From: "John Mage" <jmage at panix.com>
>The present (1991-2003) is a period wherein FDI [Foreign
>Direct Investment] and FPI [Foreign Portfolio Investment], especially
>the latter, have constrained macroeconomic policy including fiscal policy
>to weaken industrial growth rates since 1996-1997.
Doug said:
>What I'd like to know is how
>imperialism contributes to Northern prosperity today, and this quote
>doesn't really answer that. And Indian growth rates have recently
>been pretty strong. Also, a lot of American IT workers might argue
>that FDI is contributing to Indian growth at the expense of U.S.
>growth.
From: <uvj at vsnl.com>
>
> China's enjoys trade surplus of $100 bn with the US. Does any developing
> country have the kind of market access to the US and Japan that China has?
>
> Ulhas
>
First to Doug...shouldn't we differentiate between prosperity of the North vs. prosperity of Northern owners of capital (which though they may be tied in substantial ways are different issues)? What is bad for American IT workers could be good for the owners...
Second, when looking at the influence of western (northern, u.s.) capital on India's prosperity/poverty, is it best to discuss India's portion in total world trade (which as we see is negligable)? Or is it better to scale things down and focus on the specific influence that trade and investment (and all the national legislative and policy decisions that stem from participation, at any level, in the global economy) have on India. What seems of minimal influence to the world economy could be very influential within the social, political and economic mileau of India.
Tied to this, I happen to be reading at present Nitzan and Bichler's "The Global Political Economy of Israel" and they hold that accumulation of capital represents the commodification of power. (Seems Bourdieun in some ways to me) "Capitalists accumulate not things carried over from the past, but vendible power titles projected into the future. In this sense, their capitalised profit represents a claim not for a share of the output, but for a share of control over the social process." (p.36) and further, they say that "to accumulate differentially is to increase your share of total profit and capitalisation. And to increase your distributive share of these magnitudes is to increase your relative power to shape the process of social change. The source of such power is the ability of owners to strategically limit or 'sabotage' the process of social reproduction." (p.37)
John Mage's Indian prof. friend holds that the power of foreign capitialists, in the form of FDI and FPI, presently have significant influence over economic policy decisions in India. (Not being in any way an economist, I don't have any idea how accurate his statement is).
But his argument (and also connected to the above reference to American trade deficits with China) ties in to Nitzan and Bichler's discussion of how the production and international trade issues are secondary to capital flow, which is a "matter of ownership and hence power" The authors appear to be saying that trade deficits are the downside of trade liberalization, not so much done for supporting 'free trade' per se, but more importantly "free investment--or more precisely, the freedom to impose and commodify power." (p.64):
"One of the first to approach international capital mobility as a facet of ownership and power was Hymer (1960), who argued that firms would prefer foreign investment over export or licensing when such ownership conferred differential power, or 'ownership advantage' as it later came to be known. Based on this interpretation, the power of U.S.-based foriegn investors rose exponentially over the past half-century. According to U.S. Department of Commerce data, the share of export in GDP during that period expanded at t trend growth of 1.3 per cent, but the share of foreign operations in overall net corporate profit rose more than twice as fast, at a trend growth rate of 2.8 per cent. The result is that foreign operation now contribute to accumulation roughly twice as much as exports, up from par in the 1950's. The difference seems all the more perplexing since, even with the recent resurgence of capital mobility, gross U.S. trade flows are still roughly three timjes larger than gross capital flows. But then, unlike trade, investment tends to accumulate, eventually causing overseas earnings to outpace those coming from export." (p. 64)
"Although difficult to ascertain with available data, the cumulative (albiet irregular) build-up of international investment has probably contributed greatly to the differential accumulation of U.S. dominant capital. The reason is that whereas exports augment the profits of small as well as large firms, the bulk of foreign earnings go to the largest corporations. It is therefore the globalisation of ownership, not trade, which is the real prize. While free trade could boost as well as undermine differential accumulation, free investment tends mostly to raise it. But then, since free investment can come only at the footsteps of liberalised trade, the latter is worth pursuing, even at the cost of import competition and rising trade deficits." (p.64)
So, shouldn't we be looking at foreign investment instead of trade:
http://www.fdi.gov.cn/common/info.jsp?id=CENSOFT0000000009525 Between January - July this year, 22,245 foreign-funded enterprises were newly approved to set up in China, with the contractual foreign investment of USD59.171 billion, and the actual utilized foreign investment of USD33.354billion 2003-08-19
http://fpeng.peopledaily.com.cn/200203/14/eng20020314_92082.shtml Foreign Investment in China Tops 400 Billion US Dollars China had made use of foreign investment of over 400 billion U.S. dollars by February 2002, the Ministry of Foreign Trade and Economic Cooperation said Wednesday.