Latin America at the end of the millennium

Monthly Review

Volumn 51, Issue 3, 1999, Pages 31-52

  Petras, James ^a   Veltmeyer, Henry ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0002371490     PISSN: 00270520     EISSN: None     Source Type: Journal    
DOI: 10.14452/MR-051-03-1999-07_3     Document Type: Article

References (21)

1. Fred Bergsten and Randall Henning, authors of Global Economic Leadership and the Group of Seven (Institute for International Economics, 1996) have focused, as others have, on evidence of a re-emerging inter-imperialist rivalry, reflected in dissension within the G7. However, there is evidence for the growing effort and success of the United States (since the collapse of the Soviet Union and the socialist bloc) in establishing hegemony over the whole system. Japan, in particular, has been losing ground. Notwithstanding evidence of a growing battle for the global marketplace and difficulties within the G7 to coordinate policies of global management and governance, the system as a whole is increasingly under the sway and hegemony of the United States. This is reflected in the declining share in the top five hundred multinational companies (MNCs) of Japan (from seventy-one in 1998 to forty-six in 1999) and the European Community (173 versus 244 for the United States). At the level of the top one hundred, the dominance of United States is even more striking: over 70 percent versus 26 percent for Europe and 4 percent for Japan ("Global 500," Financial Times, January 28, 1999).
2. Fred Bergsten and Randall Henning, authors of Global Economic Leadership and the Group of Seven (Institute for International Economics, 1996) have focused, as others have, on evidence of a re-emerging inter-imperialist rivalry, reflected in dissension within the G7. However, there is evidence for the growing effort and success of the United States (since the collapse of the Soviet Union and the socialist bloc) in establishing hegemony over the whole system. Japan, in particular, has been losing ground. Notwithstanding evidence of a growing battle for the global marketplace and difficulties within the G7 to coordinate policies of global management and governance, the system as a whole is increasingly under the sway and hegemony of the United States. This is reflected in the declining share in the top five hundred multinational companies (MNCs) of Japan (from seventy-one in 1998 to forty-six in 1999) and the European Community (173 versus 244 for the United States). At the level of the top one hundred, the dominance of United States is even more striking: over 70 percent versus 26 percent for Europe and 4 percent for Japan ("Global 500," Financial Times, January 28, 1999).
3. As for the stock of FDI, calculated at 3.5 trillion dollars for 1997 (UNCTAD, World Investment Report [New York and Geneva: UN, 1998], p. xvii), it provides the basis of the operations of an estimated fifty-three thousand multinational companies (MNCs) and 448 thousand or so of their affiliates that dominate world production and trade, the total value of which is calculated at 9.5 trillion dollars. Regarding the flow of FDI, developing countries accounted for close to two-fifths or 149 billion dollars of world FDI inflows in 1997, twice their share in 1993 and ten times that of 1985 (UNCTAD 1998, p. 16). By 1997, Latin America surpassed South, East, and Southeast Asia as a favored outlet of FDI and in FDI per capita (ibid., pp. 17, 264).
4. As for the stock of FDI, calculated at 3.5 trillion dollars for 1997 (UNCTAD, World Investment Report [New York and Geneva: UN, 1998], p. xvii), it provides the basis of the operations of an estimated fifty-three thousand multinational companies (MNCs) and 448 thousand or so of their affiliates that dominate world production and trade, the total value of which is calculated at 9.5 trillion dollars. Regarding the flow of FDI, developing countries accounted for close to two-fifths or 149 billion dollars of world FDI inflows in 1997, twice their share in 1993 and ten times that of 1985 (UNCTAD 1998, p. 16). By 1997, Latin America surpassed South, East, and Southeast Asia as a favored outlet of FDI and in FDI per capita (ibid., pp. 17, 264).
5. UNCTAD 1998, p. xvii-xix, 246, 264. As UNCTAD sees it, "liberal national policy frameworks" in the region are now so commonplace that they lose their power to attract foreign capital, which is increasingly oriented in its decisions by a region's "locational advantages," viz. its stock of human resources, infrastructure, and market access, as well as "created assets" such as technology and innovative capacity, p. xxxi.
6. UNCTAD 1998, p. 244. In 1996 Brazil retained its position as the region's champion recipient of FDI, overtaking Mexico; in 1997, this lead over Mexico was consolidated with an additional inflow of sixteen dollars based on the largest privatization deal to date.
7. UNCTAD World Investment Report (New York and Geneva: UN, 1996), p. 61; UNCTAD 1998, p. 12, 243. While FDI flows today are nearly twice what they were in 1990 and some sevenfold their volume in 1989, it grossly underestimates the real size of investment by the MNCs because it does not cover the investments which are financed by funds raised in domestic and international markets (UNCTAD, World Investment Report [New York and Geneva: UN, 1997]). If these were included, it is estimated that the capital base of global production accounted for by the transnational corporations (TNCs) and their affiliates would be some 1.6 trillion dollars, about 3.5 times the value of FDI stock (UNCTAD 1998, p. 8).
8. UNCTAD World Investment Report (New York and Geneva: UN, 1996), p. 61; UNCTAD 1998, p. 12, 243. While FDI flows today are nearly twice what they were in 1990 and some sevenfold their volume in 1989, it grossly underestimates the real size of investment by the MNCs because it does not cover the investments which are financed by funds raised in domestic and international markets (UNCTAD, World Investment Report [New York and Geneva: UN, 1997]). If these were included, it is estimated that the capital base of global production accounted for by the transnational corporations (TNCs) and their affiliates would be some 1.6 trillion dollars, about 3.5 times the value of FDI stock (UNCTAD 1998, p. 8).
9. UNCTAD World Investment Report (New York and Geneva: UN, 1996), p. 61; UNCTAD 1998, p. 12, 243. While FDI flows today are nearly twice what they were in 1990 and some sevenfold their volume in 1989, it grossly underestimates the real size of investment by the MNCs because it does not cover the investments which are financed by funds raised in domestic and international markets (UNCTAD, World Investment Report [New York and Geneva: UN, 1997]). If these were included, it is estimated that the capital base of global production accounted for by the transnational corporations (TNCs) and their affiliates would be some 1.6 trillion dollars, about 3.5 times the value of FDI stock (UNCTAD 1998, p. 8).
10. According to the Banco Central do Brasil (1998) only 30 percent of the privatized assets in Brazil have been acquired by foreign investors (mostly U.S.), although in the sectors of telecommunications and electronics the involvement of foreign firms is higher (39 and 40 percent respectively). More generally, as of 1996, FDI is increasingly used to acquire the stocks of non-privatized firms - over 40 percent according to CEPAL's Productive Transformation with Equity (Santiago: 1999).
11. In 1997, total cross-border merger and acquisition (M & A) transactions worldwide amounted to some 342 billion dollars, representing 25 percent of all M & A transactions worldwide but 58 percent of total FDI inflows (UNCTAD 1998, p. 19). In Brazil, Latin America's favorite playground for transnational capital, from 1992 to 1997, there were six hundred M & As, 61 percent of which involved foreign (mainly U.S.) firms. These M & A's have been particularly evident since 1994 in the sectors of banking, insurance, and finance (which, in 1997, became the leading destination for FDI in the region), as well as pharmaceuticals, chemical products, and telecommunications (UNCTAD 1998, p. 19ff).
12. America Economía, 1997/1998; UNCTAD 1998, p. 246.
13. UNCTAD 1998, p. 8.
14. IDB, 1998; UNCTAD 1998, p. 263.
15. New York Times, March 26, 1999, p. C4. The mechanism of these super-profits is speculation on the politically manipulated timing of government actions on the exchange rate of the real.
16. UNCTAD 1997, p. 27.
17. ECLAC 1998c, p. 2, Slide 18.
18. Benu Varham-Schneider, Capital flight from Developing Countries (Westview Press, 1991), p. 12.
19. G.S. Fields and A.B. Newton, "Changing Labor Market Conditions and Income Distribution in Brazil, Costa Rica, and Venezuela," in S. Edwards and N. Lustig, eds., Labor Markets in Latin America (Washington, DC: Brookings Institute, 1997). In terms of the World Bank's World Development Report 1995 data, the index of wages had gone down in Bolivia from 182 (1980) to 76.4 (1987); in Mexico from 129.2 in 1980 to 103.3 (1990); in Brazil from 100 (1981) to 68.3 (1989); and in Venezuela from 100 (1980) to 47.4 (1992).
20. G.S. Fields and A.B. Newton, "Changing Labor Market Conditions and Income Distribution in Brazil, Costa Rica, and Venezuela," in S. Edwards and N. Lustig, eds., Labor Markets in Latin America (Washington, DC: Brookings Institute, 1997). In terms of the World Bank's World Development Report 1995 data, the index of wages had gone down in Bolivia from 182 (1980) to 76.4 (1987); in Mexico from 129.2 in 1980 to 103.3 (1990); in Brazil from 100 (1981) to 68.3 (1989); and in Venezuela from 100 (1980) to 47.4 (1992).
21. CEPAL/ECLAC (1990) is the major institutional source for such proposals in the region. While the neoliberal model is geared to a small cluster of enterprises (an estimated 15 percent or so of all enterprises) that are internationally competitive as well as another grouping of medium-sized firms that have "productive capacity" CEPAL argues the need for a more participatory and inclusive form of economic development: to incorporate into the production (and development) process those enterprises, formed by the peasants in the rural economy and by the operators of micro-enterprises in the urban informal economy, which have been left to twist in the winds of market forces by the neoliberal model.