SUSTAINABLE DEVELOPMENT IN A GLOBALIZED ECONOMY? THE ODDS*
by Róbinson Rojas (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 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" 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.
........
|
| 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 |
|
________________________________________________________________________
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.
The Human Development Report is published in English by Oxford University Press, 2001 Evans
Rd., Cary, NC 27513, USA. Telephone (919)
677-0977; toll-free in the USA (800) 451-7556; fax
(919) 677-1303. Paperback price: US$19.95.
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Contacts: New York: Ian Steele (212) 906-5302 Fax
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Copenhagen: Eva Arnvig (45-35) 46 7150 Fax (45-35)
46 70 95
Tokyo: Hidehiro Tsubaki (81-3) 5467-4751 Fax (81-3)
5467-4753
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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
__________________________________________________________________
Box 4
__________________________________________________________________
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
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