'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.