Multinationals are trashed as exploiters of the poorest people on the planet. Wrong, wrong, wrong ... The protesters are wrong! A ragtag army of save-the-world crusaders has spent years decrying multinational corporations as villains in the wave of globalization overwhelming the Third World. This ominous trend would fatten the rich, further impoverish and oppress the poor and crush local economies. The business-bashing group Public Citizen argued as much in a proclamation signed by almost 1,500 organizations in 89 countries in 1999. Whereupon hundreds of protesters rioted outside a conference of the WTO in Seattle, shattering windows, blocking traffic and confronting cops armed with tear gas and pepper spray. 600 people were arrested.
Cut to 2007, and the numbers are in: The protesters and do-gooders are just plain wrong. It turns out globalization is good, and not just for the rich, but especially for the poor. The booming economies of India and China - the Elephant and the Dragon - have lifted 200 million people out of abject poverty in the 1990s as globalization took off, the International Monetary Fund says. Tens of millions more have catapulted themselves far ahead into the middle class. It's remarkable what a few container ships can do to make poor people better off. Certainly more than $2 trillion of foreign aid, which is the amount (with an inflation adjustment) that the U.S. and Europe have poured into Africa and Asia since the 1960's.
In the next eight years almost 1 billion people across Asia will take a Great Leap Forward into a new middle class. In China middle-class incomes are set to rise threefold, to $5,000, predicts Dominic Barton, a Shanghai managing partner for McKinsey & Co. As the Chindia revolution spreads, the ranks of the poor get smaller, not larger. In the 1990s, as Vietnam's economy grew 6% a year, the number of people living in poverty (42 million) fell 7% annually; in Uganda, when GDP growth passed 3%, the number fell 6% per year, says the World Bank. China unleashed its economy in 1978, seeding capitalism first among farmers newly freed to sell the fruits of their fields instead of handing the produce over to Communist Party collectives. Other reforms let the Chinese create 22 million new businesses that now employ 135 million people who otherwise would have remained peasants like the generations before them.
Foreign direct investment, the very force so virulently opposed by the do-gooders, has helped drive China's gross domestic product to a more than tenfold increase since 1978. Since the reforms started, $600 billion has flooded into the country, $70 billion of it in the past year. Foreigners built hundreds of thousands of new factories as the Chinese government built the coal mines, power grid, airports and highways to supply them. As China built infrastructure, it created Special Economic Zones where foreign companies willing to build modern factories could hire cheap labor, go years without paying any taxes and leave it to government to build the roads and other infrastructure they needed. All of that, in turn, drove China's exports from $970 million to $974 billion in three decades. Those container loads make Americans better off, too. You can get a Chinese DVD at Wal-Mart (nyse: WMT - news - people ) for $28, and after you do you will buy some $15 movies made in the U.S.A. Per-person income in China has climbed from $16 a year in 1978 to $2,000 now. Wages in factory boomtowns in China can run $4 a day, scandalously low in the eyes of the protesters, yet up from pennies a day a generation ago and far ahead of increases in living costs.
Middle-class Chinese families now own TVs, live in new apartments and send their children to private schools. Millions of Chinese have traded in their bicycles for motorcycles or cars. McDonald's (nyse: MCD - news - people ) has signed a deal with Sinopec, the huge Chinese gasoline retailer, to build drive-through restaurants attached to gas stations on China's new roads. Today 254 Starbucks (nasdaq: SBUX - news - people ) stores serve coffee in the land of tea, including one at the Great Wall and another at the Forbidden Palace. (The latter is the target of protesters.) In Beijing 54 Starbucks shops thrive, peddling luxury lattes that cost up to $2.85 a cup and paying servers $6 for an 8-hour day. That looks exploitative until you peek inside a nearby Chinese-owned teahouse where the staff works a 12-hour day for $3.75.
Says one woman, 23, who works for an international cargo shipper in Beijing: "My parents were both teachers when they were my age, and they earned 30 yuan [$3.70] a month. I earn 4,000 yuan ($500) a month, live comfortably and feel I have better opportunities than my parents did." Tony Ma, age 51, was an unwilling foot soldier in Mao's Cultural Revolution. During that dark period from 1966 to 1976 universities were closed, and he was sent at age 16 to work in a steel mill for $2 a month. He cut metal all day long for seven years and feared he might never escape. When colleges reopened, he landed a spot to study chemistry, transferred to the U.S., got a Ph.D. in biochemistry and signed on with Johnson & Johnson (nyse: JNJ - news - people ) at $45,000 a year. Later he returned to the land he fled and now works for B.F. Goodrich (nyse: GR - news - people ) in Hong Kong. The young college grads in China today wouldn't bother immigrating to the U.S. for a job that pays $45,000, he says - because now they have better opportunities at home.
Capitalism alone, however, isn't enough to remake Third World economies - globalism is the key. A big reason India trails behind its bigger neighbor to the northeast in lifting the lower classes is that, even after embracing capitalism, it kept barriers to the flow of capital from abroad. Thus 77% of Indians live on $2 a day or less, the Asian Development Bank says, down only nine percentage points from 1990. A third of the population is illiterate. In 1980 India had more of its population in urban centers than China did (23% versus 20% for China). But by 2005 China had 41% in cities, where wages are higher; India's urbanites had grown to only 29%.
Freed of British colonial rule in 1947 and scarred by its paternalistic effects, India initially combined capitalism with economic isolationism. It thwarted foreign companies intent on investing there and hampered Indian firms trying to sell abroad. This hurt Indian consumers and local biz: A $100 Microsoft (nasdaq: MSFT - news - people ) operating system got slapped with duties that brought the price to $250 in India, putting imported software and computers further from reach for most people and businesses. Meanwhile, the government granted workers lavish job protections and imposed heavy taxes and regulations on employers. Government jobs usually were unchallenging and routine poorly, but they guaranteed lifetime employment. They also ensured economic stagnation.
Financial crisis struck in 1991. Desperate for cash, India flew a planeload of gold reserves to London and began, grudgingly, to open its economy. Import duties were lowered or eliminated, so India's consumers and companies could buy modern, foreignmade goods and gear. Overseas firms in many industries were allowed to own their subsidiaries in India for the first time since 1977. India all but banned foreign investment until 1991. Since then foreign companies have come back, but not yet on the scale seen in China. Foreign companies have invested $48 billion in India since 1991 - $7.5 billion of that just in the last fiscal year - the same amount dumped into mainland China every five to six weeks.
By the mid-1990s the economy boomed and created millions of jobs. By the late 1990s U.S. tech companies began turning to India for software design, particularly in the Y2K crunch. The Indians proved capable and cheap, and the muchmaligned offshoring boom began. Suddenly Indian software engineers were programming corporate America's computers. New college graduates were answering America's customer service phone calls. Builders hired construction workers to erect new high-rise buildings suddenly in demand as American and European firms rushed to hire Indian workers. The new college hires, whose older siblings had graduated without finding a job, tell of surpassing their parents' salaries within five years and of buying cell phones, then motorcycles, then cars and even houses by the time they were 30. All of that would have been impossible had India failed to add globalization to capitalism. Today, despite its still dilapidated airports and pothole-riddled highways, the lumbering Elephant now is in a trot, growing more than 7% annually for the last decade. In 2005, borrowing from the Chinese, India began a five-year, $150 billion plan to update its roads, airports, ports and electric plants. India is creating free trade zones, like China, to encourage exports of software, apparel, auto parts and more.
S.B. Kutwal manages the assembly line where Tata Motors builds Safari SUVs. He remembers how, in the 1980s, people waited five years to buy a scooter, and cars were only for the rich. "Since we've liberated the economy, lots of companies have started coming into India," says Kutwal. "People couldn't afford cars then. Now the buying power is coming." In Mumbai (formerly Bombay), Delhi, Bangalore and other big cities, shopping malls have sprung up, selling everything from Levi's jeans to Versace. India still has raggedy street touts, but when they tap on car windows at stoplights, instead of peddling cheap plastic toys, they sell to the new India: copies of Vogue and House & Garden magazines. Western restaurants are moving in, too: Domino's Pizza and Ruby Tuesday's have come to India, and 107 McDonald's have sprung up, serving veggie hamburgers in the land where cattle are sacred.
None of this gives pause to an entity called International Forum on Globalization. The group declares that globalism's aim is to "benefit transnational corporations over workers; foreign investors over local businesses; and wealthy countries over developing nations. While promoters … proclaim that this model is the rising tide that will lift all boats, citizen movements find that it is instead lifting only yachts." - "The majority of people in rich and poor countries aren't better off" since the WTO formed in 1995 to promote global trade, asserts Christopher Slevin, deputy director of Global Trade Watch, an arm of Public Citizen. "The breadth of the opposition has grown. It's not just industrial and steel workers and people who care about animal rights. It includes high-tech workers and the offshoring of jobs, also the faith-based community."
While well-off American techies may be worried, it seems doubtful that an engineer in Bangalore who now earns $40,000 a year, and who has just bought his parents' house, wants to ban foreign investment. Slevin's further complaint is that globalism is a creature of WTO, the World Bank and other unelected bodies. But no, the people do have a voice in the process, and it is one that is equivocal on the matter of free market capitalism. The Western World's huge agriculture subsidies - $85 billion or more annually, between the U.S., Japan and the European Union - are decreed by democratically elected legislatures. The EU pays ranchers $2 per cow in daily subsidies, more than most Indians earn. If these farmers weren't getting handouts, and if trade in farm products were free, then the poor in the Third World could sell more of their output and could begin to lift themselves out of poverty.
Dit artikel van Robyn Meredith verscheen tevens in The Free State, The New York Times en Forbes, alsook op InvisibleHand.nl.
Meer artikels van deze auteur op www.forbes.com.
Cut to 2007, and the numbers are in: The protesters and do-gooders are just plain wrong. It turns out globalization is good, and not just for the rich, but especially for the poor. The booming economies of India and China - the Elephant and the Dragon - have lifted 200 million people out of abject poverty in the 1990s as globalization took off, the International Monetary Fund says. Tens of millions more have catapulted themselves far ahead into the middle class. It's remarkable what a few container ships can do to make poor people better off. Certainly more than $2 trillion of foreign aid, which is the amount (with an inflation adjustment) that the U.S. and Europe have poured into Africa and Asia since the 1960's.
In the next eight years almost 1 billion people across Asia will take a Great Leap Forward into a new middle class. In China middle-class incomes are set to rise threefold, to $5,000, predicts Dominic Barton, a Shanghai managing partner for McKinsey & Co. As the Chindia revolution spreads, the ranks of the poor get smaller, not larger. In the 1990s, as Vietnam's economy grew 6% a year, the number of people living in poverty (42 million) fell 7% annually; in Uganda, when GDP growth passed 3%, the number fell 6% per year, says the World Bank. China unleashed its economy in 1978, seeding capitalism first among farmers newly freed to sell the fruits of their fields instead of handing the produce over to Communist Party collectives. Other reforms let the Chinese create 22 million new businesses that now employ 135 million people who otherwise would have remained peasants like the generations before them.
Foreign direct investment, the very force so virulently opposed by the do-gooders, has helped drive China's gross domestic product to a more than tenfold increase since 1978. Since the reforms started, $600 billion has flooded into the country, $70 billion of it in the past year. Foreigners built hundreds of thousands of new factories as the Chinese government built the coal mines, power grid, airports and highways to supply them. As China built infrastructure, it created Special Economic Zones where foreign companies willing to build modern factories could hire cheap labor, go years without paying any taxes and leave it to government to build the roads and other infrastructure they needed. All of that, in turn, drove China's exports from $970 million to $974 billion in three decades. Those container loads make Americans better off, too. You can get a Chinese DVD at Wal-Mart (nyse: WMT - news - people ) for $28, and after you do you will buy some $15 movies made in the U.S.A. Per-person income in China has climbed from $16 a year in 1978 to $2,000 now. Wages in factory boomtowns in China can run $4 a day, scandalously low in the eyes of the protesters, yet up from pennies a day a generation ago and far ahead of increases in living costs.
Middle-class Chinese families now own TVs, live in new apartments and send their children to private schools. Millions of Chinese have traded in their bicycles for motorcycles or cars. McDonald's (nyse: MCD - news - people ) has signed a deal with Sinopec, the huge Chinese gasoline retailer, to build drive-through restaurants attached to gas stations on China's new roads. Today 254 Starbucks (nasdaq: SBUX - news - people ) stores serve coffee in the land of tea, including one at the Great Wall and another at the Forbidden Palace. (The latter is the target of protesters.) In Beijing 54 Starbucks shops thrive, peddling luxury lattes that cost up to $2.85 a cup and paying servers $6 for an 8-hour day. That looks exploitative until you peek inside a nearby Chinese-owned teahouse where the staff works a 12-hour day for $3.75.
Says one woman, 23, who works for an international cargo shipper in Beijing: "My parents were both teachers when they were my age, and they earned 30 yuan [$3.70] a month. I earn 4,000 yuan ($500) a month, live comfortably and feel I have better opportunities than my parents did." Tony Ma, age 51, was an unwilling foot soldier in Mao's Cultural Revolution. During that dark period from 1966 to 1976 universities were closed, and he was sent at age 16 to work in a steel mill for $2 a month. He cut metal all day long for seven years and feared he might never escape. When colleges reopened, he landed a spot to study chemistry, transferred to the U.S., got a Ph.D. in biochemistry and signed on with Johnson & Johnson (nyse: JNJ - news - people ) at $45,000 a year. Later he returned to the land he fled and now works for B.F. Goodrich (nyse: GR - news - people ) in Hong Kong. The young college grads in China today wouldn't bother immigrating to the U.S. for a job that pays $45,000, he says - because now they have better opportunities at home.
Capitalism alone, however, isn't enough to remake Third World economies - globalism is the key. A big reason India trails behind its bigger neighbor to the northeast in lifting the lower classes is that, even after embracing capitalism, it kept barriers to the flow of capital from abroad. Thus 77% of Indians live on $2 a day or less, the Asian Development Bank says, down only nine percentage points from 1990. A third of the population is illiterate. In 1980 India had more of its population in urban centers than China did (23% versus 20% for China). But by 2005 China had 41% in cities, where wages are higher; India's urbanites had grown to only 29%.
Freed of British colonial rule in 1947 and scarred by its paternalistic effects, India initially combined capitalism with economic isolationism. It thwarted foreign companies intent on investing there and hampered Indian firms trying to sell abroad. This hurt Indian consumers and local biz: A $100 Microsoft (nasdaq: MSFT - news - people ) operating system got slapped with duties that brought the price to $250 in India, putting imported software and computers further from reach for most people and businesses. Meanwhile, the government granted workers lavish job protections and imposed heavy taxes and regulations on employers. Government jobs usually were unchallenging and routine poorly, but they guaranteed lifetime employment. They also ensured economic stagnation.
Financial crisis struck in 1991. Desperate for cash, India flew a planeload of gold reserves to London and began, grudgingly, to open its economy. Import duties were lowered or eliminated, so India's consumers and companies could buy modern, foreignmade goods and gear. Overseas firms in many industries were allowed to own their subsidiaries in India for the first time since 1977. India all but banned foreign investment until 1991. Since then foreign companies have come back, but not yet on the scale seen in China. Foreign companies have invested $48 billion in India since 1991 - $7.5 billion of that just in the last fiscal year - the same amount dumped into mainland China every five to six weeks.
By the mid-1990s the economy boomed and created millions of jobs. By the late 1990s U.S. tech companies began turning to India for software design, particularly in the Y2K crunch. The Indians proved capable and cheap, and the muchmaligned offshoring boom began. Suddenly Indian software engineers were programming corporate America's computers. New college graduates were answering America's customer service phone calls. Builders hired construction workers to erect new high-rise buildings suddenly in demand as American and European firms rushed to hire Indian workers. The new college hires, whose older siblings had graduated without finding a job, tell of surpassing their parents' salaries within five years and of buying cell phones, then motorcycles, then cars and even houses by the time they were 30. All of that would have been impossible had India failed to add globalization to capitalism. Today, despite its still dilapidated airports and pothole-riddled highways, the lumbering Elephant now is in a trot, growing more than 7% annually for the last decade. In 2005, borrowing from the Chinese, India began a five-year, $150 billion plan to update its roads, airports, ports and electric plants. India is creating free trade zones, like China, to encourage exports of software, apparel, auto parts and more.
S.B. Kutwal manages the assembly line where Tata Motors builds Safari SUVs. He remembers how, in the 1980s, people waited five years to buy a scooter, and cars were only for the rich. "Since we've liberated the economy, lots of companies have started coming into India," says Kutwal. "People couldn't afford cars then. Now the buying power is coming." In Mumbai (formerly Bombay), Delhi, Bangalore and other big cities, shopping malls have sprung up, selling everything from Levi's jeans to Versace. India still has raggedy street touts, but when they tap on car windows at stoplights, instead of peddling cheap plastic toys, they sell to the new India: copies of Vogue and House & Garden magazines. Western restaurants are moving in, too: Domino's Pizza and Ruby Tuesday's have come to India, and 107 McDonald's have sprung up, serving veggie hamburgers in the land where cattle are sacred.
None of this gives pause to an entity called International Forum on Globalization. The group declares that globalism's aim is to "benefit transnational corporations over workers; foreign investors over local businesses; and wealthy countries over developing nations. While promoters … proclaim that this model is the rising tide that will lift all boats, citizen movements find that it is instead lifting only yachts." - "The majority of people in rich and poor countries aren't better off" since the WTO formed in 1995 to promote global trade, asserts Christopher Slevin, deputy director of Global Trade Watch, an arm of Public Citizen. "The breadth of the opposition has grown. It's not just industrial and steel workers and people who care about animal rights. It includes high-tech workers and the offshoring of jobs, also the faith-based community."
While well-off American techies may be worried, it seems doubtful that an engineer in Bangalore who now earns $40,000 a year, and who has just bought his parents' house, wants to ban foreign investment. Slevin's further complaint is that globalism is a creature of WTO, the World Bank and other unelected bodies. But no, the people do have a voice in the process, and it is one that is equivocal on the matter of free market capitalism. The Western World's huge agriculture subsidies - $85 billion or more annually, between the U.S., Japan and the European Union - are decreed by democratically elected legislatures. The EU pays ranchers $2 per cow in daily subsidies, more than most Indians earn. If these farmers weren't getting handouts, and if trade in farm products were free, then the poor in the Third World could sell more of their output and could begin to lift themselves out of poverty.
Dit artikel van Robyn Meredith verscheen tevens in The Free State, The New York Times en Forbes, alsook op InvisibleHand.nl.
Meer artikels van deze auteur op www.forbes.com.
2 Reacties:
- At 12:11 Anoniem said...
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Eén van de steunpilaren van de economische maleise is net de economische globalisering, voorgesteld als het Walhalla van de commerciële activiteiten.
Helaas is bij geen enkele politieker het idee opgekomen dat dit nefast is voor de lokale economie omdat er nu eenmaal plaatsen zijn op de planeet die voor de komende tientallen jaren nu eenmaal goedkoper zijn om te produceren en bedrijven zijn op termijn wel genoodzaakt om de activiteiten te herpositioneren om toch dat beetje competitief te blijven of erger, nog meer winst te maken. En natuurlijk is het nu te laat om bij te sturen, vooral omdat het ongepast lijkt om een soort verkeersregels op te stellen voor de bedrijven al is dat moeilijk gezien het mondiale karakter van de het transport.
Zolang België niet in eerste instantie aan eigen productie denkt, dus voor de eigen markt en dan pas eventueel export blijft op termijn de import stijgen. En het is tevens nadelig voor die armere landen. Hoezo kan je spreken van een heropleving van de economie als er wel wekelijks jobs sneuvelen voor dezelfde reden. En als er nu absoluut geen probleem is omtrent de import van de veel goedkopere apparaten bvb.
Helaas soms kommer en kwel nadat het Duiste Stiftung Warentest polycyklische aromatische Koolenwaterstoffen (PAK) gevonden heeft in de kabel van een cheopo bovenfrees TROF 1500 E-B. Of dit model in België ook in de handel is , weet ik niet - en kan ook niemand weten omdat men geen idee heeft welke invoerder er achter deze merknaampjes zit. Ok, die kabel houd je niet zo frequent vast maar PAK hoort gewoonweg niet apparaten te zitten. En wie controleert de geïmporteerde goederen?
De maatregelen die de paarse regering neemt (of wil nemen zodra er een compromis is) volstaan niet om deze tendens te keren en in het ons meer richten op de dienstensector geloof ik ook al niet, want daarmee alleen komen we er niet. - At 13:19 Anoniem said...
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@Stefaan.
Wat je hier allemaal uitkraamt, raakt kant noch wal. Het is niet omdat men toevallig een gebrek vaststelt in een product uit het buitenland, dat men dit moet gaan beschouwen als een fout gevolg van de globalisering. Zulke gebreken kunnen evengoed voorvallen met Belgische/Europese producten. Daarbij is de consument in de EU via de "watervalregel" wel degelijk zéér goed beschermd tegen verborgen gebreken. Wanneer hij zulk een gebrek vaststelt, kan hij onmiddellijk zijn verkoper dagvaarden. Die verkoper kan daarna zijn groothandelaar dagvaarden, en die nadien zijn producent, en die zijn onderaannemer en die zijn grondstoffenleverancier etc. Ik zie er dus geen probleem in.
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