'For upward of a thousand years the tendency of the economic centre of the
world has been to move westward, and the Spanish War has only been the shock
caused by its passing the Atlantic. Probably, within two generations, the United
States will have faced about, and its great interests will cover the Pacific,
which it will hold like an island sea (...)' Brooks Adams (1900) 'America's
Economic Supremacy', as quoted in David and Wheelwright, 1989
'The Ten Duties of Kings are: liberality, morality, self-sacrifice,
integrity, kindness, austerity, non-anger, non-violence, forbearance, and
non-opposition to the will of the people' (Daw Aung San Suu Kyi, the Buddhist
view of responsible kinship)
'Although famines can kill millions of people, they do not kill rulers. Kings
and presidents, bureaucrats and bosses, generals and police chiefs - these
people never starve' (Amartya Sen)
Table of Contents:
List of abbreviations (functional terms)
List of Tables
List of Graphs
1) Introduction
2) The theoretical framework: what can policy-makers know about the ascent
and decline in the world economy?
3) The international environment is basically unstable. A survey of the
contemporary research methods for the study of changes in the world system since
1989
4) Problem number 1: Europe is characterised by the typical 'mix' of
conditions that lead to stagnation
5) Problem number 2: Europe must come to terms with the 'new' social problems
arising from the contradictions of the process of the global environmental
destruction, to which Europe as one of the main regions of world industry and
traffic, disproportionately contributes, and Europe must find a proper way for
gender empowerment
6) Problem number 3: Europe must come to terms with the contradictions of
world cultures and world cultural conflict, global anarchy and global decay
7) Problem number 4: Europe must come to terms with the contradictions
between Europe, the developed centre, and its Eastern European periphery, and
the problems of political instability, nationalism, and unequal development,
that the present form of interaction between the centre and the periphery bring
about
8) Problem number 5: Europe must come to terms with the contradictions of the
process of the ageing of democracies, especially phenomena which one might term
sclerosis bruxelliana and sclerosis Europea
9) Transnational Integration and National Disintegration - A Synthesis
Appendix
Bibliography
Index
List of abbreviations (functional terms)
a constant in multiple regression analysis (statistics)
ACDA Arms Control and Disarmament Agency (United States Department of State)
ASEAN Association of Southeast Asian Nations
b1,2,3 coefficients in multiple regression analysis (statistics)
CEFTA Central European Free Trade Area (as of 1.9.1995, Czech Republic, Slovak Republic, Poland, Hungary)
CIS Community of Independent States (in the ex-USSR)
CO2 carbon dyoxide
CPM capability poverty measure, combining percentages of unattended births, children with underweight, and female illiteracy rates
df. degrees of freedom (statistics)
DYN variables, measuring growth (economic growth, human development et cetera)
DYN HD growth of life expectancy over time
e Eulers number (2.7...)
EC European Community, now: EU
ECU European Currency Unit
ENCONS energy consumption per capita
EO/AA equal opportunity and affirmative action laws in the United States of America
EU European Union (per 1.9.1995 15 member states)
EXCEL computer software
F productivities
F F-test-value in multiple regression analysis
GDI Gender Development Index, measuring the discrepancies in life expectancy, adult literacy rate, combined enrolment, educational attainment, and earned income shares
GDP Gross Domestic Product
GEI Gender Empowerment Index, combining parliamentary representation, share of administrative and managerial positions, share of professional and technical positions, weighted by population share
GNP Gross National Product
HD(I) Human Development (Index), combining life expectancy, adult literacy, combined enrollment ratios, and real GDP per capita
HDR Human Development Report, document, published each year by the UNDP
IBM International Business Machines, international manufacturer of computer hard- and software
ILO International Labour Office
IMF International Monetary Fund
LDCs less developed countries
LEX life expectancy
ln natural logarithm
LN PCI natural logarithm of per capita income
M Imports
MNC Multinational Corporations
n sample size
NAFTA North American Free Trade Area
nat.log. natural logarithm
NATO North Atlantic Treaty Organisation
NOX nitrogen
OECD Organisation of Economic Co-operation and Development
O2 oxygen
PCI per-capita-income
pi number pi (3.14...)
PPP purchasing power parity
PSL Polish Peasant Party
R2 total variance explained
RGP linear standard regression procedure of the EXCEL 5.0 programme
RKP non-linear standard regression procedure of the EXCEL 5.0 programme
rpp real purchasing power parity
S.J. Jesuits Fathers (Catholic Church)
SO2 sulphur-dioxide
TNC Transnational Corporations
UN(O) United Nations (Organisation)
UNDP United Nations Development Programme
UN ECE United Nations Economic Commission for Europe
UNICEF United Nations Children's Fund
UK United Kingdom
USA United States of America
USSR former Union of Soviet Socialist Republics
WDR World Development Report, document, published each year by the World Bank
X Exports
x independent variable(s)
y dependent variable(s)
List of Tables
Table 2.1: Global patterns of foreign direct investments, 1975-1995, in billions of $:
Table 4.1a: MNC penetration by international comparison
Table 4.1b: The share of inward FDI stock in the gross domestic product of European Union countries by international comparison, 1980-1994
Table 4.1c: The re-iteration of the dependency and neo-classical model of growth and development in the capitalist world economy, 1980 - 1992
Table 4.1d: The effects of dependency (FDI stock per total GDP in the host countries) and world development - data for the 1980s and beyond
Table 4.2: International dependency and its effects on growth and adjustment, allowing for the influence of the migration process
Table 5.1: environmental quality in Eastern Europe and the former USSR in comparison to the US, the UK, France, (West) Germany, Sweden and Austria
Table 5.2: the marginalisation of women, social devastation and decay in former communist countries of Central and Eastern Europe in comparison to the European Union countries
Table 5.3: gender empowerment
Table 6.1: the influence of Huntington's index on development performance at the level of world society
Table 6.2: The determination of the Gurr-Index of ethno-political conflict in the periphery and semi-periphery
Table 6.3: Money-laundering and its destructive effects on the national economy:
Table 7.1: Poverty and peripherisation in (Eastern) Europe
Table 7.2: Poverty on a world scale
Table 7.3: the position of the East and the (former) 'de-linking' South in the new world system
Table 7.4a: The 1993 elections in Poland
Table 7.4b: The 5th of November 1995 elections in Poland
Table 7.4c: The 19th of November 1995 elections in Poland
Table 7.5: the political ecology of foreign capital attraction to the different regions in Poland, 1993
Table 7.6: The transformation success or failure 1989-95
Table 7.7: The determinants of economic growth in the transformation countries
Table 7.8a: Inequality, savings, taxes, and social expenditure. Evidence from Eastern Europe by cross-national comparison
Table 7.8b: Gini-Index of income inequality in the formerly socialist or quasi-socialist countries
Table 7.9: foreign aid, aggregate resource flows per GNP and economic growth in the transformation countries
Table 7.10: The external conditions of the transformation and the World Bank's liberalisation index:
Table 7.11: EU-eastward expansion - a synopsis of the conditions, prevailing in the European periphery:
Table 8.1: trade balances in Eastern Europe
Table 8.2: The extractive economy on a world scale. Poland by international comparison
List of Graphs
Graph 1.1: Structural dependence of the European East
Graph 1.2: The debt crisis of the world periphery
Graph 1.3: The 11 - 19 main crisis points in the world system
Graph 1.4: The demand side of the distribution of gross domestic product in a Tiger economy and in a successful transformation country - Singapore and Poland compared
Graph 2.1: Capital flows, projected from outflow and inflow data 1984 - 1995 from major economic regions. North America will become the major source of capital outflows over the coming years
Graph 2.2: national origin of the foreign population of 16.9 million people, living in the European Union countries
Graph 3.1: the tendencies of the capitalist world economy towards Kondratieff cycles
Graph 3.2: The war cycles since 1495
Graph 3.3: Kuznets-cycles in the world system, 1756 - 1975
Graph 3.4a: New evidence regarding the Kondratieff cycles, 1740-1975, based on 5-year moving averages
Graph 3.4b: Kondratieff cycles, based on 10 year moving averages
Graph 3.5a: the Human Development Index as a function of the level of development (real purchasing power)
Graph 3.5b: capability poverty as a function of real purchasing power - the results at the level of the semi-periphery and periphery countries
Graph 3.5c: capability poverty as a function of real purchasing power - the results at the level of the semi-periphery and periphery countries with a real GDP per capita between 4000 $ and 8500 $
Graph 3.6: critical values of the t-test
Graph 4.1: inward and outward FDI stock as a percentage of gross domestic product over time in 1980, 1985, 1990 and 1994 in major regions of the world economy
Graph 5.1 Charles D. Keeling's data series from Mauna Loa - atmospheric concentrations of greenhouse and ozone-depleting gases, 1959-90, and the trend for the next 60 years
Graph 5.2: CO2 emissions and their growth rates from 1950 onwards
Graph 6.1: War victims and victims of mass murder after 1945
Graph 7.1: unemployment in Poland - total outflows and outflows to work, 1990-1995
Graph 7.2: human development and poverty
Graph 7.3: MNC investments in the Polish economy
Graph 7.4: unemployment in Poland - regional aspects
Graph 7.5: unemployment in Poland - the time series
Graph 7.6: inequality and economic transformation on a world level and in the transformation countries
Graph 7.7a: foreign aid and economic growth in the transformation countries
Graph 7.7.b: foreign aid per capita and economic growth on a world level
Graph 7.7.c: resource flows and economic growth in the transition countries
Graph 7.8: the weighted averages of the economic and political indicators of European periphery countries
Graph 8.1: current account balances in the world system, 1994, in millions of $
Graph 8.2: the world-wide recipients of transnational investment, 1984 - 1995
Graph 8.3: projections of the inflows of world-wide investments until 2000
Graph 8.4: Triad fortresses? The share of intra-regional trade, trade with the other parts of the triad and with the rest of the world in a time-perspective
1) Introduction
The aim of this work is to serve as an invitation to the research community to further develop insights into the dynamics of world development in the post 1989-world. We walk in the fog of a world order, that seems to be characterized by instability and low-intensity conflict, by the shifting of the centres of gravity of the world economy, by the increase in the contradictions of the process of globalization, by environmental decay, refugee crises, by violations of human rights on a scale unthinkable since the end of the Second World War. The liberal paradigm, that shaped politics and economics of the post-1989 world, seems to have reached its limits, while the predictions of world society paradigms - starting with Karl Polanyi - gain in relevance. Our book is limited in aim and in scope - and well aware of future possibilities for further research both in terms of the sophistication of mathematical-statistical models as well as in terms of the data at our disposal and has the aim to provide a cross-national analysis of the post-1989 tendencies of world development that is both timely and politically relevant.
'Critical' thinking about the world economy and world politics, that again and again achieved to catch the imagination of a scholarly public even in a country, where the values of the free market economy are as firmly entrenched as they are in the USA - has always been, that it hinted at the darker, possible outcomes of events to come, and that it showed to the world the continued relevance of the mechanisms of great power rivalry, conflict, and the relevance of dependence, of the cyclical ups and downs of the world economy, and finally, of both the 'outer' i.e., environmental, and the 'inner', i.e. gender frontiers of the existing world social order. It is no coincidence, that precisely now, after years of silence in Europe, a book, written by two German speaking journalists - Martin/Schumann, 1996, has become a best-seller. Globalization. As if the issue had not existed before. All of a sudden, Europeans begin to discover that their societies and economies are being exposed as well in an almost ruthless fashion to the pressures of the globalization process, like the rest of the world has known for many years. With the fall of the Berlin Wall and the so-called End of the Cold War, the capitalist world economy found opportunities, qualitatively and quantitatively unheard of only a decade ago. Suffice to re-read today the still relevant volume edited by Christopher K. Chase Dunn (1982) to see what today has become possible in terms of transnational capitalist expansion and penetration into the world of former 'real socialism'. Even in the most populous former or still communist-party-ruled countries of the world, the central state as an economic actor (in the sense of activity) is out, while transnational investment is in. Let us compare here China, Vietnam, Myanmar, Ethiopia, Poland, Russia, and the Ukraine, whose population each will exceed 35 million inhabitants by the year 2000. All governed by elites in the 1980s, whose common denominator was an official rejection of 'Western' capitalism, often associated in their official propaganda with decay, rottenness and what more, their central governments today withdraw from the economy or have already done so long ago, and are actively engaged in promoting foreign direct investments from the very same transnational companies which once were bedevilled in the propaganda in the 1980s and earlier on. The average Eastern European former communist country is the host to FDIs, which amount to 7.4% of their respective national products, in former Soviet Central Asia this percentage is at 3.3%; while in China the ratio is now at 17.9% (UNCTAD, 1996). Scholarly articles are being published today that claim that this or that piece predicted the demise of real socialism. But if ever there were correct predictions about the future of 'real socialism', they were contained in Chase-Dunn (1982), pointing in the direction of an increase in both qualitative and quantitative terms of the power of the transnational economy in Eastern Europe, in Russia and its historical inner perimeters since the expansion of the Russian state into Asia.
Another notion also figures prominently here: the notion: capitalist development is characterized by strong cyclical fluctuations, that are parallel to political and social instabilities and changes, both at the national and the international level.
The basic methodological innovation of this work is the idea, that the cross-nationally observable 'laws' of development that determined, why some nations had a more rapid ascent than other nations, that declined, stagnated or even dissolved during an earlier cycle, might be different during a new, evolving cycle. In a way, this notion goes back to the thought of Giovanni Arrighi, who proposed in his provocative analysis of the 'Long 20th Century' (1995) the thought that the logic of accumulation on a world-scale is governed by the ups and downs in the succession of regulation and de-regulation, starting from the Venetian (regulatory) and Genoese (deregulated) era of capitalism, followed by the Dutch (regulatory) and British (deregulated) era, and the US hegemony, which after 1945 was a regulatory model. From the late 1970s, however, we witness, Arrighi's argument goes on, again the renewed rise of a deregulated model of world capitalism.
We agree with Arrighi that the rise of financial capitalism and the decline of productive capitalism are always connected to major shifts in the location of the centres of world capitalism, first from Venice to Genoa, followed by the shift from Genoa to Amsterdam, from Amsterdam to London, from London to New York, and from there on to the capitalist archipelago of East Asia today (Arrighi, 1995). Arrighi also introduced the important notion, that there is a certain coexistence in the time-perspective between the 'different logics', so that elements of the waning and elements of the emerging order might coincide for years. Arrighi's sequential model of world capitalism is also a historic interpretation of the old Marxist notion of financial expansion - > material expansion- >financial expansion (MCM'), and as such radically challenges the notion of 'unchanging' general laws of rise and decline under world capitalism. Following Arrighi, we postulate that regulatory strategies might have been well compatible with growth under the rise of the Venetian, Dutch, and American era, while at the time of the rise of 'deregulation', such deregulatory strategies and not 'big government' will be conducive to economic growth.
There were dozens of articles being published on these 'laws' of development in world society, with the quantitative dependency argument perhaps most clearly having been stated by Bornschier and Chase Dunn in 1985. The basic two questions are then:
a) do these 'laws' still hold and are they still in force after the world went through the recession of the late 1970s and early 1980s?
b) do these 'laws' still hold for new phenomena, like social, ecological, and human development, as well as gender disparities, that more and more become an intrinsic part of the capitalist world system, and that, better than economic growth, express ascent and decline in world society today?
We present our results, ideas and prescriptions in the light of the preliminary evidence. Readers of this book are invited to try out for themselves the analytical possibilities, opened up by the use of the LOTUS-format UNDP data sets and the UNCTAD data series about foreign capital penetration that surpass in any way older and still to be encountered data series. The UNDP, with its almost unique data series, opened the way for a cross-national quantitative debate about environmental decay, gender inequality, human development, capability poverty, and many other issues at the same time. Instead of relying on economic growth as the main explanandum, and leaving other issues to specialists from other departments (geographers, social anthropologists etc.), the interdisciplinary nature of today's social issues compels social research to be inter-disciplinary in focus. If anything, this book attempts to be an impassionate plea for cross-national research, especially in the United States of America, where this tradition is now long established, to take up the challenges of such question writing and to further test and develop the hypotheses, presented here.
What also should be carried over into the debate is the pressing need to focus our research capabilities on the variety of crisis symptoms that the world is now facing. Where the present author especially agrees with Joshua Goldsteins results is the emphasis on the fact, that the next 25 years will be determining the issue of war and peace for the next century.
About a quarter of a century ago, a Chilean social scientist, Osvaldo Sunkel proposed in a widely received article under the title: 'Transnational capitalism and national disintegration (in Latin America)' the provocative thought, that transnational investment and integration might go hand in hand, under certain conditions, with an increasing relative social polarisation between rich and poor in the host countries of the evolving transnational system and on the international level. At that time, Sunkel said:
'The interpretation so far advanced suggests that the international capitalist system contains an internationalized nucleus of activities, regions and social groups of varying degrees of importance in each country. These sectors share a common culture and 'way of life', which expresses itseflf through the same books, texts, films, television programmes, similar fashions, similar groups of organization of family and social life, similar style of decoration of homes, similar orientations to housing, building, furniture and urban design. Despite linguistic barriers, these sectors have a far greater capacity for communication among themselves than is possible between integrated and marginal persons of the same country who speak the same language (...) Modernization implies the gradual replacement of the traditional productive structure by another of much higher capital intensiveness (...) On the one hand, the process of modernization incorporates into the new structures the individuals and groups that are apt to fit into the kind of rationality that prevails there; on the other hand, it expels the individuals and groups that have no place in the new productive structure or who lack the capacity to become adapted to it. It is important to emphasize that this process does not only prevent or limit the formation of a national entrepreneurial class, as indicated by Furtado, but also of a national middle class (...) and even a national working class. The advancement of modernization introduces, so to speak, a wedge along the area dividing the integrated from the segregated segments (...) In this process, some national entrepreneurs are incorporated as executives into the new enterprises or those absorbed by the TRANCO (i.e. transnational corporations), and others are marginalized; some professionals, forming part of the technical staff and the segment of employees are incorporated, and the rest are marginalized; part of the qualified labour supply and those that are considered fit to be upgraded are incorporated, while the remainder are marginalized.
The effects of the disintegration of each social class has important consequences for social mobility. The marginalized entrepreneur will probably add to the ranks of small or artesanal manufacture, or will abandon independent activity and become a middle class employee. The marginalized sectors of the middle class will probably form a group of frustrated lower middle class people trying to maintain middle class appearance without much possibility of upward mobility and terrorized by the danger of proletarization. The marginalized workers will surely add to the ranks of absolute marginality, where, as in the lower middle class, growing pools of resentment and frustration of considerable demographic dimension will accumulate (...) Finally, it is very probable that an international mobility will correspond to the internal mobility, particularly between the internationalized sectors (...) The process of social disintegration which has been outlined here probably also affects the social institutions which provide the bases of the different social groups and through which they express themselves. Similar tendencies to the ones described for the global society are, therefore, probably also to be found within the state, church, armed forces, political parties with a relatively wide popular base, the universities etc.' (Sunkel, 1972: 18-42).
The polarisation effects in relative terms along the welfare borders of the world, which happen to be the outward borders of the economic integration zones, built up by the rich countries, are the basic conflict that confronts the process of transnational integration, and especially European integration today. The second basic conflict is the tendency towards increasing social exclusion in the trasnationally integrated core areas themselves.
Transnational corporations and their foreign investments are the cornerstone of the international system, as Osvaldo Sunkel so correctly foresaw in his penetrating analysis a quarter of a century ago. The outward stock of foreign direct investments of 39000 parent firms in their 270000 affiliates reached $2.7 trillion in 1995. The gross product of foreign affiliates amounted to 8.7% of home country GDP in the countries of the European Union in 1991, the last year with available data. In North America this ratio stood at 6.4%, in the LDCs at 6.5%, and in Central and Eastern Europe at 1.3%. On a world level, the TNCs control 6.4% of the world gross domestic product. In Eastern Europe, too, this relationship is on the rise, with the transnationals now controlling - through their FDI stock - up to 15.6% of the GDP of Eastern Europe, like in Hungary, 1994. The sales of foreign affiliates amounted to 116% of the total of world exports of goods and non-factor-services in 1982; this ratio now has risen to 127.9% (UNCTAD, 1996). For ages, economists have warned repeatedly against the danger of monopoly capitalism. Kalecki and Rothschild should be specially mentioned in this context here. An ever larger proportion of world trade is nothing but trade between the affiliates and headquarters of transnational corporations.
The international system, in addition, is not only a system of social and economic polarisation, it is also a system of recurring international long-run tensions, that erupt along these socio-economic conflict lines. Ever since the days of Akerman's pioneering study, published with Macmillan's before the Second World War, social scientists have studied by quantitative methods the connection between economic long cycles and major wars, among them Modelski, 1987, and Goldstein, 1988. International tension has characterised the world system since 1450 in ups and downs, that have led the world to three catastrophic world wards (Goldstein, 1988). Whether there is room for optimism now, after the end of the so-called Cold War, will be finally decided, among other factors, by the growing tension between the human species and the environment. Each day, 140 species are condemned to extinction; the CO2-content in the atmosphere is 26% higher than at the beginning of the industrial age; the earth surface was warmer in 1990 than at any point since the middle of the 19th century, when measurements began; each year, a forest area of the world as big as Finland is being destroyed, and each year, another Mexico is being added to the world's population (World Watch Institute Report, 1992).
Rather than predicting the end of history, the acceleration of history might loom ahead. Sunkel foresaw then, from the viewpoint of his structural economic theory, many of the problems that seem to beset the post-1989 world. In 1993, 76% of the stock of world-wide foreign direct investments were still anchored in the old industrialised countries, and only 23% in the developing countries. Although 40% of all investment flows between 1990 and 1994 went to the LCD's, 4/5 of which to the top ten among the semi-industrialised or newly industrialised nations (China, Singapore, Argentina, Mexico, Malaysia, Indonesia, Thailand, Hong Kong, Taiwan and Nigeria), European leadership towards growth for the European East in an ecologically sustainable way is one of the main tasks of rebuilding the world-economy. Between 1990 and 1994, the share of the 'triad'(US+CND; Japan; EU) in world GNP rose from 50.3% to 50.7%; the share of the rest of Asia rose from 17.2% to 23.1%, while the participation of Eastern Europe and the ex-USSR in the world economy was nearly wiped out and reduced to half in less than a decade - from 10.9% to 5.3% of world GNP. Will Europe be able to lead to growth for the East, or will - what a bleak, though nonetheless realistic scenario, the stagnation of the East between 1990 and 1994 become the future of the West of the continent (our compilations from Stiftung, 1993, and 1996)?
The gaps between the rich centre in Europe and the surrounding peripheral and
semi-peripheral areas are part of the economic, ecological and social history
over the last 500 years. They continue to exist today, and if anything, have
deepened since the 1980s. In terms of most welfare indicators, as calculated by
the UNDP, the East (Eastern Europe and the former USSR) and the southern rim of
Europe (the Arab world), are as distant from 'us', the European Union, as the
'Haves' and the have-nots are devided from each other at any welfare border
around the world, be it on the shores of the Rio Grande or across the China Sea.
At the same time, the population balance, and the balance of military forces
shifts in favour of the poorer nations, that surround the rich man's land, the
European Union, beset by a growing number of internal problems, like
unemployment, drugs, crime, environmental decay, and ageing populations. The
following calculation from UNDP-data, 1995, shows the dramatic character of the
welfare gap at the outer borders of the Union:
East-West-gap North-South-gap
for the European Union, by around 1995
real purchasing power 1:3.5 1:4
life expectancy 1:1.12 1:1.22
share of world industrial GNP 1:8.5 -
defence expenditures 1:6.1 1:1.8
population potential, 2000 1:0.9 1:1.3
military personnel 1:1.8 1:1
total GDP 1:9 -
The East's challenge to the ageing north-west is its population and thus
migration potential, its high military personnel ratio, but the East's unease
number one is its low share in world total GDP and industrial GNP. The South's
challenge in military terms has been building up over recent years, combined
with a rapid population growth and still existing large-scale poverty. Let us
hope and work for peace in the Middle East; but if that is not achieved quickly,
and development in the Arab world does not reach down to the poorest strata,
centuries of unequal exchange, foreign rule and neglect could combine with the
archaic weight of religious tradition - then the dar al harb, the world
of war and disbelief will be held responsible for 80 million illiterates, for
the 73 million poor, for the 12% of resources, spent on arms, for the scarcity
of water that affects 55% of the Arabs. If the balance will not be achieved by
political and economic means within the next 25 years, then migration and the
military expansion of the desperate nations will attempt to redress the balance.
With real purchasing power parity rates, the gaps are today:
Japan - East Asia (excl. China) 1:2.6
Europe - Eastern periphery 1:3.5
Europe - South 1:4
North America - Latin America 1:4.1
The professional political optimism of our times in Europe holds, that after
overcoming the transformation crisis, Europe will re-unite and catch up with the
competing market economic centres. Another vision might hold though that the
inability of the East to find a proper niche in the world market might spill
over to the West of the continent. Social scientific thought in the long-term
policy planning and development research tradition - in Austria of Otto Bauer,
Karl Polanyi, Joseph Alois Schumpeter, Kurt Rothschild and many other social
scientists, would dare to ask, whether or not the crisis and final collapse of
communism, in the end, is the product of the one and single movement in world
economic dynamics away from the European landmass and the Euro-Atlantic region
towards the Pacific. GDP real growth, p.a., from 1986-95 was:
Asia +7.3%
LCD's in the Middle East and Southern Europe +3.7%
Latin America +2.6%
USA +2.5%
Japan +2.5%
EU +2.4%
Africa +2.4%
Eastern Europe -1.9%
CIS -4.2%
Source: Stiftung Entwicklung und Frieden, 1996
Re-reading Osvaldo Sunkel's penetrating analysis, written over thirty years
ago, one is struck by the parallels between the Latin America of yesterday and
the Eastern Europe of today. One of the most recurrent predictions of
structuralists as Osvaldo Sunkel, Raul Prebisch, and many others would be that a
country, specialising in investment goods and other manufactures has a much
better chance for long-run and stable development than nations, specialising in
raw materials and semi-finished products. Samir Amin and other critics of the
Union have maintained, that the structure of trade relations with the outer rim
of the Union favours unequal specialisation, and prolongs the periphery's trade
in raw materials and semi-finished products. Just that that seems to have been
the case from 1980 to 1992:
Graph 1.1: Structural dependence of the European East
Legend: right-hand scale: semi-finished products; left-hand scale: raw
materials per total exports. Source: our own compilations from Stiftung
Entwicklung und Frieden, 1996
While other regions could advance and received a fairer share of the world
market, Eastern Europe was increasingly marginalised. More and more, there seems
to be a 'legal' and a parallel illegal core of the world economy. What the legal
economy cannot redress, the illegal economy will. The mafias around the world
have a turnover of more than $ 500 thousand million a year alone from the
narcotics' trade. Each year, $ 85 thousand million in drug profits are
'laundered' through the financial markets. The new, speculative character of the
global market economy dictates, that even legal transnationals have to earn much
of their profits from speculation on the international financial markets. With
that, the basic instability of the international system increases (UNDP, 1994,
1995; Stiftung Entwicklung und Frieden, 1996). Among the most powerful groups,
threatening the very fabric of legal society in western countries today, are the
following large illegal transnational corporations (with their estimated
turnover)
La Costa Nostra (USA) 100 thousand million $
Colombian cartels (Colombia) 15 thousand million $
Italian organised crime (Italy) 100 thousand million $
Cosa Nostra
Camorra
Ndrangheta
Sacra Corona Unita
Yakuza (Japan) 120 thousand million $
(Source: our compilation from Raith, 1995)
Newcomers, like the Russian Mafia groups, and formally regional groupings, like the Chinese triads, are expanding rapidly as well into the core areas of the world-wide market. By the year 2020, the expansion of these and other criminal corporations will be not a threat, but a reality (Raith, 1995). The logic of accumulation of these large, transnational criminal corporations seem nowadays to reflect the growing weight of 'flexible specialization', while the earlier, post-1932 model reflected 'corporatist structures' (Behan, 1996).
The core of the transnational economy, Sunkel and many others observed, used
to be the legal transnational corporation and the legal transnational bank. From
1991 to 1993, the following growth rates were observed:
world GDP +1.6%
world trade +3.1%
world-wide stock of FDI +8.0%
sales of the foreign affiliates of transnational corporations +20.0%
Source: our own compilations from Stiftung Entwicklung und Frieden, 1996
More than $ 1000 thousand million are shifted around each day by way of
international financial markets. The cumulative debt of the developing countries
reaches the staggering proportion of $ 1945 thousand million, and will tend to
grow by around 1998 to $ 2600 thousand million dollars:
Graph 1.2: The debt crisis of the world periphery
Legend: our own compilations from Stiftung Entwicklung und Frieden, 1996
The problem of international development, to a large extent, is also the
problem of underdevelopment and poverty, in which a large part of the
malnourished children of this world grow up - 11 - 19 countries, which, in
addition, have to shoulder a large part of the world refugee problem as
well:
Graph 1.3: The 11 - 19 main crisis points in the world system
| refugees in thousands | malnourished children in millions | ||
| Iran | 2495 | 1,64 | |
| Philippines | 3 | 3,024 | |
| Indonesia | 2 | 8,768 | |
| China | 288 | 19,317 | |
| Vietnam | 5 | 4,413 | |
| Myanmar | 2,326 | ||
| Pakistan | 1480 | 9,409 | |
| India | 260 | 61,775 | |
| Nigeria | 5 | 6,975 | |
| Bangladesh | 199 | 10,994 | |
| Ethiopia | 248 | 4,749 | |
| Rest LDCs | 6805 | 23,55 | |
Country estimated number of poor people
according to the capability-poverty-measurement-scale
| Mexico | 14,5847 |
| Brazil | 15,16 |
| Turkey | 12,1264 |
| Thailand | 11,6894 |
| South Africa | 11,8256 |
| Philippines | 18,3744 |
| China | 204,8725 |
| Iran | 17,8502 |
| Algeria | 12,672 |
| Indonesia | 79,3971 |
| Morocco | 12,7729 |
| Egypt | 23,4232 |
| Pakistan | 73,872 |
| India | 530,5605 |
| Tanzania | 10,5986 |
| Zaire | 17,2542 |
| Nigeria | 57,8436 |
| Bangladesh | 89,5116 |
| Ethiopia | 36,0314 |
| Rest | 172,2797 |
Source: our own calculations from UNDP, 1996 and the data-base of this
work
Globalisation negatively affected the lives of around 1.5 thousand million
people on earth, whose per-capita incomes were lower than in earlier decades.
These 1.5 thousand million people live in around 100 countries; while 15 nations
experienced rapid capitalist development over the last decade. Among the world's
desperate nations, 43 countries had a per-capita income which was lower - in
real terms - than that of the 1970s. The poorest 20% of the world saw their
share in global product reduced from 2.3% to 1.4% over the past 30 years. The
share of the richest 20% rose from 70% to 85%, with the differences between
these two rising from 30:1 to 61:1 (UNDP, 1996). In the developed core countries
of the world economy alone, 100 million people are categorized as poor, and 30
million are homeless. In the Federal Republic of Germany alone, 900000 people
are homeless, nearly 5 million people officially have no job, and 7.5 million
are poor (Orientierung, 60, 1996: 204). 385 persons on our globe - 358
billionaires- have an income that is greater than the yearly income of the
combined poorest 45% of our globe. The wave of the world recession - or as
we prefer to say, the Kondratieff B-phase - first hit Africa in the 1970s, and
rolled on to hit Latin America and the Arab world in the 1980s and Eastern
Europe in the 1990s. Even in the highly industrialised countries, capitalist
development became more and more
(i) jobless: in the countries of the European Union in 1993, there
were 16.86 million unemployed people. In the industrial countries as a whole,
there are 30 million people out of work.
(ii) ruthless: global GNP grew by 40%, but the number of poor grew by
17%. In the European Union, the ratio between the richest 20% and the bottom 20%
is now 7.5 in France, 9.6 in the UK, 7.1 in Denmark, 5.8 in Germany, and 6.0 in
Italy. Each year, damage to forests due to air pollution leads to economic
losses of about $35 billion - about the annual GDP of Hungary. In Europe, the
number of poor people increased within half a year from 50 million to 80 million
(Afheldt, 1994)
(iii) voiceless: human and political rights performance on a global
scale has deteriorated in many countries according to the well-known Freedom
House data series (Stiftung, 1996); even in the countries of the European
Union, the following performances in 1993 were below the maximum value '1'
Germany: civil rights 2
France: civil rights 2
Greece: civil rights 3
Great Britain: civil rights 2
Northern Ireland-political rights 5
civil rights 4
Irish Republic: civil rights 2
Italy: civil rights 3
Spain: civil rights 2
More than 100 million people live below the official poverty line in the
industrial countries, more than 5 million are homeless. The poorest 40% receive
only 18% of total incomes. Women receive on average only 2/3 of the income of
males; and hold only 12% of parliamentary seats
(iv) rootless: 10000 cultures of humans and millions of species are on
the verge of disappearance world-wide; local human dialects, cultures and
accents, disappear also in Europe at a rapid pace. Nationality conflicts and
regional conflicts have increased in many countries of Europe over the last
decade. Low-quality satellite TV more and more substitutes national TV output;
the transnational economy dominates more and more domains of radio, TV, and the
press. Even in EU countries, nationally made films amount from only 2% (Greece)
to 34.9% (France) of all films shown in cinemas. The US film industry holds a
market-share of 2/3 or ¾ and more. At the same time, social deviance increases
in the age of rootless growth or stagnation. In the European Union, there were
77 prisoners per 100 000 people in 1987; now there are 87. The intentional
homicide rate is Union-wide 7.7 per 100 000. 44% of all male EU adults smoke
(women: 25%), alcohol consumption is 9.6 litres per capita and year, and the
male cancer rate is 235, the female cancer rate is 171 Union-wide. Television
takes up now some 40% of the free time of the average American, and
participation in voluntary associations such as the Red Cross has declined by
25-50%. The basic networks, necessary for the functioning of democracies, are on
the retreat around the globe. Trade Union membership rates declined in the
Netherlands from 39% in 1978 to 25% in 1991; from 30% to 15% in the USA et
cetera. In the Union as a whole, trade union membership declined from 37% in
1970 to 33%; in Austria and in many other countries, the decline was even more
dramatic (from 62% to 46%). Nearly 130000 women are reported annually to be
raped in the industrial countries.
(v) futureless: annual fresh water withdrawals amount to 862 m^3 in
the Union. Commercial energy use in oil equivalents is 3588 kg per capita in oil
equivalents, and each year, the Union produces 15.13% of the world's greenhouse
gas emissions, 3373 metric tons of heavy metal from nuclear reactors, 48220 tons
of hazardous highly-toxic waste. The average Union citizen produces 399 kg of
municipal waste a year, and recycles only 45% of his or her paper and 52% of his
or her glass. 2 million people are already affected with HIV.
In the developing countries, despite the increases in life expectancy over 1960-93, the spectre of poverty is still overwhelming. 1.3 billion people are to be classified as poor, 800 million people do not eat enough food, and 500 million are chronically malnourished. Each year, 20 million hectares of tropical forests are degraded or completely cleared; there are now 11 million refugees in the developing countries, and entire regions are affected by destabilisation and war, most notably the lake region of East-Central-Africa, wide areas of Central Asia, and some countries of West Africa.
Instead of an end of history, global or regional anarchy in countries like Kampuchea, Somalia, Yemen, Afghanistan, Tajikistan, Georgia, Liberia, Sudan, Bosnia, Ruanda, Burundi, Angola, and Mocambique seems to be likely. In a very brilliant commentary, Rudi Dornbusch thinks that another Mexican crisis - or rather Peso desaster for the world economy - is likely (Dornbusch, in Business Week, November 25, 1996). The capacity of the US to act as a global policeman under such circumstances is severely constrained by the secular balance of trade deficit of the US economy, not being offset by an enough positive balance of services and payments.
The contradictions of capitalism today are truly global: during 1965-90, world merchandise trade tripled, and financial cross-border flows exceed a trillion US $ a day. In the light of the empirical research results of macroquantitative social sciences, we have to start from the assumption here, that MNC penetration, i.e. the relationship between MNC investments and the size of the economy of the host country, has unfortunately a long-term structural negative effect, that goes beyond the earlier Kondratieff-cycle that ended by around 1982; affecting development in the contemporary, post-1982 world. The main reason for the short-term dynamic, but long-term structural negative effects of FDIs have been often seen by economists and other social scientists to be the structural inability of the host country to achieve a process of their own proper savings, and positive trade and current account balances. The negative effects of transnational foreign investment dependence on the more long-term growth of societies in the world system are demonstrated by the effects of the UNCTAD variable 'share of inward FDI stock in gross domestic product' by around 1985 on subsequent growth and redistribution.
As it is well-known, the current account balance is the broadest measure of a nation's trade and world market performance. For the neo-classical economists, this is mainly so, because import substitution and market imperfections are at work in the highly penetrated countries, while for the dependency-schools, the monopoly situation of large corporations alongside a backward or semi-backward business environment create outflows due to transferred profits and royalties, that are much higher than inflows in the long run.
The internationally comparable economic and social data from the World
Development Report 1996 by the World Bank make this point for the transition
economies very clear. Poland, with its recent spurt of economic growth already
often termed the 'European tiger', achieved a per-capita-income in
internationally comparable $ of 5480 $. The current account balance before
official transfers amounted to -3.1% of GNP in 1994, and the net value of the
external debt amounted to 37% of GNP. On the positive side for Poland, official
development assistance amounted in 1994 to 2.0% per GNP, the highest value for
all the transformation countries in Europe with complete data except Albania.
But the 27% of population, who live from agriculture, just receive 6% of the
total GNP - an expression of the perennial structural heterogeneity of Polish
society, that characterises the country from the Long 16th Century onwards.
Graph 1.4: The demand side of the distribution of gross domestic product in a
Tiger economy and in a successful transformation country - Singapore and Poland
compared
Legend: our own compilations from World Development Report, 1996, World
Bank
The following comparison might again be dramatic, but it tries to drive home
an important point: Europe is too restrictive in its economic relations with its
periphery. The annual growth rates of exports and imports after transformation
also clearly show the difference between Europe's restrictive interaction with
its peripheries and the East Asian growth model, based on labour-intensive
exports:
Poland Singapore
export growth, 1980-90 +4.8% +12.1%
export growth, 1990-94 +3.9% +16.1%
import growth, 1980-90 +1.5% +8.6%
import growth, 1990-94 +26.3% +12.1%
The policy approach, that is at the basis of this study, realistically
assumes that the following determinants will be of the utmost importance for the
success or failure of the project of European integration and European
unity:
(i) Europe is characterised by the typical 'mix' of countries that are doomed
to stagnation
(ii) Europe must come to terms with the 'new' social problems arising from
the contradictions of the process of global environmental destruction, to which
Europe as one of the main regions of world industry and traffic
disproportionately contributes, and Europe must find a proper way for gender
empowerment
(iii) Europe must come to terms with the contradictions of world cultures and
world cultural conflict, global anarchy and global decay
(iv) Europe must come to terms with the contradictions between Europe, the
developed centre, and its Eastern European periphery, and the problems of
political instability, nationalism, and unequal development, that the present
form of interaction between the centre and the periphery bring about
(v) Europe must come to terms with the contradictions of the process of the
ageing of democracies, especially phenomena which one might term sclerosis
bruxelliana and sclerosis Europea
Development is seen here as a multi-dimension process in the tradition of
recent UNDP-centred research. Apart from per capita income growth, our
indicators also analyse the maintenance of growth during the changing conditions
of the post-1980 world as compared to the development experience from 1965 to
1980. Our measurements of development include, among others, life expectancy,
life expectancy increases, political rights violations, human rights violations,
the UNDP human development index, the UNDP gender-related development index, the
UNDP gender empowerment index and, last but not least, the UNDP greenhouse index
as an indicator of pollution. The human development index weights longevity,
income, knowledge and standard of living. It is composed of per capita incomes,
education and life expectancy variables. We also control for the effects not of
internal, but international distribution coalitions as a co-determining factor
of ascent and decline in the world system. These international distribution
coalitions are closely linked to the number of years that a country is member of
the UN.
2) The theoretical framework: what can policy-makers know about the
ascent and decline in the world economy?
Above, we already mentioned some of the controversies that surround the process of globalisation. The world view of this analysis holds, that the transnational system is characterised today by two basic tendencies (i) the tendency towards globalisation (ii) the tendency towards an erosion of the world political order that shaped the world after 1945. Because of the phenomenon of dependency and unequal exchange, there could be an underlying tendency towards conflict in the world system again, as already happened during the earlier world political cycles from 1495 - 1618, 1648 - 1791, 1816 - 1945.
The transnational world-wide market economy has expanded tremendously since
the early 1980s. A look at transnational investment flow statistics shows this
process in all clarity:
Table 2.1: Global patterns of foreign direct investments, 1975-1995, in
billions of $:
| total outflows | 1975-79 | 1980-84 | 1985-89 | 1990 | 1991 |
| from US | 15,9 | 9,6 | 22,8 | 33,4 | 29,5 |
| from Japan | 2,1 | 4,3 | 23,8 | 48 | 30,7 |
| from EC | 14,2 | 20,9 | 59,4 | 97,5 | 80,5 |
| other industr. | 2,5 | 6,2 | 22,4 | 30,6 | 24,8 |
| LDCs | 0,6 | 1,4 | 6,5 | 12,9 | 11,8 |
| total industr. | 34,7 | 41 | 128,4 | 209,5 | 165,5 |
| total | 35,3 | 42,4 | 134,9 | 222,4 | 177,3 |
| total inflows | 1975-79 | 1980-84 | 1985-89 | 1990 | 1991 |
| to US | 6,1 | 18,6 | 48,2 | 37,2 | 22,2 |
| to Japan | 0,1 | 0,3 | 0,1 | 1,8 | 1,4 |
| to EC | 11,4 | 14,2 | 38,4 | 85,9 | 67,7 |
| other industr. | 2,3 | 3,1 | 11,4 | 23,8 | 23,9 |
| LDCs | 7 | 16,4 | 19,5 | 30,9 | 42,7 |
| total industr. | 19,9 | 36,2 | 98,1 | 148,7 | 115,2 |
| total | 26,9 | 52,6 | 117,6 | 179,6 | 157,9 |
| OECDinflows | OECDoutflows | LDCinflows | LDCoutflows | CEEinflows | CEEoutflows | |
| 1990 | 169,8 | 222,5 | 33,7 | 17,8 | 0,3 | 0,04 |
| 1991 | 114 | 201,9 | 41,3 | 8,9 | 2,45 | 0,04 |
| 1992 | 114 | 181,4 | 50,4 | 21 | 3,77 | 0,1 |
| 1993 | 129,3 | 192,4 | 73,1 | 33 | 5,59 | 0,2 |
| 1994 | 132,8 | 190,9 | 87 | 38,6 | 5,89 | 0,55 |
| 1995 | 203,2 | 270,5 | 99,7 | 47 | 12,08 | 0,3 |
| EU inflows | EU outflows | EU balance | US+CNDinfl. | US+CNDout. | US+CNDbal. | Jap inflows | Jap outflows | Jap balance | |
| 1984-89 | 37702 | 62641 | 24939 | 48656 | 21511 | -27145 | 81 | 20793 | 20712 |
| 1990 | 97387 | 132959 | 35572 | 55773 | 31900 | -23873 | 1753 | 48024 | 46271 |
| 1991 | 77715 | 106842 | 29127 | 24760 | 39111 | 14351 | 1730 | 42619 | 40889 |
| 1992 | 79812 | 108716 | 28904 | 22097 | 42613 | 20516 | 3490 | 21916 | 18426 |
| 1993 | 74467 | 91488 | 17021 | 46125 | 74803 | 28678 | 234 | 15471 | 15237 |
| 1994 | 64017 | 101070 | 37053 | 55803 | 50421 | -5382 | 908 | 18521 | 17613 |
| 1995 | 111920 | 132285 | 20365 | 71418 | 100291 | 28873 | 39 | 21286 | 21247 |
Source: our own compilations from Bailey, Parisotto and Renshaw, 1993, and
UNCTAD, 1996
It might very well be possible that the following trends emerge from the
international inflow and outflow statistics:
Graph 2.1a: Capital flows, projected from outflow and inflow data 1984 - 1995
from major economic regions. North America will become the major source of
capital outflows over the coming years
Graph 2.1b: Capital flows, projected from outflow and inflow data 1984 - 1995
from major economic regions. The scenario is optimistic for the LDCs and Eastern
Europe
Source: our compilations and projections from the data, quoted in Stiftung,
1996, UNCTAD, 1996
The United States current account balance deficit widened to $ 35.59 thousand million in the first quarter of 1996 from a revised $ 30.44 thousand million in the fourth quarter of 1955. Acquisitions of foreign assets by US residents slowed sharply, and total net capital inflows of $43.1 thousand million were recorded in the first quarter of 1996. Apart from the USA, the LDCs - especially in East and South Asia and the Americas - will become the major investment areas of the international order, while Europe as a whole loses (with shifts between Western and Eastern Europe still being likely). Thus, Eastern Europe could become again a contested zone of influence - in between the eastward expansion of west European, Asian and North American capital and a newly asserted Russian power projection.
Why some nations grow faster than others, is an explosive issue of
international relations, that contributes towards the distribution conflicts in
the international system, especially after the end of the 40-to 50 year
hegemonic periods that characterise the world economy after 1618, 1816, and
1945. Among the theories of social science, claiming compatibility with the
empirical findings of cross-national policy planning and development research,
are those dealing with international competitiveness, liberal theories of
institutional reform and transformation, and finally approaches in the tradition
of social safety and social dialogue, which claim that the factor of societal
'embeddedness' is the most important determinant of world development. Although
liberal approaches of institutional reform were rather dominant in the debate
after 1989, the other theories and policy approaches equally claim quantitative
evidence on a world scale in their favour. Our analysis of the theoretical
structure of the arguments will be rather short and condensed; all three major
approaches are presented in terms of their contribution to the evolving European
policies vis-à-vis the Eastern half of the continent.
Improving international competitiveness of the peripheral regions
surrounding Europe: the dependency perspective
Why some nations grow faster and socially and environmentally less contradictory than other nations, can be explained by various social science theories. Much amount of western aid, including EU aid, to the less-developed regions of the world is devoted to the dimension of international competitiveness. A brief look will suffice here to explain the theoretical backgrounds to this approach. Poor regions must be supported to achieve a sufficient level of international competitiveness. Hirschman, Kaldor, Kalecki, Mandelbaum, Rosenstein-Rodan, Rothschild and many other prominent economists, who knew the Eastern European region very well, were all very much aware of the problems of monopoly power and structural imbalances that are to be observed under conditions of 'market imperfection'.
The almost unlimited number of empirical studies on peripheral capitalism and development on a world level in the B-phase of the Kondratieff cycle from 1965 onwards go back, in a way, to the classic essay, published by Johan Galtung in the spring issue of the Journal of Peace Research a quarter of a century ago (Galtung, 1971). Scepticism about the expanding world order, dominated by the transnationals, as a tool for achieving stable market-oriented development persisted, the neo-liberal transformation literature in the wake of the earthquake of the revolution of the year 1989 in Eastern Europe and the breakdown of communism notwithstanding (Aslund, 1992; Sachs, 1993). The second 'Great Transformation' of our century, that from socialism back to the world-wide market economy, can be seen in the perspective of the specific globalisation aspects also inherent in the writings of Karl Polanyi: a Polanyian world view would hold, that authoritarian socialism in Eastern Europe crumbled like the old Hapsburg empire back in 1918 under pressure of the world market, that democracy had a chance in the region, as it had from 1918 onwards, but that this new chance, as the one in 1918 is now being at stake. For followers of the globalisation school, Polanyi's anthropology in a way foresaw the destabilisation, the nationalist warfare, the unemployment, the international conflict, the social decay, and the more than 800000 excess mortality cases since the transformation in the whole of Eastern Europe and the former USSR, as Cornia's UNICEF study so aptly put it in 1994. These phenomena also, the argument goes on, imply why in the East the lessons of 'critical' development theory should remain on the agenda. Political turmoil continues in some regions of Eastern Europe and the former USSR 7 years after the transformation, and transnational crime from the East and the South has become a very serious negative factor in international relations. Indeed, it is even plausible that the old big-power rivalries will continue under the new banner of culture and nationalism. Only four of the seventeen countries that adopted democracy during the Kondratieff cycle B-phase between 1915 and 1931 could save democracy; and today, freedom in the world is again on the retreat while violence and repression is on the increase. At the end of 1993, only 57.5%, that is, 107 out of 186 UN member countries had competitive elections and various guarantees of political and human rights (Lipset, 1994: 1).
Small nations in the world economy might find it difficult to get access to
bigger markets. That is one of the main themes of dependency theory. In Western
Europe, unemployment and early retirement rose dramatically, while in the USA
there was a considerable withdrawal from the labour force into crime (Wood,
1994). The institutional greater flexibility of wage labour in the US still
allowed for a better employment creation record than in Western Europe, with
both major regions of developed capitalism being affected by trans-border
migration and a growth of the shadow economy. The South's official exports of
manufactures to the developed countries have meanwhile risen to $ 250 thousand
million a year, and the developed countries' and East's industrial labour
intensive base shrinks rapidly. That there is a new international division of
labour seems to be increasingly out of the question. The cumulative effect of
the expansion of trade in manufactures and services with the South reduced the
demand for unskilled labour in the developed countries and the East relative to
skilled labour. In the developed countries, this amounts to a 20 percent
reduction in the relative demand for unskilled labour (Wood, 1994).
Transnational capital and its tendency to re-deploy the sites of production
world-wide is seen by the theories of neo-dependency and international division
of labour as the basic underlying cause of the crisis in the developed countries
themselves (Froebel et al., 1977-86; Ross and Trachte, 1990; Tausch and Prager,
1993). Wage and personnel side costs in industry per hour in a country like the
Federal Republic of Germany (alte Bundeslaender) or Sweden exceed those
in the United States of America by a ratio of approximately 2:1, those in a
country like Turkey by a ratio of 6:1 (Weltalmanach, 1995: 989-990).
Automatisation, work robots, rationalisation and personnel reduction are the
answer of capital vis-à-vis the high labour costs in industry in some
leading industrialised countries. Although some dependency authors, most notably
Chase-Dunn, 1984, dismissed this 'new international division of labour'
approach, millions of jobs, especially those of women, were lost in Northern
manufacturing over recent decades and were 'exported' to the East and the South.
There are very clear trends, this school maintains, towards peripherisation and
marginalisation of entire regions, social groups and industrial sectors in the
developed countries. Ross and Trachte were among the most prominent authors to
voice such concerns in the USA; in Europe, the 'Starnberg group' authors
Froebel, Heinrichs and Kreye advanced this point in a systematic fashion.
Graph 2.2: national origin of the foreign population of 16.9 million people,
living in the European Union countries
Legend: C&E Europe: Central and Eastern Europe, not yet members of EU;
EEA+CH: European Economic Area + Switzerland. Our own compilations from Salt,
1996
Graph 2.3: the legally employed foreigners as a percentage of the number of
total foreigners in selected European countries, 1980 - 1994 and projections
until 2000
Legend: the percentage of legally working foreigners per total foreigners,
1980 - 1994, and projections (polynomial expressions of the 3rd or 4th order)
until 2000 according to EXCEL 5.0
The market economies of western Europe first imported labour; now, with the transfer of production away from the European central zones, foreigners become increasingly marginalised. In the inner cities of countries like France, Germany, and Britain, real 'ghettos' develop, a process that began in the United States of America three or two decades ago. Women also have to suffer from these tendencies, as their jobs are being exported away to the still much-lower paid labour power of the periphery and the semi-periphery (Stiftung Entwicklung und Frieden, 1993). Neo-dependency schools would fear, that the most recent tendencies of world capitalism will strongly work against high female employment and create female unemployment, and they would expect two hypotheses to hold (i) transnational capital marginalises female labour power (ii) the dynamics of growth turn away from those countries, where women still have a strong position on the labour market. The measurement scale, compatible with such hypotheses, would be the share of women in total employment and it's trade-off with growth rates. The new indicator series, developed by the UNDP for the UNO-Women-Conference in Beijing 1995, provide a further testing ground for the different feminist social theories of world development.
In international feminist literature, it has been maintained for the logic of the preceding Kondratieff cycle, that the world system - especially penetration by transnational corporations - creates a sexist pattern of development, which leads to a growing marginalisation of women, especially in the periphery and semi-periphery. Feminist approaches in social policy would consider, that the share of women in the national legislature and the share of women in the total labour force reflect the positive role of women in society. More recent indicator series are available from the UNDP.
The heritage of the world depression in the 1980s, as was already explained in greater detail in Tausch/de Boer, 1997, is said to be unequal exchange, another important concept of dependency and world system theories.
The main operationalisations of the concept of dependence in this study will be MNC penetration, measured either during the B-phase of the preceding cycle or by the more recent UNCTAD-time series on the share of inward FDI stock in gross domestic product from 1980 to 1994, and more traditional indicators of dependency, like terms of trade or trade dependency. A great number of economic nationalists and neo-nationalists cherish such an argument. Their position in part would be at least understandable, if MNC penetration indeed were to contribute to underdevelopment in the long run, short-term spurts of growth notwithstanding.
The share of foreign trade per total GDP is for some social scientific
theories the symbol of the status of a nation as a small state in world society,
conducive to social compromise and world economic adjustment. Opportunity of
access to bigger markets will be deeply connected with this variable. Some
dependency schools would regard however the share of trade per total product as
an indicator of dependence (Hoell, 1983; Rothschild, 1944-1985). The main
theoretical expectation of the refined globalisation model in the tradition of
Cardoso can still be summarised as follows:
(2.2a) structural imbalance of the development process (like high
polarisation of income distribution, insufficient human development, political
or human rights violations) = constant + b1 * MNC penetration index + b2
* trade dependency index - b3 * terms of trade index
while 'classic' small state theories and early macroquantitative studies of
development in addition would expect:
(2.2b) economic growth = constant - b1 * MNC penetration index
- b2 * trade dependency index + b3 * terms of trade index
The liberal and social reformist perspective: creating the
institutional environment in the periphery and semi-periphery
The presentation of the liberal and socio-liberal counterpositions to the dependency approach will be rather condensed. The basic problem of institutional reform in the less developed part of the world economy is the creation of a market economy, based on private property in the framework of democracy. Over recent years, the liberal doctrine challenged the near dominance of globalisation-paradigms in international social science that was evident in the late 1970s and the early 1980s. During the 1980s it became the dominant paradigm of politics in the USA, the UK and many other places. For the transformation countries of Eastern Europe it had a paramount importance. There are certain myths and fallacies involved in the interpretation of these theories.
First of all, - and this might be perhaps surprising to many - there
is a certain structural similarity between many of the arguments from
dependency theory and liberal development theory, once you 'translate'
one theoretical language into the other and vice versa. As the Economist
paper put it on October 26, 1996:
'although some investment can be financed by foreign money, high savings
rates will be needed to pay for the accumulation of capital and thus to boost
growth rates'
For a true liberal economist, dependency is a special situation of the typical constraints, caused by a policy of import substitution and export discrimination. Policies, that create double deficits (huge current account balance deficits + large state sector budget deficits) and discriminate against internal savings, will lead to a high propensity to import foreign capital, often still aided by de-iure or de-facto policies that prevent enterprise creation and savings mobilisation. The growing peripherisation of the United States of America should be also mentioned in this context. According to the World Bank World Development Report, 1996, the current account balance of the United States in 1994 before official transfers was the largest single negative current account balance in the world ($136.484 thousand million); the current overall central government deficit per GNP in 1994 was 3%. Neo-classical economists would agree with 'dependentistas' in their critique of import substitution strategies, currency overvaluations, and - hence - the discrimination against exports in benefit of the urban sector and to the detriment of rural society. The basic argument of such a sophisticated version of the neo-liberal school further runs as follows: in world politically stable countries with long recognised international borders, narrow distribution coalitions emerge in the wake of too big a state sector influence, and they will thwart growth perspectives and bring about stagnation and unemployment. High real appreciation of the national currency (Poland + 9% 1990-94) declining private savings rates (Poland: 12.4% growth rate of private consumption), inadequate investments in the tradables sector, low export growth rates compared to imports, high official current account balance deficits per GDP (estimated by some economists to be unsustainable when twice the numerical value of the export growth rate or more), a growing reliance on short-term capital flows and large currency exposures are well known to both neo-classical economics and dependency theories alike (Dadush and Brahmbhatt, 1995). In addition, the state and it's economic activities will be most harmful in older democracies due to the unhalted workings of the mechanism of narrow distribution coalitions.
Measured in terms of central state sector expenditures per total GNP, the average European Union country today (50.9%) is more 'socialist' than most former communist states. Even in the UK, after years of conservative rule, 39.9% of GNP in 1994 was controlled by the central government in London, a figure, which does not include expenditures by government in the broader sense in the municipalities et cetera. One of the reasons, why the central government share in the USA (22.2%) is lower than in most European countries is simply, that the USA are a very federal system (World Bank, World Development Report, 1996; UNDP, Human Development Report, 1995). True liberals would not preclude, that distribution coalitions indeed foster situations, where imported capital plays a predominant role in an economy. What might be politically valid for old democracies like New Zealand or the United States, does not necessarily hold true for a young democracy like Spain after Franco or Poland after the downfall of communism.
Neo-liberal cross-national studies of growth and development tended to
conceptualise 'systems age' or 'age of democracy' by the number of years, that a
polity enjoyed without changes to the externally recognised borders and in the
framework of the establishment of free and competitive elections to the
legislative chamber(s) (Weede, 1985-1992). Our operationalisation of the concept
of system's age is here the concept of the strength of international
distribution coalitions: 'years of United Nations membership of a state',
to account for the 'internationally recognised' position of a country in the
international community. Thus, the power position as a distribution coalition
broker in the international system is being measured:
(2.3a) stagnation = constant + b1 * age of the international
post-war system participation + b2 * national state sector influence
(like state sector expenditures per GDP)
or, on a world-scale:
(2.3b) stagnation (in the countries of the world system) = constant +
b1 * chance for distribution coalitions to arise (years of UN
membership) + b2 * state sector influence (like state sector
expenditures, government consumption per GDP or share of public
investment per total investment) - (b3 * proper internal and
external conditions for the defence of democracy (a firmly entrenched
democratic system and a stable integration into the Western security zone - b4 *
cultural preconditions (like the Huntington Index)
Ever since the classical political economy of J.S. Mill, socio-liberal reformers have maintained the compatibility of social reform and market economic/capitalist growth. The official social doctrine of the Catholic Church in some aspects is using similar arguments - from Pope Leo XIII to John Paul II. There are common denominators for a reform-oriented social policy programme: a leading variable, of interest to this school, will be social security benefits expenditures per GDP in the contemporary period. The social insurance programme experience index measures the social security experience of a nation during the earlier Kondratieff cycle as a precondition for contemporary growth.
Some authors in the tradition of this 'social policy approach', summarised in a statement by Nancy Birdsall from the World Bank before the delegates of the Social Committee, UN General Assembly, October 19th, 1992, would also expect - ever since the publication of the World Development Report 1984, - a very strong negative relationship between development performance and population growth. Throughout his academic and political life, Myrdal emphasised this point of development theory, thought to be so important for the structure of labour markets, income distribution, and economic growth. Apart from that, human capital formation and the patterns of human ecology and the use of scarce natural resources, all connected with the population issue, are of relevance for this approach (Tausch and Prager, 1993). The anti-natalist view, however, is not shared by the mainstream of Catholic reform thinking.
The liberal corporatist school, an important sub-school, which draws it's experience from the post-war development of countries like Sweden or Austria, treats the combination of world economic openness (trade dependency index) with a democratic political regime (for example a low index of violations of civil and political rights) as an ideal mix, conducive towards political compromise and a partial alliance between capital, wage labour and the state. It expects positive trade-offs between world economic openness, democracy and social policy on the one hand and economic and social performance on the other hand. Katzenstein was most prominent to formulate such a theory (1984); others, most notably Schmidt, 1986, and Munoz, 1982 followed suit. According to the social policy approach, markets always need the element of existing and functioning social safety nets. Rent seeking is a reality, but it is a process that in the end redistributes incomes upwards and wastes economic resources. By concentrating social policy on the real needy and poor sectors of society, an impetus can be created to cut government expenditures in other areas.
By way of summary, a social and ecological reform theory would expect at
least:
(2.4) pace and level of development = constant - b1 * increase
of fertility rates 1960-90 (UNDP, 1993/94) + b2 * social insurance
programme experience index (or social security benefits expenditures
as % of GDP) + b3 * share of women in the membership of national legislature
or other measures of gender development - b4 * total fertility rate
- b5 * share of richest 20% in total incomes + b6 * trade
dependency index
3) The international environment is basically unstable. A survey of the
contemporary research methods for the study of changes in the world system since
1989
International social science since the mid-1960s studied patterns of international development in a cross-national perspective. This movement towards retrievability of research results, based on statistical analysis with internationally available and recognised data, which was initiated, amongst others, by the late Karl Wolfgang Deutsch from Harvard University, had important implications for international social policy. It allowed for the rigorous testing of hypothesis, contested in the political arena in an often passionate fashion.
Our attempt to estimate the determinants of world economic and social development from 1980 onwards tries to be based in this tradition. The UNDP Human Development Reports, our main new data source, emerged over the years as one of the leading socially scientific relevant data collections for cross-national research; the wealth of data contained in them shows concern for the global environment and for social decay and by far exceeds in quality other comparable products on the market today. The choice of the time period corresponds to the Kondratieff-type long cycle theories, that are presented below. Our data collection goes on to use some materials which are relevant for the description of the long-run position of a society in terms of ownership of the means of production (public investment, transnational investment), the social security programme experience, and ethno-linguistic fractionalisation from the Bornschier/Heintz data collection. In combining the new UNDP data with these older materials from Bornschier/Heintz and the World Handbooks of Political and Social Indicators, I-III, pertaining to the earlier Kondratieff cycle, we fully integrate the new knowledge about cycles into our hypotheses.
Our data sources for the study of this latest phase in the evolution of transnational capitalism relied at least in part also on Fischer Weltalmanach; Nohlen; Seager and Olson and Stiftung Entwicklung und Frieden, which are excellent data handbooks for the study of international relations. Some data were also cross-checked with Tausch, 1993, 1994; UNECE; UNICEF (Cornia, 1993 and 1994); and the World Bank WDR and other sources. Our main samples of 123 nations and 135 nations comprised all the countries for which UNDP reports economic growth rates and life expectancies at two different periods. The countries of the ex-USSR are not being included for the reason of data limitations, while other 'real socialist' or ex-'real socialist' nations, like China and Hungary, at any rate integral parts of the conceptualisations of the capitalist world economy today, do form part of our main 123 and 135 countries' investigation.
Our leading, but not exclusive indicator of the process of dependence and globalisation is the historic legacy of MNC (multinational corporation) penetration of a country in the earlier Kondratieff-cycle (Tausch/de Boer, 1997) or the effects of the share of inward FDI stock in the gross domestic product of the host countries of MNC penetration. The MNC-penetration-concept was first contained in the very widely used publication by Bornschier and Heintz, reworked and enlarged by Ballmer-Cao and Scheidegger, later on widely popularised by the book publication Bornschier/Chase Dunn, 1985. The emphasis was on MNC investments, 1967 and 1973, weighted by population and total capital stock. The more recent UNCTAD concept of the share of FDI stock is defined in terms of total host-country GDP. That is to say, available measurements correspond to the value of the indicator during the B-phase of the earlier long economic cycle.
The more dependent a country is in the system of the world-wide market
economy, the greater will be the penetration of its economy by transnational
capital. Dependency theories (Cardoso/Faletto, 1971) hold, that the countries of
the periphery were integrated into the world-economy in the following sequence
of events
(i) desarrollo hacia exterior (development to the outside)
(ii) desarrollo hacia adentro (inward-looking development)
(iii) transnacionalizacion de los mercados internos
(internationalisation of the internal markets)
Starting from the late 1950s, the transnational system increasingly dominates
the industrialisation process of the periphery and the semi-periphery (phase
iii). The penetration of the host countries by transnational investment becomes
the most important scientific yardstick of dependency (Bornschier/Chase-Dunn,
1985).
To these phases in the evolution of the international divsion of labour, one
would have to add
(iv) financial capitalism and globalization
as the latest stage of centre-periphery relationships during the 1980s and 1990s.
Cycle time plays an important role in our approach. Above, we already hinted
at Arrighi's thought, that the logic of accumulation on a world scale shifts
along time, and that we again witness during the 1980s and beyond a deregulated
phase of world capitalism with a logic, characterized - in contrast to earlier
regulatory cycles - by the dominance of financial capital. Arrighi further
teaches us that even a century can be a 'short run' in the evolution of world
capitalism. There are signal crises of world capitalism, and there are
terminal crises of the world system, like the great crash of the early
1340s, which marked the beginning of the Genoese age, the 1560s, which marked
the beginning of the Dutch era, the 1750s and 1760s, which marked the beginning
of the British era, and the 1930s, which were the terminal crisis of British
world capitalist dominance. Regulation can be successful, like after 1560, and
1930, and deregulation can be successful, like after 1340, 1760, and - most
probably - the 1980s (compiled from Arrighi, 1995). Macroquantitative research
about the determinants of world development has to be conscious about the time
horizon, in which the research design is situated. Bornschier (1988) found out
that state sector expenditures in 21 western democracies correlate with economic
growth in the following fashion:
1950-60 r = + .41
1960-75 r = - .07
1974-77 r = - .72
(Bornschier, 1988: 309)
Studies about world development throughout the entire period 1960 - 1997 might be misleading, because the time period would reflect the 'logic' of the waning 'regulatory' cycle, the economic global crisis of the 1970s and the early 1980s, and the ascent of financial capitalism and the East Asian archipellago of the 1990s. Thus, the beginning of the 1980s serve as our 'cutting point'.
The long cycle literature, largely overlooked by macroquantitative
development studies, tells us, why there is a recurrent pattern of instability
in the social orders both at the level of national society as well as at the
level of the international system. It also explains the often puzzling aspect,
how different studies, using different time perspectives, reach different
results. Long cycles by themselves are quite a strong argument in the debate
about the long-run viability of the world-wide market economy: the recurrence of
cycles, depressions and wars was thematically portrayed, amongst others, by
Goldstein (1988) and Arrighi (1995) in very far-reaching empirical studies of
world development from 1450 onwards. First we update the evidence, that led
Goldstein to the conclusion that the capitalist world systems tends continuously
towards wars and violent conflicts:
Graph 3.1: the tendencies of the capitalist world economy towards Kondratieff
cycles
economic growth (left hand scale) and war intensity (right-hand scale) in the
world economy. Moving 9-year averages, calculated with EXCEL 5.0 from
Goldstein's original data.
war intensity = nat. logarithm from (1 + battle fatalities from
great-power wars ^0.10)
At a time of major shifts in world politics and economics, it is no wonder
that systematic studies in the evolution of the international order have gained
ground. Arrighi's main hypotheses (1995) differ from those of Goldstein.
Goldstein's quantitative approach (1988 ff.) concentrates on the major power
confrontations as the 'watershed' in international relations. Ample empirical
evidence supports Arrighi's and Goldstein's theories. The recurrence of major
power wars in the capitalist world economy from 1495 to the present is one of
the most intriguing features of the international system. Each world political
cycle up to now corresponded to a 'W'-pattern
of war intensity. The x-axis in our graph is the number of years after the end
of the major power wars, i.e. 1648, 1816, and 1945. The starting point is
Goldstein's data series about economic growth since 1740:
economic growth in the world system since 1740; adapted from Goldstein, 1988
and UN ECE/Fischer Weltalmanach, current issues. 5 and 9-year moving
averages
From Goldstein's data series, it is possible to derive - without any
smoothening of the data - the following cycles of war in world society since
1495, using 6th order polynomial expressions:
Graph 3.2: The war cycles since 1495
1495-1648
1649-1816
1817-1945
1946 -
annual battle fatalities from major great power wars in thousands
The stylized function:
Source: our own compilations, using a sinus function (1495 = 0; 1496 = 0,33;
1497 = 0,33 + 0,33 etc.) about war in the world system. The sinus function is
the stylized function, based on reasoning about three major global wars in
capitalist world society (Thirty Years War, Napoleonic Wars, Germany's Wars in
the 20th Century); the dotted lines are the fourth root of
Goldstein's data series on major power battle fatalities; the trend line is a 20
years moving average of major power war fatality rates, calculated as before
Alternatively, we could also use a shorter swing, which would then be more in
line with Arrighi's argument of the four hegemonies in world capitalism
(Arrighi, 1995): Genoa, the Netherlands, Great Britain and the United
States:
Source: our own compilations, using a sinus function (1495 = 0; 1496 = 0,45;
1497 = 0,45 + 0,45 etc.) about war in the world system. The sinus function is
the stylized function, based on Arrighi's reasoning about the four hegemonies in
capitalist world society, connected with the ups and downs of war in global
society (Genoa, the Netherlands, Britain, the United States, while the major
power confrontations were Charles V Wars, the Thirty Years War, the
French-British Conflict of the 18th Century, Napoleonic Wars,
Germany's Wars in the 20th Century); the dotted lines are the fourth
root of Goldstein's data series on major power battle fatalities; the trend line
is a 10 years moving average of major power war fatality rates, calculated as
before
Each long Goldtsein or Arrighi cycle of world politics could be characterised, according to Modelski, by a dominant world economic power and it's challenger. Goldstein and Arrighi have very aptly described these world political cycles in great detail, so there is no need to repeat their reasoning here. The simple statistical evidence to support their theories on the basis of Goldstein's own original data is surprising, though. Our tests use a very common software, available on millions of home micro-computers around the world (the EXCEL 5.0 programme). The R^2 for the test series is between 31% and 91%; no transformation of the data was performed. The W-structure of conflict emerges neatly from all the tests. And each time, the challengers for world hegemony of a dominant sea-power were former members of the ruling coalition (France, Germany, Russia + China?), while the challengers in the world wars (Thirty Years War, Napoleonic Wars, German Wars of our century) always were continental powers (the Hapsburgs, France, Germany) (see also: Modelski, 1987; Goldstein, 1988, Arrighi, 1995). Thus, there is some support at least for the hypothesis about the sequence of world politics, leading from global wars to hegemonies, to the de-concentration of the international system, to the de-legitimisation of international leadership, and finally, to new global wars.
Ever since the days of Schumpeter, economists and sociologists were inclined
to see also more short-term cycles at work, namely the Kitchin cycles,
lasting three and a half years, the Jugar cycles lasting 8-10
years, and the Kuznets cycles between 18 and 25 years. The
intense controversy about cycles should only be mentioned briefly here; for the
policy-maker perhaps more important is the fact, that after the economic crisis
of 1825, the stock exchange collapse of 1873, the Black Friday of 1929 and the
world recession starting in 1973/75, world capitalism has experienced quite
severe downswing-phases, that hit with elementary weight especially the
countries of the periphery and the semi-periphery. The Kondratieff cycles
of approximately 50 years duration and the Kuznets cycles, 20 years long,
are especially relevant for our understanding of the ups and downs of world
economics and politics: our data series, constructed from Goldstein's original
data, is explained quite markedly by the application of the Kondratieff and
Kuznets-cycle hypotheses, even when there are now data filtering or smoothening
operations being performed:
Graph 3.3: Kuznets-cycles in the world system, 1756 - 1975
Three Kuznets cycles make up one Kondratieff cycle; three Kondratieff cycles up to now led the world economy in a W-shaped pattern towards the major global wars.
The 'filtering' of the very short-term economic fluctuations plays an
important part in the debate about the existence of Kondratieff-cycle
fluctuations. It should not be denied here, that Kondratieff cyclical movements
in the world economy are seen to be highly controversial, with a large tradition
in economic literature, like Eklund and Kuznets, denying the existence of such
cycles. Other social scientists from a variety of theoretical camps, only some
of them, like Mandel, Marxists, others, like Forester, W. W. Rostow, also took
up the challenge of long-wave research. Filtering out the very-short-term
Kitchen-cycle fluctuations by applying 5 year moving averages and then to
explain these moving averages by a Kondratieff cycle hypotheses from 1756 seems
to be a reasonable new research strategy. The results for such a procedure are
being reprinted below:
Graph 3.4a: New evidence regarding the Kondratieff cycles, 1740-1975, based
on 5-year moving averages
Graph 3.4b: Kondratieff cycles, based on 10 year moving averages
The stylized function could have the following form:
Source: our own compilations, using a cosinus function (1740 = 0; 1741 =
0,85; 1742 = 0,85 + 0,85 etc.).
The fit with the empirical data for a Kondratieff swing is the
following:
Legend: A Kondratieff-type cyclical fluctuation in the world economy,
compared to the empirical data about world economic growth (dotted line) and the
10-year moving averages. As to the calculation of the cosinus function, see
above
Legend: Kuznets-cycles and growth in the capitalist world economy, 1740-1975.
Kuznets fluctuations, 10-year moving averages of real growth rates and the
empirical data (dotted line). (1740 = 0; 1741 = 0,255; 1742 = 0,255 + 0,255
etc.).
Thus, we achieved here a structural differentiation of the time periods, and
it will be easier to correctly evaluate the cross-national evidence from
different periods in the history of the evolution of the world economy.
Throughout this work, the following statements hold:
Regression coefficients at the level of error probability < or = 5% are printed in bold type. The following further conditions do hold:
Concepts: growth always refers to per capita income growth in real terms, if not specified otherwise
Time period: 1980s and beyond (if not specified otherwise)
Missing values: mean substitution, if possible, by known values for the economic or geographic region (like: countries with low human development, excluding India et cetera)
It should be explained here, what is meant under the term 'structural
adjustment': the empirical measurement (and not normative concept) of adjustment
compares the GNP per capita growth rates in two subsequent periods with a
regression-based residual analysis. In other words: we try to answer the
empirical, and not normative question, which countries accelerated their
economic growth compared to the earlier cycle, and which countries adapted badly
to the new conditions. Our measurement concept compares growth rates predicted
for the period of the new Kondratieff cycle (post 1980/82)(^Yi)
upon knowledge of the performance during the earlier Kondratieff B-phase
(1965-80) with the actual growth rates Yi during the new Kondratieff
cycle from 1980/82 onwards:
(3.1) adjustment i = Yitn-^Yitn
Y = economic growth
Ytn = a + b1 * Ytn-1
Changes in the underlying logic of ascent and decline in the world economy will be especially observable at a time of comparison between the logic of a waning Kondratieff cycle and the emerging laws of a new cycle. Thus, adjustment will be a theoretically especially relevant phenomenon.
Next, we should deal with the trade-off between development level and performance. Policy planning must, in order to avoid spurious results, under any circumstances properly specify such trade-offs. Poor countries increase rapidly their average life-expectancy or economic growth and they quickly reduce their income inequality; prima vista there will be a spurious and very high, but absolute non-sense correlation between, say, the number of shanty-town dwellers per total population and life expectancy increases. The reduction of the infant mortality rate, the acceleration of growth or the redistribution of income over time will all dramatically and positively be influenced by the number of people still living in shanty towns. If we do not properly specify development level as an intervening variable, our results will be biased extremely.
The curve-linear function of growth, being regressed on the natural logarithm
of development level and it's square, is sometimes called the 'Matthew's
effect' following Matthew's (13, 12):
'For whosoever hath, to him shall be given, and he shall have more abundance:
but whosoever hath not, for him shall be taken away even that he hath'
Social scientists interpreted this effect mainly in view of an acceleration
of economic growth in middle-income countries vis-à-vis the poor
countries and in view of the still widening gap between the poorest periphery
nations ('have-nots') and the 'haves' among the former Second and
Third World (Jackman, 1982):
(3.2) economic growth/adjustment success = a1 + b1* ln (PCItn-1)-b2*
(ln(PCItn-1))2
The same function is also applied to income inequality, following a famous essay published by S. Kuznets in 1955. Redistribution gets underway after 1000 $ per capita income is reached; the share of the richest 20% diminishes from approximately 55% to around 40%. Growth and adjustment accelerate with redistribution.
Now, we should turn to basic human needs satisfaction and hence, life
expectancy: it is very difficult to arrive at valid propositions about social
conditions and development as a dependent variable on the basis of income
distribution data alone. There are comparable World Bank income distribution
data for only 65 countries, while basic human needs satisfaction data are
available from many more countries. Studies about the determinants of basic
human needs satisfaction, and hence, poverty are of a more recent date (Stokes
and Andreson, 1990; Tausch and Prager, 1993; furthermore: Moon and Dixon, 1992;
Ragin and Bradshaw, 1992). The idea to link life expectancy to energy
consumption levels or dollar income levels, that is to say, to patterns of
civilisation, that exploit mother earth and lead to the self-destruction of life
chances of the human species, is still somewhat revolutionary, although there
has been quite an extensive debate among different researchers from the ILO, the
World Bank and other researcher institutions, most notably Goldstein, 1985b and
Russett, 1983b, on the proper specification of the development-basic-human-needs
trade-off. Among the decision makers of our time, US vice-president Gore
formulated such 'green' philosophical apprehensions in the most stringent
fashion (Gore, 1994). It is difficult to design a single indicator of the
civilisational malaise constituted by the environmental crisis caused by
the industrial mode of production. But the energy consumption-life expectancy
trade-off offers a very clear, mathematical expression. The prime success
measure of a society should be, how much energy can be saved in achieving a
given quantity of life of the population and to avoid premature death. The
limited resources of our planet, so clearly foreseen by Polanyi, dictate, that
as little as possible energy is being used. The social demands and moral
convictions of civilisations dictate, that premature death should be avoided.
Thus, eco-social reasoning taking into account the performance scores of the
energy consumption-life expectancy trade-off would hold, that the energy
consumption of a society should be minimised and life expectancy maximised. One
recent formulation of this position, reported in Tausch and Prager, 1993, that
contains a reference to the extensive earlier debate at the World Bank and at
the ILO about this trade-off, arrived at the conclusion that using very common
deviates of the natural constants e (2.7) and pi
(3.1) reproduce this important trade-off in an optimal fashion, although most
other published mathematical formulations boil down to similar strong
curve-linear functions. It is also imperative to consider the effect of already
achieved levels of life expectancy on the subsequent life expectancy increase: a
poor society with, say, 40 years life expectancy, will find it easier to expand
the well-being of the population to 50 years average life expectancy than a
society that already reached the level of a 75 year-average.
To avoid problems of collinearity, increases in life expectancy over time are
being calculated by differences in logarithms 10, i.e.
(3.3) DYN LEX = ((log 10 (LEX tn)-log 10 (LEX tn-1)) * 100
Let LEX denote life expectancy or other basic human needs indicators,
PCI per capita incomes, ENCONS p.c. energy consumption rates per
capita and year in kg oil equivalent, and DYN rates of increases of basic
human needs satisfaction. On a world scale and for different groups of
countries, levels of human development and increases in terms of human
development, reductions in infant mortality et cetera will always
significantly correspond to the following function and the first
derivate:
(3.4) LEX = a + b1 * (ENCONS p.c.)^(1/(e^2)) - b2 * (ENCONS p.c.)^ln(pi)
R2 = 72.4%; F = 157.63; df. = 120; alpha (one-tailed) 5% > 1.289
(3.5) DYN LEX(tn) = a - b1 * LEX (tn-1) +-
b2 * (PCI)(tn-1)^((1/(e^2))-1)-b3 * (PCI)(tn-1)^(((ln(pi))-1)))
R2 = 69.8%; F = 91.85; df. = 120; alpha (one-tailed) 5% > 1.289
predictors b2 and b3 only: R2 = 43.3%; F = 45.89; df. = 120; alpha
(one-tailed) 5% > 1.289. Formulation also possible with ENCONS p.c., but the
PCI data series is more complete
Based on UNDP (1993) data for all the countries that report economic growth rates for the periods 1965-80-90, equation (3.4) explains 72.4% of total variance of life expectancy; equation (3.5) - even without life expectancy in 1960 as an additional control variable - explains 45.9% of total variance.
Equation (3.2) can also be applied to human development, the world gender
issues and democratisation:
(3.6a) human development or gender development or gender empowerment = a1 -
b1* ln (PCItn-1) + b2* (ln(PCItn-1))2
or
(3.6b) political rights violations or civil rights violations = a1 + b1* ln
(PCItn) - b2* (ln(PCItn))2
Human development, and the growing participation of women in society, are a
clearly rising function of achieved development level, while political and civil
rights violations decrease along the course of development. No result is weaker
than roughly 2/5 of variance explained; and all results show - per se -
an optimistic perspective for human development, gender justice and
democratisation: the human development index, the gender development index, the
gender empowerment index (ranging from 0.0 to 0.999 each), political rights
violations and civil rights violations (ranging from 1.0 to 7.0) are all to be
represented as a function of achieved development level in 1990 (expressed in
purchasing power parity rate). For the calculation of the gender empowerment
(GEI) function, the following procedure to estimate missing data was followed:
means of country groups with available data were taken to substitute missing
values. The following groups were used: industrial countries (UNDP definition,
1993; GEI = 0.56); developing countries with a higher human development index
(UNDP 1993 list - Barbados through to Saint Lucia; GEI = 0.391); developing
countries with medium human development (UNDP 1993 list - Turkey through to El
Salvador; GEI = 0.347); developing countries with low human development (UNDP
1993 list - Maldives through to Sierra Leone; GEI = 0.27). The following
statistical properties of the functions hold:
human development index R^2 = 82.4%; F = 281.0
gender development index R^2 = 80.1%; F = 240.8
gender empowerment index R^2 = 60.0%; F = 90.0
political rights violations R^2 = 38.0%; F = 36.8
civil rights violation R^2 = 40.0%; F = 39.9
(3.6a) might be formulated, however, by function (3.6b), applying model
(3.4). The function is:
(3.6b) Human Development Index = a + b1 * (real purchasing power
p.c.)^(1/(e^2)) - b2 * (real purchasing power p.c.)^ln(pi)
The trend-line then has the following fashion:
Graph 3.5a: the Human Development Index as a function of the level of
development (real purchasing power)
Legend: human development as a function of development level
Gender empowerment itself is a very strong non-linear function of achieved
development level. The above functions will be used in the following chapter to
evaluate the validity of different development theories to explain the dependent
variables under due consideration of these general development functions. To
exclude them will lead to spurious results. The capability poverty measure, in
turn, is being determined by the following function of real purchasing power of
a society:
Graph 3.5b: capability poverty as a function of real purchasing power - the
results at the level of the semi-periphery and periphery countries
Graph 3.5c: capability poverty as a function of real purchasing power - the
results at the level of the semi-periphery and periphery countries with a real
GDP per capita between 4000 $ and 8500 $
Finally, we summarise the critical values of the t-test, applied in this
work, at the 5%-level in Graph 3.6:
Graph 3.6: critical values of the t-test
Legend: the x-axis symbolises degrees of freedom, the y-axis critical values
of the t-test at the 5%-level according to Kriz, 1978
4) Problem number 1: Europe is characterised by the typical 'mix' of
conditions that lead to stagnation
Some nations develop more rapidly and in a less contradictory manner as other nations. Over the last decade, Europe began to lag behind, while Asia is ascending. The globalisation model of economic and social stagnation in the world economy, which was empirically first developed by Bornschier, is clearly vindicated again with the new data. The European Union policies, as maintained by EU-critics ever since the days of Johan Galtung, favour disproportionately the powerful, big, European transnational corporations and banks, while the real dynamics of modern capitalism demand a lean, relatively socially just state, a high, internal savings mobilisation, and relatively little room for manoeuvre of social distribution coalitions. The protected home market for the transnationals in Europe created large market distortions which are inhibiting economic growth.
TNC-dominated development pressures societies towards higher income inequality, and less employment. Women, especially, become marginalised, a trend, which is still enhanced by the growing tendency towards a new international division of labour within Europe. In Europe, where the legacy of politically established feminism is still relatively strong, state expenditures are being used to redress the balance, but the struggle is an uphill one against the tendencies of contemporary globalisation. Feminism will become over the years the big loser in the redistribution of world political and economic resources.
High MNC penetration becomes one of the main blocks against further European ascent in the world economy. We have already stated, that for a true liberal economist, dependency is a special situation of the typical constraints, caused by a policy of import substitution and export discrimination. Policies, that create double deficits (huge current account balance deficit + large state sector budget deficits) and discriminate against internal savings, will lead to a high propensity to import foreign capital, often still aided by de-iure or de-facto policies that prevent enterprise creation and savings mobilisation. Instead of selling-out the 'family jewels' of national industry, both private and national (so common in Europe today), there would be an alternative for the European policy-maker: neo-classical economists would agree with 'dependentistas' in their critique of import substitution strategies, currency overvaluations, and - hence - the discrimination against exports in benefit of the urban sector and to the detriment of rural society. European monetary union, just like the smaller monetary union between the D-Mark and the new Bundesländer, will only increase this problem (Süddeutsche Zeitung, 50, ½ March, 1997: 25). German unification cost anywhere between 750 thousand million or 1000 million D-Mark; monetary union, Maastricht style, will load another sum of similar proportions onto the more advanced participant nations of the monetary union project.
The basic argument of such a sophisticated version of the neo-liberal school further runs as follows: in world politically stable countries with long recognised international borders, narrow distribution coalitions emerge in the wake of too big a state sector influence, and they will thwart growth perspectives and bring about stagnation and unemployment. Political feminism in Europe cannot be exempted from this.
Neoclassical and of course dependencia theorists would admit, that gender discrimination is a typical violation of the assumptions of a functioning market economy. The neo-classical remedy would consist in better creating better market access for the underprivileged groups. Without question, the gender issue is one of the most typical instances of such a market imperfection under 'capitalism'. The solution, especially in Europe, has been to remedy this imperfection with huge programmes of state expenditures. But state expenditures in excess of revenues, together with a deficit in the balance on the current account, are a good receipt for increasing the share of foreign capital in the national economy. The circle continues.
Government consumption in the EU was 19% already in 1992, and will still
increase with eastward expansion and the rising unemployment problem. Tax
revenue was on average only 38 of GNP - in contrast to the 50.9% of GNP, spent
by the national government. EU-imports were 23% of GNP, while EU-exports only
22% of EU-GNP. By 1992, the average deficit per EU-GNP was 10%. In such a
situation, the inflow of foreign capital, including that of dubious legality,
will become an economic necessity. Indirect taxes play an overwhelming role in
European finances, and indirect taxes are a growth-inhibiting structure of their
own (Tausch/Prager, 1993).
By the beginnings of the 1990s, the penetration of MNC in the European Union
economies in terms of total manufacturing employment was quite considerable by
international standards:
Table 4.1a: MNC penetration by international comparison
MNC penetration Inward FDI FDI inflows
in terms of manufact. per total GDP in the year 1990
employment per total GDP
USA 12% 7% 0.7%
Japan 1% 1% 0.1%
FRG 16% 6% 0.1%
France 20% 7% 1.1%
Italy 12% 6% 0.6%
UK 15% 21% 3.3%
Canada 36% 19% 1.0%
Spain 48% - 2.8%
Australia 24% - 2.4%
CH 4% 8% 2.2%
Sweden 13% - 1.0%
Belgium 33% - 4.2%
Austria 33% - 0.6%
SF 6% - 0.7%
Norway 11% - 0.8%
DK 9% - 0.9%
Portugal 12% - 3.5%
New Zealand 23% - 0.5%
Ireland 43% - 0.2%
Poland 3%
Mexico 21%
Argentina 32%
Colombia 16%
Barbados 31%
Botswana 36%
Mauritius 33%
South Korea 15%
Indonesia 24%
Thailand 15%
Hong Kong 14%
Philippines 20%
Malaysia 27%
Singapore 58%
Sri Lanka 40%
Source: our own compilation from Bailey et al., 1993
Also, long-term MNC penetration in Europe has increased rapidly, reflecting
the growth of a monopolistic, protected home-market for the European
transnational corporations:
Table 4.1b: The share of inward FDI stock in the gross domestic product of
European Union countries by international comparison, 1980-1994
1980 1994
Austria 5.8% 6.6%
Belgium and Luxembourg 6.0% 31.7%
Denmark 6.3% 12.6%
Finland 1.1% 5.9%
France 3.4% 10.7%
Germany 4.5% 6.8%
Greece 11.3% 23.5%
Ireland 19.5% 10.3%
Italy 2.0% 5.9%
Netherlands 11.3% 27.7%
Portugal 4.4% 6.6%
Spain 2.4% 25.0%
Sweden 2.9% 9.7%
UK 11.7% 20.9%
other Western Europe 9.4% 14.4%
Canada 20.4% 19.2%
USA 3.1% 7.5%
Australia 8.7% 28.3%
Israel 3.3% 5.2%
Japan 0.3% 0.4%
New Zealand 10.5% 31.6%
South Africa 21.3% 9.1%
developing Europe 0.3% 10.0%
Africa 5.8% 14.6%
Latin America 6.5% 12.7%
among these:
Brazil 6.9% 8.0%
Argentina 6.9% 8.1%
Mexico 4.6% 14.4%
West Asia 1.2% 7.2%
Central Asia - 3.3%
South and South-
East Asia 3.8% 13.3%
among these:
Bangladesh 0.4% 0.7%
China - 17.9%
India 0.7% 0.9%
Pakistan 2.5% 6.0%
Philippines 3.8% 8.3%
South Korea 1.8% 3.3%
Taiwan 5.8% 6.6%
The Pacific 26.4% 40.1%
Central and Eastern Europe 0.1% (1985) 7.4%
Source: our own compilations from UNCTAD, 1996
Graph 4.1 shows the tendencies of the inward and outward FDI stock as a
percentage of gross domestic product over time in 1980, 1985, 1990 and 1994 in
major regions of the world economy:
Graph 4.1: inward and outward FDI stock as a percentage of gross domestic
product over time in 1980, 1985, 1990 and 1994 in major regions of the world
economy
| 1980 | 1985 | 1990 | 1994 | |
| EU inward | 5,5 | 8,2 | 10,8 | 12,9 |
| EU outward | 6,3 | 10,4 | 11,8 | 15,1 |
| USA inward | 3,1 | 4,6 | 7,2 | 7,5 |
| USA outward | 8,1 | 6,2 | 7,9 | 9,1 |
| Japan inward | 0,3 | 0,4 | 0,3 | 0,4 |
| Japan outw. | 1,8 | 3,3 | 7 | 6,2 |
| LDCs inward | 4,3 | 7,7 | 8,3 | 12,5 |
| LDCs outw. | 0,2 | 0,8 | 1,7 | 3,5 |
| CEastE inw. | 0,1 | 0,8 | 7,4 | |
| CEastEoutw | 0,1 | 0,4 |
Legend: our own compilations from UNCTAD, 1996
In our empirical analysis, as we already explained in our methodological
section above, we included the proper specifications for development levels and
other trade-offs affecting processes of development. For example, it would be
senseless to predict life expectancy increases without properly taking into
account earlier, achieved levels of life expectancy; and it would be senseless
to talk about deforestation rates and coverage of a country with woodlands, not
knowing how much of the total areas is taken up by agricultural land. Dependency
from the transnational corporations both in 1973 and in 1985 significantly and
fairly constantly blocks development. The data outprint of Table 4.1 reiterates
again the well-known dependency and neo-classical results in the tradition of
Bornschier, Chase-Dunn, Dadush and Brahmbatt, even for the new time period and
the new indicators of world development, published by the UNDP:
Table 4.1c: The re-iteration of the dependency and neo-classical model of
growth and development in the capitalist world economy, 1980 - 1992
| MNC PEN73 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | Constant | |
| adjustment | -0,66 | -0,988 | 0,1353 | -3,49 | 0,0247 | -0,065 | -0,065 | 0,1698 | 0,0058 | -0,037 | -0,004 | 23,741 |
| 0,1795 | 0,9495 | 0,3355 | 5,0128 | 0,0244 | 0,0379 | 0,0206 | 0,0592 | 0,0073 | 0,0219 | 0,0017 | 19,163 | |
| 0,3515 | 2,5513 | |||||||||||
| 5,4705 | 111 | |||||||||||
| 391,7 | 722,52 | |||||||||||
| t-Test | -3,679 | -1,04 | 0,4033 | -0,696 | 1,0123 | -1,715 | -3,135 | 2,8687 | 0,8004 | -1,688 | -2,222 | |
| MNC PEN73 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | Constant | |
| growth | -0,888 | -0,406 | 0,1692 | -4,102 | 0,0108 | -0,087 | -0,047 | 0,1641 | 0,0118 | -0,048 | -0,003 | 27,785 |
| 0,1585 | 0,8383 | 0,2963 | 4,4259 | 0,0216 | 0,0335 | 0,0182 | 0,0523 | 0,0064 | 0,0193 | 0,0015 | 16,919 | |
| 0,4426 | 2,2526 | |||||||||||
| 8,014 | 111 | |||||||||||
| 447,33 | 563,25 | |||||||||||
| t-Test | -5,605 | -0,484 | 0,5713 | -0,927 | 0,4988 | -2,604 | -2,589 | 3,141 | 1,8314 | -2,464 | -1,773 | |
| LEX 1960 | 1 der e-funct | 1 der pi-func | MNC PEN73 | Viol Civ Rits | Trade Dep | Terms Trade | UN-membery | Women Parl | Women %LF | ln(MPR+1) | Constant | |
| DYN | 1,1954 | -0,045 | -0,043 | -0,038 | 0,0161 | -0,001 | 0,0549 | -2E-04 | -0,251 | -26,67 | -0,3 | 27,436 |
| LEX | 0,8258 | 0,0207 | 0,0307 | 0,018 | 0,0167 | 0,0063 | 0,1759 | 0,0016 | 0,7469 | 6,8464 | 0,0365 | 2,6108 |
| 0,7425 | 2,2316 | |||||||||||
| 29,1 | 111 | |||||||||||
| 1594,1 | 552,79 | |||||||||||
| t-Test | 1,4476 | -2,178 | -1,408 | -2,119 | 0,9644 | -0,215 | 0,3122 | -0,138 | -0,336 | -3,896 | -8,217 | |
| e-func Encon | pi-func Enc | MNC PEN73 | Viol Civ Rits | Trade Dep | Terms Trade | pub invest | Women Parl | Women %LF | ln(MPR+1) | Fertility Rate | Constant | |
| green | 0,0103 | 0,0651 | 0,0014 | -0,001 | -0,003 | -4E-04 | -4E-05 | 0,0118 | 4E-05 | 2E-05 | 0,0122 | 0,1137 |
| house | 0,0153 | 0,0708 | 0,0018 | 0,0025 | 0,0013 | 0,0014 | 0,0005 | 0,0129 | 0,0001 | 4E-06 | 0,0798 | 0,3005 |
| index | 0,4201 | 0,1792 | ||||||||||
| 7,309 | 111 | |||||||||||
| 2,5828 | 3,5659 | |||||||||||
| t-Test | 0,6724 | 0,9192 | 0,7857 | -0,596 | -2,413 | -0,325 | -0,077 | 0,9119 | 0,2921 | 4,4106 | 0,1528 | |
| pol rights | MNC PEN73 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | Constant |
| violations | 0,5593 | 1,3587 | 0,0913 | -1,779 | 0,0054 | 0,0556 | 0,0202 | -0,11 | 0,0058 | 0,0133 | 0,0003 | 7,1765 |
| 0,1075 | 0,5685 | 0,2009 | 3,0012 | 0,0146 | 0,0227 | 0,0123 | 0,0354 | 0,0044 | 0,0131 | 0,001 | 11,473 | |
| 0,5679 | 1,5275 | |||||||||||
| 13,261 | 111 | |||||||||||
| 340,34 | 258,98 | |||||||||||
| t-Test | 5,2037 | 2,3902 | 0,4546 | -0,593 | 0,371 | 2,45 | 1,6368 | -3,118 | 1,3315 | 1,012 | 0,2914 | |
| MNC PEN73 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | Constant | |
| civil rights | 0,3518 | 1,3417 | -0,008 | -0,305 | -0,003 | 0,0345 | 0,027 | -0,099 | 0,003 | -0,006 | -9E-04 | 3,6364 |
| violations | 0,0828 | 0,4381 | 0,1548 | 2,3132 | 0,0113 | 0,0175 | 0,0095 | 0,0273 | 0,0034 | 0,0101 | 0,0008 | 8,8428 |
| 0,6057 | 1,1773 | |||||||||||
| 15,501 | 111 | |||||||||||
| 236,35 | 153,86 | |||||||||||
| 4,2469 | 3,0621 | -0,052 | -0,132 | -0,307 | 1,974 | 2,8429 | -3,625 | 0,8792 | -0,58 | -1,159 | ||
| HDI | MNC PEN73 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | Constant |
| -0,096 | 0,1617 | 0,0053 | 0,0295 | 4E-05 | -0,003 | -5E-04 | 0,0008 | -2E-04 | 0,0006 | 7E-05 | 0,4458 | |
| 0,0078 | 0,0413 | 0,0146 | 0,218 | 0,0011 | 0,0016 | 0,0009 | 0,0026 | 0,0003 | 0,001 | 8E-05 | 0,8332 | |
| 0,8698 | 0,1109 | |||||||||||
| 67,432 | 111 | |||||||||||
| 9,1287 | 1,3661 | |||||||||||
| -12,26 | 3,9161 | 0,3641 | 0,1353 | 0,0366 | -1,628 | -0,546 | 0,3095 | -0,736 | 0,6132 | 0,8849 | ||
| MNC PEN73 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | Constant | |
| -0,072 | 0,0902 | -0,007 | 0,1685 | 0,0011 | -0,002 | -3E-04 | 0,0021 | -2E-04 | 0,0003 | 8E-05 | -0,018 | |
| 0,0057 | 0,0303 | 0,0107 | 0,1597 | 0,0008 | 0,0012 | 0,0007 | 0,0019 | 0,0002 | 0,0007 | 6E-05 | 0,6107 | |
| 0,8711 | 0,0813 | |||||||||||
| 68,221 | 111 | |||||||||||
| 4,9607 | 0,7338 | |||||||||||
| Gender Development Index | ||||||||||||
| -12,63 | 2,9816 | -0,641 | 1,0549 | 1,4275 | -1,883 | -0,444 | 1,0921 | -0,71 | 0,4643 | 1,5028 | ||
| MNC PEN73 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | Constant | |
| -0,022 | 0,0074 | 0,0152 | -0,182 | 0,0016 | 0,0054 | 0,0006 | 0,0022 | -1E-04 | 6E-05 | 4E-05 | 0,8293 | |
| 0,0041 | 0,0216 | 0,0076 | 0,1139 | 0,0006 | 0,0009 | 0,0005 | 0,0013 | 0,0002 | 0,0005 | 4E-05 | 0,4356 | |
| 0,8193 | 0,058 | |||||||||||
| 45,758 | 111 | |||||||||||
| 1,6927 | 0,3733 | |||||||||||
| Gender Empowerment Index | ||||||||||||
| MNC PEN73 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | ||
| -5,285 | 0,3421 | 1,9977 | -1,595 | 2,82 | 6,2331 | 1,2727 | 1,6387 | -0,732 | 0,1206 | 1,1321 | ||
| e-func Encon | pi-func Enc | MNC PEN73 | Viol Civ Rits | Trade Dep | Terms Trade | Constant | Life Expectancy | |||||
| 0,0499 | 0,0121 | -1,444 | -0,004 | -4E-04 | 17,288 | 24,842 | ||||||
| 0,0364 | 0,0134 | 0,3005 | 0,0034 | 1E-04 | 1,5622 | 5,1727 | ||||||
| 0,777 | 4,9733 | |||||||||||
| 67,347 | 116 | |||||||||||
| 9994,6 | 2869,1 | |||||||||||
| 1,3696 | 0,9042 | -4,807 | -1,302 | -3,768 | 11,067 | |||||||
| Life expectancy | ||||||||||||
| e-func Encon | pi-func Enc | MNC PEN73 | Viol Civ Rits | Trade Dep | Terms Trade | Constant | Maternal Mortality | |||||
| -1,975 | -0,374 | 23,806 | 0,1619 | 0,0127 | -551,7 | 1681,8 | ||||||
| 1,1804 | 0,4329 | 9,7404 | 0,1093 | 0,0032 | 50,639 | 167,67 | ||||||
| 0,7282 | 161,21 | |||||||||||
| 51,806 | 116 | |||||||||||
| 8E+06 | 3E+06 | |||||||||||
| e-func Encon | pi-func Enc | MNC PEN73 | Viol Civ Rits | Trade Dep | Terms Trade | |||||||
| -1,674 | -0,863 | 2,444 | 1,4809 | 4,0355 | -10,89 | |||||||
| MNC PEN73 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | %agland | Constant | |
| %forest | -0,392 | -2,287 | -9,318 | -2,208 | 30,87 | 0,517 | 0,748 | -0,027 | -0,391 | -0,088 | 0,101 | 0,01 | -79,6 |
| area | 0,131 | 1,415 | 7,406 | 2,598 | 38,83 | 0,189 | 0,296 | 0,159 | 0,474 | 0,057 | 0,17 | 0,014 | 148,8 |
| 0,291 | 19,75 | ||||||||||||
| 3,771 | 110 | ||||||||||||
| 17648 | 42902 | ||||||||||||
| t-Test | -3,003 | -1,617 | -1,258 | -0,85 | 0,795 | 2,73 | 2,53 | -0,17 | -0,825 | -1,557 | 0,593 | 0,711 | |
| MNC PEN73 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | %agland | Constant | |
| annual | 0,015 | 0,094 | -0,571 | -0,217 | 3,172 | 0,004 | 2E-04 | 0,009 | -0,058 | 0,004 | -0,002 | 3E-04 | -11,24 |
| deforest | 0,006 | 0,069 | 0,361 | 0,127 | 1,893 | 0,009 | 0,014 | 0,008 | 0,023 | 0,003 | 0,008 | 7E-04 | 7,253 |
| 0,339 | 0,963 | ||||||||||||
| 4,705 | 110 | ||||||||||||
| 52,33 | 102 | ||||||||||||
| t-Test | 2,295 | 1,36 | -1,582 | -1,71 | 1,676 | 0,478 | 0,016 | 1,181 | -2,499 | 1,436 | -0,28 | 0,448 | -1,55 |
| MNC PEN73 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | %agland | Constant | |
| ethno | 0,008 | 0,096 | 0,337 | -0,053 | 0,701 | 0,01 | 0,03 | 0,023 | -0,041 | 2E-05 | -0,015 | -0,001 | -2,865 |
| warfare | 0,011 | 0,116 | 0,606 | 0,213 | 3,177 | 0,015 | 0,024 | 0,013 | 0,039 | 0,005 | 0,014 | 0,001 | 12,17 |
| 0,124 | 1,616 | ||||||||||||
| 1,3 | 110 | ||||||||||||
| 40,74 | 287,2 | ||||||||||||
| t-Test | 0,772 | 0,833 | 0,556 | -0,249 | 0,221 | 0,657 | 1,228 | 1,747 | -1,07 | 0,004 | -1,103 | -1,065 | |
| MNC PEN73 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | %agland | Constant | |
| destab./ | 0,002 | 0,019 | 0,03 | -0,033 | 0,515 | 0,001 | -0,001 | 0,008 | -0,012 | -7E-04 | 0,001 | -4E-04 | -2,114 |
| war | 0,003 | 0,027 | 0,143 | 0,05 | 0,75 | 0,004 | 0,006 | 0,003 | 0,009 | 0,001 | 0,003 | 3E-04 | 2,873 |
| 0,145 | 0,381 | ||||||||||||
| 1,549 | 110 | ||||||||||||
| 2,703 | 16 | ||||||||||||
| t-Test | 0,82 | 0,683 | 0,212 | -0,662 | 0,686 | 0,355 | -0,19 | 2,552 | -1,347 | -0,599 | 0,421 | -1,54 |
| MNC PEN73 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | lnPCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | Constant | |
| employment | -1,639 | 2,339 | 2,146 | -32,85 | 0,377 | 0,146 | -0,035 | -0,054 | 0,033 | -0,168 | 0,005 | 161,9 |
| 0,43 | 2,274 | 0,804 | 12,01 | 0,059 | 0,091 | 0,049 | 0,142 | 0,017 | 0,052 | 0,004 | 45,9 | |
| 0,546 | 6,111 | |||||||||||
| 12,16 | 111 | |||||||||||
| 4994 | 4145 | |||||||||||
| t-Test | -3,813 | 1,029 | 2,671 | -2,736 | 6,446 | 1,603 | -0,705 | -0,378 | 1,887 | -3,21 | 1,116 |
| MNC PEN73 | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | constant | |
| inequality | 1,844947742 | -3,803585139 | -2,233455684 | 33,20675582 | 0,008641375 | -79,27182924 |
| share top | 0,655930289 | 3,580564824 | 1,031320612 | 15,67457093 | 0,005552609 | 59,67619026 |
| 20% | 0,260566545 | 8,013042615 | ||||
| 5,285801109 | 75 | |||||
| 1696,976104 | 4815,663896 | |||||
| t-Test | 2,812719236 | -1,06228635 | -2,165626925 | 2,118511312 | 1,556272887 |
Note: as in all EXCEL 5.0 outprints in this work, first row: unstandardised
regression coefficients, second row: standard errors, last row: t-Test. The
values immediately below the standard errors are R^2 (third row, left
side entry), F, and degrees of freedom (fourth row).
Although the ethno-warfare index, and the index of destabilisation and war can be considered as the weakest points in the theoretical structure, presented above, for the R^2 is below 1/6 in each case, the above materials can be considered as a powerful support for dependency theory. There are 17 variables and processes of development measured here. 14 variables are explaining different aspects of development. MNC penetration significantly and negatively affects 14 of the 17 dimensions reported, the rest - the greenhouse index, ethno-warfare, and the existence of war and political destabilisation in a country, are still affected in a fashion, as predicted by our theory, but not significantly.
Three variables measure dependency: MNC penetration, trade dependency, and terms of trade; the processes, relevant for liberal transformation theories are government expenditures, UN member years, civil rights violations, and social security expenditures. The reform theories are being measured by social security, women in parliaments, women as a percentage of the labour force, and the fertility rate. In addition, arms conversion and peace sub-theories in the reformist camp will be measured by military personnel ratios.
One dimension, not significantly affected by MNC penetration, the greenhouse index, is however to be shown a clear function of the fluctuations of unequal exchange in the world economy (terms of trade). Women are particularly marginalised by the process of globalisation, as is shown in our results for gender development, gender empowerment, and maternal mortality. Female power and equity is incompatible, at the other hand, with the process of globalisation.
To judge from Table 4.1, the world after 1980 seems to be a neat repetition of the well-known scholarly Weltbild, that emerged from the writings of Volker Bornschier and Chris Chase-Dunn during the 1980s, and to which we referred to above. Our findings particularly suggest, that MNC penetration in the earlier Kondratieff cycle period again significantly blocks adjustment, growth, increases of life expectancy, the political and human rights record, the human development index, and the gender development index, the gender empowerment index, the life expectancy, a reduction of maternal mortality, and the protection of the world forests.
In addition, income inequality (the share of top 20% of income earners in 81 countries according to Moaddel's data base, enlarged by WDR World Bank data, 1994) is also well explained by the penetration of multinational corporations in the host countries, and is - in contrast to Weede's earlier findings - nowadays significantly enhanced and not lessened by militarisation.
International system participation age is an important control variable in the whole process of the explanation of post-1982 growth and development/stagnation. The basic dependency-argument that emerges from Table 4.1 almost does not need to be spelt out here anymore: too evident is the negative and systematic effect of MNC dependence on growth and development. Almost as a footnote to these arguments, one can add, that terms of trade have a significant effect in the expected direction on the process of maternal mortality. However, our results need a series of qualifications: (i) militarisation emerges - contrary to widely published earlier results by Weede - as one of the main development blocs in the period after 1980, with 5% significant results regarding adjustment, growth, life expectancy increases, income redistribution, employment, the greenhouse effect, and further notable effects on the two deforestation indicators. The main theoretical thrust of our results points, however, in the following further directions: (ii) fertility is negatively related to adjustment, redistribution and growth. (iii) The small and open economies in the world society also tend towards gender political power sharing and towards a better employment situation. A world economically open society with a high proportion of foreign trade per total product is also more likely to have - ceteris paribus - a lower greenhouse-index, principally because the world economically more dominant big nations tend towards higher environmental destruction. (iv) Government activity is not significantly related to adjustment and growth; but a government-controlled economy increases in a negative way the performance of a country regarding the political and human rights record. At the other hand, strong, and not weak government, enhances the human development index, and the gender development index. A socially active state (social security) is significantly better performing, furthermore, to protect the world's forests in a time-perspective sense than the countries, that rely on less 'embedded' modes. The neo-liberal critique is correct, however, in stressing the negative effect of a high social security effort on employment. (v) The institutional long-term integration into the world community, and especially the United Nations, has a significant positive effect on gender power sharing, employment and the dynamic aspects of forest protection. The United Nations programmes in these areas can be regarded as indeed the most effective side of the UN, as far as the measurable results on world development are concerned. (vi) Established feminism (representation of women in parliaments and in the work force) can be regarded as the main loser of the world economic changes that have taken place since the 1980s. States with a high feminist power base at the one hand were successful in still increasing the feminist power base (gender empowerment index); and are performing relatively well on the forest protection front; but even the gender development index could not be affected in an upward direction by established feminism; and ceteris paribus, states with a well-developed feminist power base were performing very badly regarding adjustment, growth, life expectancy increases, political and civil rights performance.
The following Table 4.1d now shows the effects of MNC penetration, measured
by the new UNCTAD data series, measured by around 1985, on world development. In
addition to our above-discussed measures of the social, political, and
environmental well-being of nations, we now have also included mean years of
education as a measure of human capital formation, and the new UNDP capability
poverty measure (CPM), which directly tries to estimate the percentage of
people, marginalised from development in today's LDCs. Unfortunately, the UNDP
did not calculate the CPM-poverty measure for the transition economies of
Eastern Europe, where poverty and mortality often have increased during
transformation. Again, MNC penetration significantly blocks development in the
fullest sense of the word, negatively affecting the whole canon of development
measures:
Table 4.1d: The effects of dependency (FDI stock per total GDP in the host
countries) and world development - data for the 1980s and beyond
| MNCP85 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | Constant | ||||||||||
| adjustment | -0,758 | -0,717 | 0,1956 | -4,491 | 0,0169 | -0,05 | -0,045 | 0,1354 | 0,0044 | -0,042 | 0,0092 | 27,36 | |||||||||
| 65/80/93 | 0,1563 | 0,7946 | 0,2894 | 4,3203 | 0,0211 | 0,0329 | 0,0181 | 0,0512 | 0,0064 | 0,0188 | 0,014 | 16,516 | |||||||||
| 0,3777 | 2,2049 | ||||||||||||||||||||
| 6,1235 | 111 | ||||||||||||||||||||
| 327,46 | 539,62 | ||||||||||||||||||||
| t-Test | -4,847 | -0,902 | 0,6757 | -1,039 | 0,8025 | -1,53 | -2,483 | 2,643 | 0,6865 | -2,228 | 0,661 | ||||||||||
| MNC PEN85 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | Constant | ||||||||||
| growth | -0,907 | -0,281 | 0,0954 | -3,147 | 0,0144 | -0,063 | -0,038 | 0,1416 | 0,0086 | -0,04 | 0,0145 | 23,795 | |||||||||
| 1980-93 | 0,1551 | 0,7885 | 0,2872 | 4,2869 | 0,0209 | 0,0327 | 0,0179 | 0,0508 | 0,0063 | 0,0187 | 0,0138 | 16,389 | |||||||||
| 0,4425 | 2,1879 | ||||||||||||||||||||
| 8,0108 | 111 | ||||||||||||||||||||
| 421,8 | 531,33 | ||||||||||||||||||||
| t-Test | -5,846 | -0,356 | 0,3322 | -0,734 | 0,6895 | -1,922 | -2,104 | 2,7849 | 1,3644 | -2,116 | 1,0498 | ||||||||||
| LEX 1960 | 1 der e-funct | 1 der pi-func | MNCP85 | Viol Civ Rits | Trade Dep | Terms Trade | UN-membery | Women Parl | Women %LF | ln(MPR+1) | Constant | ||||||||||
| DYN | 1,3468 | -0,05 | -0,033 | -0,028 | 0,0147 | -0,006 | 0,0599 | 0,0348 | -0,497 | -25,58 | -0,292 | 27,108 | |||||||||
| LEX | 0,7823 | 0,0201 | 0,03 | 0,0179 | 0,0157 | 0,0062 | 0,171 | 0,0137 | 0,7032 | 6,6478 | 0,0353 | 2,5246 | |||||||||
| 0,7565 | 2,1702 | ||||||||||||||||||||
| 31,349 | 111 | ||||||||||||||||||||
| 1624,1 | 522,79 | ||||||||||||||||||||
| t-Test | 1,7215 | -2,509 | -1,115 | -1,578 | 0,9382 | -0,903 | 0,3502 | 2,528 | -0,707 | -3,847 | -8,265 | ||||||||||
| e-func Encon | pi-func Enc | MNCP85 | Viol Civ Rits | Trade Dep | Terms Trade | pub invest | Women Parl | Women %LF | ln(MPR+1) | Fertility Rate | Constant | ||||||||||
| green | 0,0107 | 0,0514 | 0,0016 | -0,002 | -0,003 | -3E-04 | 0,0001 | 0,0116 | -0,001 | 2E-05 | 0,0249 | 0,0823 | |||||||||
| house | 0,0152 | 0,0681 | 0,0018 | 0,0025 | 0,0013 | 0,0013 | 0,0005 | 0,0129 | 0,0011 | 4E-06 | 0,0798 | 0,2998 | |||||||||
| index | 0,4238 | 0,1787 | |||||||||||||||||||
| 7,4227 | 111 | ||||||||||||||||||||
| 2,606 | 3,5427 | ||||||||||||||||||||
| t-Test | 0,7035 | 0,7549 | 0,882 | -0,742 | -2,351 | -0,26 | 0,254 | 0,901 | -0,901 | 4,328 | 0,3121 | ||||||||||
| pol rights | MNCP85 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | Constant | |||||||||
| violations | 0,5633 | 1,3303 | 0,0892 | -1,74 | 0,0046 | 0,0561 | 0,0209 | -0,11 | 0,0057 | 0,0133 | 0,0032 | 6,9943 | |||||||||
| 0,1083 | 0,5504 | 0,2005 | 2,9926 | 0,0146 | 0,0228 | 0,0125 | 0,0355 | 0,0044 | 0,013 | 0,0097 | 11,441 | ||||||||||
| 0,568 | 1,5273 | ||||||||||||||||||||
| 13,266 | 111 | ||||||||||||||||||||
| 340,4 | 258,92 | ||||||||||||||||||||
| t-Test | 5,2024 | 2,4168 | 0,4451 | -0,582 | 0,3158 | 2,4594 | 1,6653 | -3,098 | 1,2994 | 1,0218 | 0,3327 | ||||||||||
| MNCP85 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | Constant | ||||||||||
| civil rights | 0,3549 | 1,4809 | 0,0051 | -0,535 | -0,002 | 0,0361 | 0,0275 | -0,098 | 0,002 | -0,008 | 0,0014 | 4,4396 | |||||||||
| violations | 0,084 | 0,4268 | 0,1554 | 2,3205 | 0,0113 | 0,0177 | 0,0097 | 0,0275 | 0,0034 | 0,0101 | 0,0075 | 8,871 | |||||||||
| 0,601 | 1,1843 | ||||||||||||||||||||
| 15,203 | 111 | ||||||||||||||||||||
| 234,53 | 155,67 | ||||||||||||||||||||
| 4,2269 | 3,4698 | 0,0328 | -0,231 | -0,21 | 2,0412 | 2,8337 | -3,566 | 0,5888 | -0,748 | 0,184 | |||||||||||
| Human Development Index | MNCP85 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | Constant | |||||||||
| -0,095 | 0,1544 | 0,0047 | 0,0402 | -1E-04 | -0,003 | -4E-04 | 0,0009 | -2E-04 | 0,0006 | 0,0005 | 0,4008 | ||||||||||
| 0,0079 | 0,04 | 0,0146 | 0,2177 | 0,0011 | 0,0017 | 0,0009 | 0,0026 | 0,0003 | 0,0009 | 0,0007 | 0,8321 | ||||||||||
| 0,8695 | 0,1111 | ||||||||||||||||||||
| 67,224 | 111 | ||||||||||||||||||||
| 9,125 | 1,3697 | ||||||||||||||||||||
| -12,08 | 3,8562 | 0,3237 | 0,1845 | -0,106 | -1,589 | -0,426 | 0,3348 | -0,716 | 0,663 | 0,6949 | |||||||||||
| MNCP85 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | Constant | ||||||||||
| -0,071 | 0,0814 | -0,008 | 0,1812 | 0,0009 | -0,002 | -2E-04 | 0,0022 | -2E-04 | 0,0004 | 0,0007 | -0,072 | ||||||||||
| 0,0058 | 0,0294 | 0,0107 | 0,1597 | 0,0008 | 0,0012 | 0,0007 | 0,0019 | 0,0002 | 0,0007 | 0,0005 | 0,6107 | ||||||||||
| 0,8705 | 0,0815 | ||||||||||||||||||||
| 67,801 | 111 | ||||||||||||||||||||
| 4,9568 | 0,7377 | ||||||||||||||||||||
| Gender Development Index | |||||||||||||||||||||
| -12,36 | 2,7703 | -0,706 | 1,1346 | 1,1746 | -1,809 | -0,23 | 1,1382 | -0,707 | 0,5363 | 1,285 | |||||||||||
| MNCP85 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | Constant | ||||||||||
| -0,021 | 0,0038 | 0,015 | -0,177 | 0,0014 | 0,0055 | 0,0007 | 0,0023 | -1E-04 | 5E-05 | 0,0006 | 0,8051 | ||||||||||
| 0,0041 | 0,0208 | 0,0076 | 0,1129 | 0,0006 | 0,0009 | 0,0005 | 0,0013 | 0,0002 | 0,0005 | 0,0004 | 0,4317 | ||||||||||
| 0,8216 | 0,0576 | ||||||||||||||||||||
| 46,465 | 111 | ||||||||||||||||||||
| 1,6974 | 0,3686 | ||||||||||||||||||||
| Gender Empowerment Index | |||||||||||||||||||||
| MNCP85 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | |||||||||||
| -5,089 | 0,1813 | 1,9835 | -1,57 | 2,5954 | 6,364 | 1,537 | 1,7252 | -0,895 | 0,1112 | 1,644 | |||||||||||
| e-func Encon | pi-func Enc | MNCP85 | Viol Civ Rits | Trade Dep | Terms Trade | Constant | Life Expectancy | ||||||||||||||
| 0,0387 | 0,0082 | -1,41 | 0,0046 | -4E-04 | 17,262 | 25,561 | |||||||||||||||
| 0,0356 | 0,0138 | 0,3021 | 0,0303 | 1E-04 | 1,58 | 5,1809 | |||||||||||||||
| 0,7737 | 5,009 | ||||||||||||||||||||
| 66,116 | 116 | ||||||||||||||||||||
| 9953,2 | 2910,5 | ||||||||||||||||||||
| 1,0862 | 0,5931 | -4,668 | 0,1524 | -3,766 | 10,925 | ||||||||||||||||
| Life expectancy | |||||||||||||||||||||
| e-func Encon | pi-func Enc | MNCP85 | Viol Civ Rits | Trade Dep | Terms Trade | Constant | Maternal Mortality | ||||||||||||||
| -1,564 | -0,247 | 22,606 | -0,05 | 0,0129 | -551,3 | 1655,5 | |||||||||||||||
| 1,158 | 0,4491 | 9,8139 | 0,9842 | 0,0032 | 51,33 | 168,31 | |||||||||||||||
| 0,7231 | 162,73 | ||||||||||||||||||||
| 50,487 | 116 | ||||||||||||||||||||
| 8E+06 | 3E+06 | ||||||||||||||||||||
| e-func Encon | pi-func Enc | MNCP85 | Viol Civ Rits | Trade Dep | Terms Trade | ||||||||||||||||
| -1,351 | -0,55 | 2,3034 | -0,051 | 4,0413 | -10,74 | ||||||||||||||||
| MNCP85 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | %agland | Constant | |
| %forest | -0,451 | -2,685 | -11,86 | -2,419 | 34,205 | 0,5247 | 0,6685 | -0,072 | -0,385 | -0,06 | 0,1344 | -0,193 | -85,86 |
| area | 0,1307 | 1,4212 | 7,0959 | 2,5719 | 38,418 | 0,1874 | 0,2954 | 0,1607 | 0,4696 | 0,0565 | 0,1678 | 0,127 | 147,29 |
| 0,3029 | 19,589 | ||||||||||||
| 3,9827 | 110 | ||||||||||||
| 18339 | 42211 | ||||||||||||
| t-Test | -3,447 | -1,889 | -1,672 | -0,941 | 0,8903 | 2,7998 | 2,2632 | -0,447 | -0,819 | -1,057 | 0,8006 | -1,521 | |
| MNCP85 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | %agland | Constant | |
| annual | 0,0127 | 0,0805 | -0,653 | -0,223 | 3,2788 | 0,0047 | -0,002 | 0,0077 | -0,058 | 0,0049 | -0,001 | -0,007 | -11,43 |
| deforest | 0,0064 | 0,0696 | 0,3473 | 0,1259 | 1,8803 | 0,0092 | 0,0145 | 0,0079 | 0,023 | 0,0028 | 0,0082 | 0,0062 | 7,2093 |
| 0,3446 | 0,9588 | ||||||||||||
| 4,8196 | 110 | ||||||||||||
| 53,166 | 101,12 | ||||||||||||
| t-Test | 1,979 | 1,1567 | -1,879 | -1,774 | 1,7437 | 0,5142 | -0,166 | 0,9756 | -2,503 | 1,7661 | -0,148 | -1,053 | -1,586 |
| MNCP85 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | %agland | Constant | |
| ethno | 0,0102 | 0,1021 | 0,5162 | -0,038 | 0,4516 | 0,0119 | 0,0318 | 0,023 | -0,043 | -1E-03 | -0,017 | 0,0002 | -2,072 |
| warfare | 0,0108 | 0,1178 | 0,5883 | 0,2133 | 3,1854 | 0,0155 | 0,0245 | 0,0133 | 0,0389 | 0,0047 | 0,0139 | 0,0105 | 12,213 |
| 0,1152 | 1,6242 | ||||||||||||
| 1,1933 | 110 | ||||||||||||
| 37,776 | 290,19 | ||||||||||||
| t-Test | 0,9403 | 0,8667 | 0,8773 | -0,179 | 0,1418 | 0,765 | 1,2968 | 1,7257 | -1,092 | -0,208 | -1,226 | 0,0144 | |
| MNCP85 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | %agland | Constant | |
| destab./ | 0,0022 | 0,0166 | 0,0792 | -0,029 | 0,4441 | 0,0021 | -0,001 | 0,0074 | -0,013 | -8E-04 | 0,001 | -0,002 | -1,842 |
| war | 0,0026 | 0,0279 | 0,1392 | 0,0504 | 0,7534 | 0,0037 | 0,0058 | 0,0032 | 0,0092 | 0,0011 | 0,0033 | 0,0025 | 2,8885 |
| 0,1319 | 0,3841 | ||||||||||||
| 1,3929 | 110 | ||||||||||||
| 2,4667 | 16,233 | ||||||||||||
| t-Test | 0,876 | 0,5952 | 0,569 | -0,579 | 0,5895 | 0,5772 | -0,193 | 2,36 | -1,38 | -0,689 | 0,309 | -0,853 |
| MNCP85 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | Constant | |
| mean y | -0,821 | 1,1775 | 0,5406 | -6,526 | 0,02 | -0,009 | -6E-04 | 0,0817 | -0,008 | -0,012 | -0,013 | 26,224 |
| of educ | 0,0871 | 0,4429 | 0,1613 | 2,4078 | 0,0118 | 0,0184 | 0,0101 | 0,0286 | 0,0035 | 0,0105 | 0,0078 | 9,2048 |
| ation | 0,8799 | 1,2288 | ||||||||||
| 73,939 | 111 | |||||||||||
| 1228,1 | 167,61 | |||||||||||
| t-Test | -9,419 | 2,6589 | 3,3519 | -2,711 | 1,7038 | -0,487 | -0,055 | 2,8626 | -2,385 | -1,178 | -1,647 | |
| MNCP85 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | social sec | ln PCI^2 | ln(MPR+1) | Fertility Rate | Constant | |
| employ | -1,729 | 1,3969 | 2,0486 | -31,17 | 0,3784 | 0,1233 | -0,05 | -0,07 | 0,0436 | -0,153 | -0,06 | 156,76 |
| ment | 0,4309 | 2,1905 | 0,7978 | 11,909 | 0,0581 | 0,0908 | 0,0498 | 0,1412 | 0,0175 | 0,0519 | 0,0385 | 45,529 |
| 0,5513 | 6,078 | |||||||||||
| 12,397 | 111 | |||||||||||
| 5037,6 | 4100,6 | |||||||||||
| t-Test | -4,012 | 0,6377 | 2,5678 | -2,617 | 6,5094 | 1,3583 | -1 | -0,493 | 2,4854 | -2,939 | -1,565 |
| MNCP85 | Govex | Trade Dep | social sec | UN memy | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | |||
| cpm | 5,6962 | -9,65 | -1,156 | 8,4534 | -0,131 | -0,029 | 0,0247 | -1,711 | 0,0388 | -0,14 | -0,078 | 16,497 | |
| measure | 0,9599 | 4,9936 | 2,1929 | 31,463 | 0,1232 | 0,2494 | 0,1189 | 0,8804 | 0,0376 | 0,1178 | 0,0805 | 115,66 | |
| 0,6509 | 12,162 | ||||||||||||
| 14,917 | 88 | ||||||||||||
| 24270 | 13016 | ||||||||||||
| t-Test | 5,934 | -1,933 | -0,527 | 0,2687 | -1,06 | -0,117 | 0,2078 | -1,944 | 1,0332 | -1,186 | -0,973 | ||
| MNCPen85 | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | constant | |
| inequality | 1,660219 | -5,34162 | -2,13994 | 31,8547 | 0,12603 | -73,7864 |
| share top | 0,65447 | 3,456306 | 1,019608 | 15,49074 | 0,070035 | 59,09442 |
| 20% | 0,252326 | 7,897908 | ||||
| 4,92722 | 73 | |||||
| 1536,726 | 4553,517 | |||||
| t-Test | 2,53674 | -1,54547 | -2,09879 | 2,05637 | 1,799521 |
See: footnotes above, Table 4.1c. As in all EXCEL 5.0 outprints in this work,
first row: unstandardised regression coefficients, second row: standard errors,
last row: t-Test. The values immediately below the standard errors are
R^2 (third row, left side entry), F, and degrees of freedom
(fourth row).
The above materials again strongly support dependency theory. There are 19 variables and processes of development measured here. 14 variables are explaining different aspects of development. MNC penetration significantly and negatively affects 15 of the 19 dimensions reported, the rest - life expectancy increases, the greenhouse index, ethno-warfare, and the existence of war and political destabilisation in a country, are still affected in a fashion, as predicted by our theory, but not significantly.
Three variables again measure dependency: MNC penetration, trade dependency, and terms of trade; the processes, relevant for liberal transformation theories are again government expenditures, UN member years, civil rights violations, and social security expenditures. The reform theories are again being measured by social security, women in parliaments, women as a percentage of the labour force, and the fertility rate. In addition, arms conversion and peace sub-theories in the reformist camp will be measured by military personnel ratios.
One dimension, not significantly affected by MNC penetration, the greenhouse index, is shown to be a clear function of militarisation; however, smaller nations in world society (high trade dependency index) still have a more favourable balance here. The new research design shows again, that women are particularly marginalised by the process of globalisation, as is shown in our results for gender development, gender empowerment, and maternal mortality. Female power and equity is incompatible, at the other hand, with the process of growth and adjustment in the era of globalisation.
Our findings suggest, that MNC penetration in the present Kondratieff cycle period again significantly blocks adjustment, growth, the political and human rights record, human development, gender development, gender empowerment, life expectancy, a reduction of maternal mortality, and the protection of the world forests.
In addition, income inequality (the share of top 20% of income earners in the 81 countries according to Moaddel's data base, enlarged by WDR World Bank data, 1994) is again well explained by the penetration of multinational corporations in the host countries, and is again - in contrast to Weede's earlier findings - significantly enhanced and not lessened by militarisation. MNC penetration increases significantly poverty, as measured by the new UNDP 1996 CPM poverty measure. International system participation age is again an important control variable in the whole process of the explanation of post-1982 growth and development/stagnation. It significantly enhances the increase of life expectancy over time, gender empowerment, and the educational and employment record of a given country (the strong points of belonging long enough to the de-facto distribution coalition of long-standing UN members), while it significantly fails to block the deforestation process, especially due to the divergence between professed ideals and dire realities in the long-standing UN member-nations in Latin America and in Eastern Europe. Terms of trade have again a significant effect in the expected direction on the process of maternal mortality, and life expectancy.
However, our results again need a series of qualifications: (i) militarisation emerges again - contrary to widely published research results by Weede about the world economy of the 1960s, the 1970s and the early 1980s - as one of the main development blocs in the period after 1980, with 5% significant results regarding adjustment, growth, employment, income redistribution, the greenhouse effect, and further notable effects on the two deforestation indicators. The main theoretical thrust of our new results with MNC penetration during the 1980s points, however, in the following further directions: (ii) fertility is negatively related to redistribution, employment and human capital formation, but there is perhaps somewhat surprising ceteris paribus positive effect on gender empowerment, mainly due to the relatively good gender empowerment performance of countries with a relatively higher historical fertility rate like Barbados, Bahamas, China., Ireland etc., whose gender empowerment is higher than that of nations with a historically low birth rate like France (iii) The small and open economies in the world society also tend towards gender political power sharing and towards a better employment situation. A world economically open society with a high proportion of foreign trade per total product is also more likely to have - ceteris paribus - a lower greenhouse-index. To further support the predictions about the positive effects of trade dependency on development, developed by Katzenstein, one should emphasise also the positive effects on human capital formation and employment. But trade dependency also works as a classic transmitter of mechanisms of dependency by the effects it wields on life expectancy, maternal mortality, and the coverage of a nation with forests. (iv) Government activity is again not significantly related to adjustment and growth; but a government-controlled economy increases also in this research design in a negative way the performance of a country regarding the political and human rights record. At the other hand, strong, and not weak government, again enhances the human development index, and the gender development index, the human capital formation record of a nation, and government significantly reduces the amount of absolute poverty measured by the new UNDP CPM-measure to be found in developing countries. The effects of government or - more specifically - the social welfare state (social security index) on the indicators of the situation of the world woodland's are however not giving reason for optimism. The relative strength of the social welfare state has - like so many explanatory variables - positive and negative effects on the process of world development: it has a negative effect on employment, and it has a negative effect on human capital formation (mean years of education), while welfare states - ceteris paribus - still tend to behave in a protective fashion regarding their ecological systems (% forest coverage). (v) Established feminism (representation of women in parliaments and in the work force) again emerges as the main loser of the world economic changes that have taken place since the 1980s. States with a high feminist power base at the one hand were - as in the above research design - again successful in still increasing the feminist power base (gender empowerment index); and were performing relatively well on the forest protection front; but even the gender development index could again not be affected in an upward direction by established feminism; and ceteris paribus, states with a well-developed feminist power base were performing very badly regarding adjustment, growth, life expectancy increases, political and civil rights performance, the human development index.
Our analysis also shows the effects, that transnational migration has on the
sending and on the receiving countries. The hope of many semi-periphery and
periphery nations to change their weak position in the world-wide structure of
the division of labour by mass migration to the developed countries is not
realistic. These findings could have an implication not only for the social
scientific, but also for the political debate in Europe. At present, 'green',
'alternative' and socialist-left-wing groups claim that Western Europe should
allow more immigration from the South and the East. For us, migration is - above
all - an expression of a peripheral position in the world economy. The dominant
countries, like Japan or the United States, send their managers abroad, but not
their workforce. Poor and peripheral countries, like Jordan, Pakistan, Ireland,
Portugal, or nowadays Poland, send their workers abroad, and import their
managers. Interestingly enough, the effect of government size on growth becomes
significantly and highly negative, once we consider for the effect of migration
on development. Introducing the variable: 'worker remittances per total GNP'
into the above equations, we achieve for the countries with complete data on
worker remittances the following results:
Table 4.2: International dependency and its effects on growth and adjustment,
allowing for the influence of the migration process
| MNC PEN73 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | migration | constant | |
| adjustment | -0,143 | -1,13 | 0,525 | 0,589 | -11,5 | -0,018 | -0,033 | -0,05 | 0,115 | -0,02 | -0,02 | -0,004 | 60,89 |
| 0,049 | 0,207 | 1,195 | 0,404 | 6,05 | 0,026 | 0,05 | 0,027 | 0,081 | 0,017 | 0,036 | 0,003 | 22,69 | |
| 0,56 | 2,072 | ||||||||||||
| 5,402 | 51 | ||||||||||||
| 278,4 | 219 | ||||||||||||
| t-Test | -2,897 | -5,452 | 0,439 | 1,456 | -1,901 | -0,671 | -0,667 | -1,852 | 1,426 | -1,191 | -0,552 | -1,278 | |
| MNC PEN73 | Govex | Trade Dep | social sec | UN-membery | Women Parl | Women %LF | ln PCI | ln PCI^2 | ln(MPR+1) | Fertility Rate | migration | constant | |
| growth | -0,119 | -1,42 | 1,832 | 0,42 | -9,152 | -0,01 | -0,008 | -0,041 | 0,063 | -0,019 | -0,017 | -3E-04 | 53,4 |
| 0,046 | 0,194 | 1,12 | 0,379 | 5,671 | 0,025 | 0,047 | 0,025 | 0,076 | 0,016 | 0,034 | 0,003 | 21,27 | |
| 0,614 | 1,943 | ||||||||||||
| 6,767 | 51 | ||||||||||||
| 306,4 | 192,5 | ||||||||||||
| t-Test | -2,569 | -7,307 | 1,636 | 1,108 | -1,614 | -0,407 | -0,179 | -1,637 | 0,827 | -1,166 | -0,51 | -0,113 | 2,51 |
61.4% of economic growth are explained by our equation. Although the small
and open economies - especially in Europe - tend towards a higher economic
growth rate and a less painful structural adjustment towards the realities of
the evolving post-1982/89 world economic and social order, it stands out very
clearly, that under due consideration for the effects of migration on growth,
the critique of the state sector and an excessive social security burden becomes
relevant.