury goods
instead of social goods)
5) New incentive and regulatory systems (giving more protection
to capital and less to
labour)
1 to 5 will have an impact on:
1) sustainability of the style of development;
2) globalization of the internal economy;
3) creation and reduction of poverty;
4) unequal social relations;
5) environmental protection;
6) human development;
7) participation in public policy;
8) institutional development;
If the market forces are not harnessed by the people through the state,
then the style of development will be characterised by all of some of
the following types of growth:
a) JOBLESS GROWTH -the overall economy grows but fails to expand
job opportunities;
b) RUTHLESS GROWTH -the rich get richer, and the poor get nothing;
c) VOICELESS GROWTH -the economy grows, but democracy/empowerment of
the majority of the population fails to keep pace;
d) ROOTLESS GROWTH -cultural identity is submerged or deliberately
outlawed by central governments;
e) FUTURELESS GROWTH -the present generation squanders resources needed
by future generations;
f) DEPENDENT GROWTH -the economy grows, but to meet the needs of
transnational capital, producing for industrialized
countries markets and not domestic markets.
In 1997, the United Nations Conference on Trade and Development argued
that there are "seven troublesome features" of the
contemporary global economy:
1.- Although there are significant exceptions at the country level,
overall the world economy is still growing too slowly -- whether
to generate sufficient employment with adequate pay or
to alleviate poverty;
2.- Gaps between developed and developing countries, as well as within
the latter, are widening steadily. In 1965, average GNP per capita
for the top 20 per cent of the world's population was 30 times that
of the poorest 20 per cent; 25 years later, in 1990, the gap had
doubled -- to 60 times;
3.- The rich have gained everywhere... and not just in comparison to
the poorest sections of society; "hollowing out" of the
middle-class has become a prominent feature of income distribution
in many developing and developed countries;
4.- Finance has been gaining an upper hand over industry, and rentiers
over investors. In some developing countries, debt interest payments
have reached 15 per cent of GDP; trading in existing assets is thus
often much more lucrative than creating wealth through new
investment;
5.-The share of income accruing to capital has gained over that
assigned to labour. Profit shares have risen in developed and
developing countries alike. In four out of five developing
countries, the share of wages in manufacturing value added
today is well below that in the early 1980s;
6.- Increased job and income insecurity is spreading. As rising
interest charges have eaten into business revenues, corporate
restructuring, labour shedding and wage repression have become
the order of the day in much of the North as well as parts of
the South;
7.- The growing wage gap between skilled and unskilled labour is
becoming a global problem. Already an established trend in many
developed countries, absolute falls in the real wages of unskilled
workers 20 to 30 per cent in some cases -- have been common in
developing countries since the early 1980s.
In September 1999, the World Development Report 1999/2000 was honest
enough to state that:
"Fifty years of development experience have yielded four critical
lessons:
Fist, macroeconomic stability is an essential prerequisite for
achieving the growth needed for development;
Second, growth does not trickle down; development must address human
needs directly;
Third, no one policy will trigger development; a comprehensive approach
is needed;
Fourth, institutions matter; sustained development should be rooted in
processes that are socially inclusive and responsive to
changing circumstances."
Of course, like UNDP was arguing in 1992 (4), to avoid the social and
environmental catastrophe gathering through globalization, there is a
need of creating a new world order, based on five concepts of a people-
centred world order:
-New concepts of human security, stressing security of people.
-New models of sustainable human development, stressing full use of
human capabilities.
-New partnerships between between state and markets, combining market
efficiency with social compassion.
-New patterns of national and global governance, to accommodate the
rise of people's aspirations and the steady decline of the nation-state.
-New forms of international cooperation, to focus directly on the needs
of the people rather than on the preferences of nation-states.
The above measures are necessary to avoid what UNDP called "obscenities"
of the market. Obscenities that make impossible creating styles of
development consistent with the idea of sustainability both material and
human. "These are obscenities of excess in a world where 160 million
children are malnourished, 840 million people live without secure sources
of food and 1.2 billion lack access to safe drinking water. These
inequalities demand action".
Surely, the problem about taking "action" is that these "obscenities"
are the "efficient" outcome of a free-market system and not the
"excesses" of some individuals. Thus, if the free-market system
is going to be accepted at face value, we will have to get used
to see millions of human being being victimized by the "obscenities"
of a barbaric system of production (see R. Rojas, "Notes on economics:
assuming scarcity"). (see Table 1)(See BOX 2)
______________________________________________________________________
TABLE 1.- INCOME PER PERSON (in 1987 US$)
DATA FOR THE WORLD POPULATION
Poorest 20% Middle 60% Richest 20%
Year 1960 236 980 7,069
Year 1993 187 731 14,629
------------------------------------------------------------
Change 1960-93 -21% -25% +107%
------------------------------------------------------------
Data processed by Dr. Róbinson Rojas, using the
Human Development Report 1997 tables as sources.
___________________________________________________________
Of course, polarization of such magnitude cannot be only caused by
poor management in less developed societies, the market effect is also
present, the following two tables describe part of the market effect in
a globalized economy:
Table 2_______________________________________________
Diverging prices for commodities and manufactured goods in the
international market during the process of globalization:
UNIT VALUE INDEX
of manufactures OIL All
exported by groups food agric. minerals,
France, Germany, raw ores,
Japan, United Kingdom, materials metals
and United States
1960 100 100 100 100 100 100
1965 108 102 98 98 78 115
1970 117 95 108 103 70 148
1975 221 251 132 164 56 91
1980 329 556 102 106 74 108
1985 275 503 81 83 64 83
1990 446 230 63 61 53 76
1996 504 184 63 62 55 69
2006 529 570 81 59 52 169
----
annual
growth
1960-80 (%) 6.1 9.0 0.1 0.3 -1.5 0.4
1980-06 (%) 1.8 0.1 -0.9 -2.2 -1.3 1.7
Source: From UNCTAD Handbook of Statistics (2007) database at:
http://stats.unctad.org/Handbook/TableViewer/
(data processed by Dr. Róbinson Rojas).
_______________________________________________________________________
The above pattern, where globalization exerts pressure on further
deterioration of terms of trade for less developed commodities, appears
also when we look at the behaviour of net factor income from abroad,
which is net from inflow and outflow of resources for a country,
including aid. Table 3 below illustrates the pressures on less developed
societies leading to further outflow of capital to industrialized
countries:
_______________________________________________________________________
Table 3
SUMMARY FOR FREE MARKET ECONOMIES WITH NEGATIVE
NET FACTOR INCOME FROM ABROAD $ MILLION -1992 PRICES)
------------------------------------------------------------------
1960-1992 1960-1975 1976-1992
TOTAL -3065221.19 -672230.50 -2392990.70
PER Day -254.48 -115.11 -385.66
PER HOUR -10.60 -4.80 -16.07
------------------------------------------------------------------
AFRICA/per hour -2.21 -2.01 -2.39
LATIN AMERICA/per hour -3.26 -1.52 -4.90
ASIA/per hour -1.79 -0.72 -2.79
INDUSTR>/per hour -3.35 -0.55 -5.98
------------------------------------------------------------------
Note: Six industrialized countries received more than 95% of the
above flow (United States, Switzerland, Japan, Germany,
Luxembourg and France)
===Source: World Bank Tables 1995===processed by Robinson Rojas===
________________________________________________________________________
Therefore, a constant deterioration of the ratio exports price/imports
price, and a constant flow of capital from poor countries to rich
countries is very much part of this globalized style of development.
How the market creates this situation of contradiction between "social
efficiency" and "economic efficiency"?
THE DYNAMICS OF A CAPITALIST MARKET
The matrix below (The Dynamics of a Capitalist Market) based on
standard teaching of economic theory, can help to solve the riddle.
|
THE DYNAMICS OF A CAPITALIST MARKET
|
Individual
Incomes |
Persons |
Total
Income |
Output |
Price |
TR |
MR |
AC |
MC |
TC |
TR-TC |
Comments |
| 20 |
1 |
20 |
1 |
20 |
20 |
20 |
5 |
5 |
5 |
15 |
|
| 19 |
1 |
39 |
2 |
19 |
38 |
18 |
5 |
5 |
10 |
28 |
|
| 18 |
1 |
57 |
3 |
18 |
54 |
16 |
5 |
5 |
15 |
39 |
|
| 17 |
1 |
74 |
4 |
17 |
68 |
14 |
5 |
5 |
20 |
48 |
|
| 16 |
1 |
90 |
5 |
16 |
80 |
12 |
5 |
5 |
25 |
55 |
|
| 15 |
1 |
105 |
6 |
15 |
90 |
10 |
5 |
5 |
30 |
60 |
|
| 14 |
1 |
119 |
7 |
14 |
98 |
8 |
5 |
5 |
35 |
63 |
|
| 13 |
1 |
132 |
8 |
13 |
104 |
6 |
5 |
5 |
40 |
64 |
Maximum abnormal profits |
| 12 |
1 |
144 |
9 |
12 |
108 |
4 |
5 |
5 |
45 |
63 |
|
| 11 |
1 |
155 |
10 |
11 |
110 |
2 |
5 |
5 |
50 |
60 |
|
| 10 |
1 |
165 |
11 |
10 |
110 |
0 |
5 |
5 |
55 |
55 |
|
| 9 |
1 |
174 |
12 |
9 |
108 |
-2 |
5 |
5 |
60 |
48 |
|
| 8 |
1 |
182 |
13 |
8 |
104 |
-4 |
5 |
5 |
65 |
39 |
|
| 7 |
1 |
189 |
14 |
7 |
98 |
-6 |
5 |
5 |
70 |
28 |
|
| 6 |
1 |
195 |
15 |
6 |
90 |
-8 |
5 |
5 |
75 |
15 |
|
| 5 |
1 |
200 |
16 |
5 |
80 |
-10 |
5 |
5 |
80 |
0 |
Maximum normal profits |
| 4 |
1 |
204 |
17 |
4 |
68 |
-12 |
5 |
5 |
85 |
-17 |
|
| 3 |
1 |
207 |
18 |
3 |
54 |
-14 |
5 |
5 |
90 |
-36 |
|
| 2 |
1 |
209 |
19 |
2 |
38 |
-16 |
5 |
5 |
95 |
-57 |
|
| 1 |
1 |
210 |
20 |
1 |
20 |
-18 |
5 |
5 |
100 |
-80 |
|
The matrix assumes a society of 20 people with distribution of income
at a maximum differential of 1 to 20. From the added income of each
individual we can build the demand curve for the system, which will go
from 1 unit demanded at 20 units of money as the price, to 20 units
demanded at 1unit of money as the price.
Thus, producing 1 unit at 20
unit of money as the price will be extremely inneficient from the social
point of view, while producing 20 units at 1 unit of money as the price
will supply "the whole society". It will be socially efficient.
But then, this is a capitalist market, producer will attempt to maximize
profits not output.
My model then incorporates the variables to calculate at what level of
output and what level of price suppliers will maximize profits. Standard
economics is utilized here, where "normal profits" will occur
when suppliers sell their output at cost price (this is because profits,
interest, rent and depreciation of the capital utilized is included in
"costs" as "opportunity costs").
My model also consider a perfectly competitive industry of identical
firms. Assuming that input prices are fixed (due to perfect competition),
the long-run industry supply curve will be represented by AC (average
costs).
Thus, following textbook economics, long-run output adjustments
in the industry are achieved by changes in the number of firms, each
operating at the minimum point of their average cost curve (in this case
a constant 5 units of money). Therefore, in this first case, "market
equilibrium" is where the industry supply and demand curve intersect,
yielding an output of 16 and a price of 5 (average cost equals price, or
cost = price, which is the golden rule of textbook economics).
Now suppose the industry is monopolised such that each of the
previously independent firms becomes a plant under a common owner, or
common management, or agreed management, etc. Output can be varied by
altering the number of plants in operation, and so the monopolist's
marginal cost (MC) and average cost (AC) schedule is the same as before,
the AC column, that is. But now, "abnormal" profits can occur,
profits above normal profits. Now, cost price is lower than price, and
we can know where abnormal profits will maximise substracting total
costs (TC, which is 5 times output) form total revenue (TR, which is
Price times output).
This yields an output of 8 at a price of 13, and
abnormal profits being 64 units of money. Monopolisation (globalisation,
transnationalization, oligopolization, real markets behaviour) has led
to a reduction in output, increase in price and dramatic growth of extra
profits for the supplier.
When the market was still not globalized, 16 people out of 20 were
able to buy one unit of output each. Only 20% of our population was
excluded from the market. Moreover, income not utilized to satisfy
demand of this particular commodity was Total Income - Total Revenue,
that is, 200 - 80 = 120. There was demand for producing 1.5 times more.
In textbook economics, this income not utilized is known as "the
consumer's surplus". If we assume 20% profits on total revenue,
suppliers will have 16 units of money as "the supplier's
surplus". Clearly, this first case will be the case of a market
working for the consumer.
After the market is globalized, only 8 people out of 20 were able to buy
one unit of output each. Consumer's surplus will be 132 - 104 = 28. There
was a demand for producing 28/104 more ( 0.26 times more). Assuming the
same rate of normal profits, suppliers will pocket 20.8 as normal profits
plus 64 as abnormal profits. Clearly, this second case will be the
case of a market working for the supplier. This case is known as a case
of "economic efficiency" in textbook economics. Now, unlike in
the first case, 60% of the people is excluded of the market and,
conversely, will yield 84.8/20 times more profits. 4.2 times.
Thus, economic efficiency makes 4.2 times more profits for suppliers,
and exclude 60% of the population from average levels of consumption.
Conversely, social efficiency satisfy 4 times more consumer's need, but
reduces suppliers' profits to a quarter.
This is a clear case of "economic efficiency" reducing welfare
in society and multiplying welfare for the capitalist class.
An important point to note is that this welfare is reduced not because
individuals are paying a higher price for the goods they consume under
monopoly/globalization, but rather because there are some people who do
not consume the good despite the fact that their income exceeds the
marginal cost of production.
In a word, they are denied welfare in order to maximise profits by the
big corporations. Like Robert Reich, former US secretary for labour,
wrote in the Financial Times: "what may be rational for each
individual corporation is irrational for society". (5)
How economic efficiency is shaping distribution of income in the
world in an "obsecene and grotesque" pattern is dealt with in BOX 3.
Conclusion: sustainable development is not possible in a globalized
economy UNLESS the capitalist class is forced to produce at the
level of maximum social efficiency through a new international economic
and political order and a new national economic and political order.
|
________________________________________________________________________
BOX 1 HUMAN DEVELOPMENT REPORT 1999
A HUMAN FACE FOR
GLOBALIZATION
New York, 12 July
1999— A powerful plea for a re-writing of the rules of
globalization—to make it work for people and not just for profits—is
made in the Human Development Report 1999, commissioned by the United
Nations Development Programme.
Globalization, it says, is more than the flow of money and commodities
—it is the growing interdependence of the world’s people through
"shrinking space, shrinking time and disappearing borders." This offers
great opportunities for enriching people’s lives and creating a global
community based on shared values. But markets, it argues, have been
allowed to dominate the process, and the benefits and opportunities
have not been shared equitably.
The result is a "grotesque" and dangerous polarization between people
and countries benefiting from the system and those that are merely
passive recipients of its effects.
The fifth of the world’s people living in the highest income countries
has 86 per cent of world gross domestic product (GDP), 82 per cent of
world export markets, 68 per cent of foreign direct investment, and 74
per cent of telephone lines. The bottom fifth, in the poorest
countries, has about one per cent in each category. Of the foreign
direct investment in developing countries and the countries of Central
and Eastern Europe in the 1990s, more than 80 per cent went to just 20
countries, mainly to China.
Such disparities are glaring enough. But the Report argues that the
inequitable effects of globalization driven by markets and profit are
far wider and deeper, touching all aspects of human life. Care,
"the invisible heart of human development," is threatened because
today’s competitive global market is putting pressures on the time,
resources and incentives for caring labour, without which individuals
do not flourish and social cohesion can break down.
Breakthroughs in technology, such as the Internet, can open a fast
track to knowledge-based growth in rich and poor countries alike, but
at present benefit the relatively well-off and educated: 88 per cent of
users live in industrialized countries, which collectively represent
just 17 per cent of the world’s population. The literally well
connected have an overpowering advantage over the unconnected poor,
whose voices and concerns are being left out of the global
conversation.
Money also talks louder than need in defining the biotechnology
research agenda, says the Report—"cosmetic drugs and slow-ripening
tomatoes come higher on the list than a vaccine against malaria or
drought-resistant crops for marginal land."
"Even as communications, transportation and technology are driving
global economic expansion, headway on poverty is not keeping pace,"
says CNN mogul Ted Turner in a special contribution to the Report. "It
is as if globalization is in fast-forward, and the world’s ability to
understand and react to it is in slow motion."
The "breakneck" speed of globalization is also making people’s lives
less secure, as the spread of global threats to well-being outpaces
action to tackle them.
The East Asian financial crisis, for example, will have reduced global
output by an estimated US$2 trillion between 1998 and 2000, putting
millions of people out of work and prompting cutbacks in social
services all over the world. The crisis was not an isolated accident,
warns the Report, because financial volatility is an inherent feature
of globally integrated financial markets.
Job insecurity is also increasing in both industrialized and developing
countries, in the wake of economic and corporate restructuring and the
dismantling of social protection measures.
Culturally, many people feel threatened by the predominantly one-way
flow. The single largest export industry for the United States is not
aircraft or cars, but entertainment.
Criminals—"among the most enterprising and imaginative
opportunists"—are beneficiaries of globalization, with the six major
international syndicates believed to gross $1.5 trillion a year. And
the illicit trade in narcotics, weapons, labour, goods and money
contributes to crime and violence that threaten neighbourhoods around
the world.
These human elements have been left out of the narrow,
financially-based view of globalization that has prevailed so far—an
omission which the Human Development Report 1999 challenges
head-on: "Competitive markets may be the best guarantee of efficient
production but not of human development." "As long as
globalization is dominated by economic aspects and by the spread of
markets, it will put a squeeze on human development," says Sakiko
Fukuda-Parr, director of the Human Development Report Office. "We need
a new approach to governance, one that preserves the advantages offered
by global markets and competition while allowing for human, community
and environmental resources that will ensure globalization works for
people and not just for profits."
The Report calls for a re-writing of governance for the 21st century.
Its suggestions and recommendations range from the global (reform of
the United Nations and World Trade Organization), through the regional
(collective approaches by groups of countries to international
negotiations in trade and other areas), to the national (social
protection against the effects of globalization) and local (greater
gender balance in sharing the burden of providing care services).
There is no need to wait for action, it argues. A number of changes can
be set in motion in the next one to three years:
• the establishment of high-level mechanisms in individual countries to
coordinate policy on globalization;
• faster debt relief and a redirection of aid in favour of poorer
countries and human development priorities;
• independent legal aid and an ombudsman process to support weaker
countries in the World Trade Organization;
• International cooperation in the fight against global crime,
including relaxation of bank secrecy laws;
• investigation of new sources of finance for the global technology
revolution, such as a "bit tax" on Internet messages, and an
international programme for the development of technology that serves
the needs of poor people;
• a task force to review global governance, to include not only a range
of countries but representatives from the private sector and civil
society. "The world is rushing headlong into greater integration,
driven mostly by a philosophy of market profitability and economic
efficiency. We must bring human development and social protection into
the equation," says Dr. Richard Jolly, coordinator of the Report.
"Globalization needs a human face."
_________________________________________
_________________________________________
|
BOX 2
|
HUMAN DEVELOPMENT
REPORT 1999 |
THE FACTS OF GLOBAL LIFE
The fifth of the world’s
people living in the highest income countries has 86 per cent of world
gross domestic product (GDP), 82 per cent of world export markets, 68
per cent of foreign direct investments and 74 per cent of world
telephone lines: the bottom fifth, in the poorest countries, has about
one per cent in each sector.
More than US$1.5 trillion a day is exchanged in the world’s currency
markets.
English is used in almost 80 per cent of websites although fewer than
one in 10 people worldwide speak the language.
The
number of Internet hosts—computers with a direct connection to the
Internet—rose from under 100,000 in 1988 to over 36 million in
1998.
The percentage share of the market by the top 10 corporations in each
sector in 1998 was: telecommunications, 86 per cent; pesticides,
85 per cent; computers, almost 70 per cent; veterinary medicine,
60 per cent; pharmaceuticals, 35 per cent; commercial seed, 32
per cent.
The income gap between the richest fifth of the world’s people and the
poorest fifth, measured by average national income per head, increased
from 30 to one in 1960 to 74 to one in 1997.
Tanzania’s
debt service payments are nine times what it spends on primary health
care and four times what it spends on primary education.
Organized
crime syndicates are estimated to gross $1.5 trillion a year.
Industrialized countries hold 97 per cent of all patents worldwide.
Production losses from the East Asian crisis and its
global repercussions are estimated at nearly $2 trillion over the three
years from 1998 to 2000.
The 200 richest people in the world more than doubled their net worth
in the four years to 1998, to $1 trillion.
Some 130-145 million legally registered migrants live
outside their countries.
The value of the illegal drug trade was estimated at $400 billion in
1995, about eight per cent of world trade, more than the shares of iron
and steel or of motor vehicles, and roughly the same as textiles and
gas and oil.
Women occupy more than 30 per cent of parliamentary seats in only five
countries; in 31 they occupy fewer than five per cent.
The cost of a three-minute phone call from New York to London fell from
$245 in 1930 (in 1990 dollars) to 35 cents in 1998.
Foreign
direct investment (FDI) reached $400 billion in 1997, but 58 per cent
of it went to industrialized countries, and just five per cent to the
transition economies of Central and Eastern Europe. Of the FDI that
went to developing and transition countries in the 1990s, more than 80
per cent went to just 20 countries, mainly to China.
Tourism
rose from 260 million visitors in 1980 to 590 million in 1996.
Only 33 countries achieved sustained three per cent annual growth in
gross national product (GNP) per capita during 1980-96. For 59
countries, mainly in sub-Saharan Africa and the countries of the former
Eastern Bloc, GNP per capita declined.
-------------------------------------------------------
About this Report:
Every year since 1990, the United Nations Development Programme has
commissioned the Human Development Report by an independent team of
experts to explore major issues of global concern. The Report looks
beyond per capita income as a measure of human progress by also
assessing it against such factors as average life expectancy, literacy
and overall well-being. It argues that human development is ultimately
"a process of enlarging people’s choices."
This year’s
Report focuses on the positive and negative aspects of globalization.
It argues that while many millions of people are being further
marginalized by their lack of access to new technologies, including the
Internet, growing inequalities are not inevitable. It recommends, among
other things, stronger social policies and actions to buffer the
effects of today’s "bust and boom" economy. It urges policymakers to
balance their concern for profits with concern for people
disenfranchised by the turmoil of the global marketplace.
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BOX 3
ABOUT OBSCENITIES, POVERTY AND INEQUALITY IN A
CAPITALIST SYSTEM
(from Forbes Magazine 1997, and Human Developmen Report 1998)
(Summary prepared by Dr. Róbinson Rojas)
OBSCENITY NUMBER ONE:
The ultra-rich
New estimates show that the world's 225 richest people have a combined wealth of over
$ 1,000,000,000,000, equal to the annual income of the poorest 47% of the world's people (2,500,000,000).
The enormity of the wealth of the ultra-rich is a mind-boggling contrast with low incomes in the developing world.
* The three richest people have assets that exceed the combined Gross Domestic Product of the 48 least developed countries, with
a combined population of 585,000,000.
* The 15 richest have assets that exceed the total Gross Domestic Product of Sub-Saharan Africa. The population in Sub-Saharan
Africa is 570,000,000 and its GDP (year 1995) was US$ 290
billion.
* The wealth of the 32 richest people exceeds the total Gross Domestic Product of South Asia, with a combined population of
1,571 million and an aggregate GDP of US$ 439 billion (year
1995).
* The assets of the 84 richest exceeded the Gross Domestic Product of China, the most populous country, with 1,200 million
inhabitants and a GDP of US$ 745 billion (year 1995).
Another striking contrast is the wealth of the 225
richest people
compared with what is needed to achieve universal
access to basic
social services for all. It is estimated that the
additional cost
of achieving and maintaining universal access to basic
education
for all, basic health care for all, reproductive health
care for
all women, adequate food for all and safe water and
sanitation for
all is roughly US$ 40 billion a year. This is less than
4% of the
combined wealth of the richest 225 richest people in
the world.
The country with the biggest share of the world's 225 richest people is the United States, with 60 (combined wealth of US$ 311 billion),
followed by Germany, with 21 (US$ 111 billion), and Japan, with 14
(US$ 41 billion). Industrial countries have 147 of the richest 225
people ( US$ 645 billion combined), and developing countries 78 (US$ 370 billion). Africa has just two (US$ 3.7 billion), both
from South Africa.
---------------------------------------------------
The ultra-rich, by origin, 1997
Distribution Combined wealth Average wealth
of the 225 of the ultra- of the ultra-
richest rich rich
Region/country group people (US$ billions) (US$ billions)
___________________________________________________________________
United States 60 314 5.2
Germany 21 111 5.3
Japan 14 41 2.9
Other industrial countries 48 174 3.6
Eastern Europe and CIS 4 8 2.0
TOTAL INDUSTRIAL COUNTRIES 147 645 4.4
Asia 43 233 5.4
Latin America/Caribbean 22 55 2.5
Arab States 11 78 7.1
Sub-Saharan Africa 2 4 2.0
TOTAL DEVELOPING COUNTRIES 78 370 4.7
TOTAL WORLD 225 1,015 4.5
_____________________________________________________________________
POOREST
47% OF THE WORLD 2,500,000,000 1,015 0.0000004
_____________________________________________________________________
Average wealth of the 225 ultra-rich US$ 4,500,000,000
Average annual income of poorest 47% US$ 406
-----------------------------------------------------------
OBSCENITY NUMBER TWO:
The priorities of the capitalist system
ANNUAL EXPENDITURE IN US$
Basic education for all 6 billion (*)
Cosmetics in the USA 8 billion
Water and sanitation for all 9 billion (*)
Ice cream in Europe 11 billion
Reproductive health for all women 12 billion (*)
Perfumes in Europe and the USA 12 billion
Basic health and nutrition 13 billion (*)
Pet foods in Europe and the USA 17 billion
Business entertainment in Japan 35 billion
Cigarettes in Europe 50 billion
Alcoholic drinks in Europe 105 billion
Narcotic drugs in the world 400 billion
Military spending in the world 780 billion
_________________________________________________________________
* Estimated additional annual cost to achieve universal access to
basic social services in all developing countries.
SOURCE: Euromonitor 1997; UNDP; UNICEF; UNFPA 1994; Worldwide
Research, Advisory and Business Intelligence Services 1997;
Human Development Report 1998.
* For a definition of my concept of "sustainable
development" see
R. Rojas, "Sustainable development in a globalized economy", 1997
Back to Top
...............................................
Notes:
(1) Aldo Ferrer, "MERCOSUR and Alternative World Orders", in
GLOBALIZATION AND THE EXTERNAL RELATIONS OF LATIN AMERICA
AND THE CARIBBEAN, Edition N0. 53 (January-June 1998)
(2) John Eatwell, "International Financial Liberalization: the
Impact on World Development", ODS Discussion Paper, 1997
(3) Lance Taylor and Ute Pieper, "Reconciling Economic Reform and
Sustainable Human Development: Social consequences of
neo-liberalism", ODS Discussion Paper, 1996
(4) UNDP, Human Development Report 1993, OUP, 1993, page 2
(5) Robert Reich, "A hand across the great divide", Financial Times,
March 6, 1996
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GDP of groups of countries as percentage of total GDP
-172 market economies)
-----------------------------
1960 1965 1970 1975
TOTAL OECD [21] 82.082 81.798 82.219 79.435
TOTAL WEST AFRICA[23] 0.809 0.814 0.887 1.143
TOTAL E. & S. AFRICA[27] 1.627 1.487 1.371 1.380
TOTAL N. AFRICA[5] 0.743 0.809 0.854 1.028
TOTAL M. EAST[14] 0.978 1.544 1.704 3.143
TOTAL S. ASIA[8] 3.834 4.027 3.082 2.411
TOTAL E. ASIA & P.[27] 1.974 1.688 2.031 2.555
TOTAL LATIN AMERICA[21] 6.160 6.316 6.259 7.048
TOTAL THE CARIBBEAN[20] 0.396 0.410 0.431 0.420
TOTAL DEV. EUROPE[6] 1.397 1.107 1.162 1.436
----------------------------
TOTAL MARKET ECON.[172] 100.000 100.000 100.000 100.000
------------------------------------------------------------------
1980 1985 1990 1992
TOTAL OECD [21] 77.408 78.955 82.083 82.536
TOTAL WEST AFRICA[23] 1.387 1.084 0.479 0.425
TOTAL E&S AFRICA[27] 1.413 1.071 0.947 0.876
TOTAL N. AFRICA[5] 1.293 1.274 0.828 0.719
TOTAL M. EAST[14] 4.135 3.863 2.195 1.800
TOTAL S. ASIA[8] 2.203 2.460 1.919 1.485
TOTAL E. ASIA&P.[27] 3.302 3.749 4.297 4.837
TOTAL LATINAM[21] 7.188 6.126 5.470 5.540
TOTAL THE CARIB.[20] 0.396 0.417 0.321 0.270
TOTAL DEV. EUR.[6] 1.276 0.999 1.461 1.511
------------------------------
TOTAL MARKET ECON.[172] 100.000 100.000 100.000 100.000
Data from the World Bank Database processed by Dr. Róbinson Rojas Sandford
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