~ TABLE OF CONTENTS ~
(8-A) ~ Labor Conditions ~
(8-A-a) -- Central and South America ~ [Aa1] Mexico, [Aa2] Caribbean, [Aa3] South America, ~
(8-A-b) ~ Asia ~ [Ab1] Vietnam, [Ab2] Indonesia, [Ab3] South Korea, [Ab4] North Korea, [Ab5] India, [Ab6]~China, ~
(8-A-c) ~ Africa ~ [Ac1]~Madagascar, [Ac2]~Arab World, ~
(8-B) ~ Environmental Conditions ~ [B1]~Mexico, [B2]~Developing World, ~
(8-C) ~ Human Capital ~
(8-D) ~ Economic Conditions ~ [D1]~China, [D2]~Latin America, [D3]~Developing Nations, [D4]~Koreas, [D5]~Asian Sub-Continent [D6]~Southeast Asia, [D7]~Africa, [D8]~Eastern Europe, [D9]~Global, ~
(8-E) ~ Productivities ~
(8-F) ~ Driving Forces for Globalization ~
(8-G) ~ Privatization of Water Infrastructure and Other Public Facilities ~
(8-H) ~ Economic Polarization ~
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Go to List of References of this Literature Review ~
Go to Table of Contents of this Literature Review ~
Go to "Globalization: The Convergence Issue" ~
Go to Home Page of this Entire Web Site ~

According to the UN, 12 million people worldwide are forced to work against their will in a $9.5 billion a year industry. (in gci.html Section (1-C)) Pulitzer Prize-winning columnist Nicholas Kristof of The New York Times on a recent visit to Cambodia to demonstrated that the business of slavery is common, profitable and often ignored. ("Slavery Alive and Well," CNN-Anderson Cooper 360 Degrees (2/16/07).)

PART (8-A-a) ~ CENTRAL AND SOUTH AMERICA ~ [Aa1]~Mexico, [Aa2]~Caribbean, [Aa3]~South America, ~

About 44% of Latin Americans still live in poverty. The number of unemployed Latin American workers has more than doubled in the past decade. Tens of millions of others (up to 70% in some countries) work in Latin America's informal economy as street vendors etc. (02F1).

Most of Mexico's maquiladora workers are very young, between ages 16-25. Their hours are so long that their youth passes without seeing the sun. (in gci.html)

Mexico's Maquiladora employment began its decline in 2000, and in 2003 was 20% below its peak (03G1).

The North American Free Trade Agreement (NAFTA) has spurred economic development in Mexico, but is not enough to achieve economic convergence with Canada and the United States even in the long run without investment in innovation, infrastructure and adequate institutions, according to a new World Bank 346-page report. The authors () estimate that without NAFTA, global exports would have been roughly 25% lower; FDI, which was exceptionally high in 1994-95, around 40% less, and Mexico's US$5,920 per capita income in 2002 would have been 4-5% lower (03L2)

Minimum wage is 50 cents/hour. In one US auto plant in Mexico, the workers went on strike. The Mexican police shot several and put the strikers back to work - and cut their wages 45%. More than 2/3 of the American people don't want NAFTA ratified (Ross Perot, Pittsburgh Post Gazette (8/30/02)).

Workers in the Tijuana maquiladoras are paid about 50 cents/ hour - less than before NAFTA passed (Sierra, (July/August, 1997)).

Mexican auto industry wages and benefits average $4.00/ hour, vs. $30/ hour in the US (Karen Lissakers, Wall Street Journal (11/19/92)).

Average wages in Mexico's export-oriented maquiladoras sector are $1.73/ hour, vs. $2.17/ hour in the Mexican economy as a whole (Karen Lissakers, Wall Street Journal (11/19/92)).

Cuban workers earn an average of $40/ month (Gershon Fishbein, "Cubans give health system mixed reviews", Pittsburgh Post Gazette (1/12/03)). (in gci.html)

Cheap labor is one of the biggest reasons the salmon industry has grown so quickly in Chile. Not only is the minimum wage extremely low ($190/ month), but labor standards are rarely enforced. While government studies estimate that 75% of salmon companies violate labor laws, Chile regularly inspects only 12% of salmon facilities. The percentage of the salmon industry that is unionized is 11%. One result is the hiring part-time labor or rotating employees into new positions just before a pay raise is due (Anton Daughters, "Salmon industry changing culture (Chile)", The Tucson Citizen (8/3/04).). (in gcib.html)

Wages in Chilean salmon-farming: $150/ month ($5/ day) in 1989. (Nearly all salmon farmed in Chile is exported.) (Michael L. Weber, "Farming Salmon: A Briefing Book", Consultative Group on Biological Diversity (October 1997) 42pp.)

Part [8-A-b] - ASIA ~ [Ab1]~Vietnam, [Ab2]~ Indonesia, [Ab3]~ South Korea, [Ab4]~ North Korea, [Ab5]~ India, [Ab6]~China,

Sub-Part [Ab1] ~ VIETNAM ~

Wages for factory work: $1/ day or less (Marcus W. Brauchli, Wall Street Journal (4/7/93)). Vietnamese Nike workers earn $1.60/ day, while three simple meals cost $2.00 (Medea Benjamin, in a letter to the editor in Wall Street Journal (6/4/97)).

Wages of a supervisor in a Nike plant in Indonesia in 2002: $90/ month + overtime (02D1).

Workers went on strike in May 1997 for an extra 20 cents/day that would give them $2.46/day as mandated by the new minimum-wage law. Nike suggested that Indonesians were pricing themselves out of the labor market ($2.46/ day covers 90% of the basic subsistence needs for one person (Medea Benjamin, letter to the editor in Wall Street Journal (6/4/97)). Per-capita GNP in Indonesia: $880 (97O1).

Korean Average Monthly Wage for Manufacturing Employees (dollars) (Bank of Korea data)

Sub-Part [Ab4] ~ NORTH KOREA ~

Pay of workers averages about $45/month. North Korea is seeking to have its $7 billion-plus external debt restructured (Damon Darlin, Wall Street Journal (5/12/92)).

Sub-Part [Ab5] ~ INDIA ~

Foundry workers in India earn $1 for working an 8-hour day (03K2). (in gci.html)

Entry-level college graduates in India are paid $8000-$9000/ year, vs. $20,000- $30,000 in the US (03L1).

Software development in India costs $15-$20/ hour including the cost of the hardware, software and a satellite link. Compare this with $60-$80/ hour in the US (94C1).

Sub-Part [Ab6] ~ CHINA ~

In China, starting salaries for call-center operators is $90/ month (04F1). (in gci.html)

"China to Speed Up Urbanization, Resolve Farm Issues", Push newsfeed (1/8/03).
The income of China's farmers in 2002 was 2470 yuan (US$298). Average income of urban residents: 7500+ yuan (US$906). (in gci.html)

The average factory wage in China is about 40 cents per hour (02I1).

Two thirds of China's people live on less than $1/day (02I1).

China's population of entrepreneurs and white-collar workers number roughly 50 million according to some economists (02L2).

China's unemployment rate: at least 10% (02L2).

The market rate for unskilled labor is 60 cents/hour, vs. $2.50 in Malaysia, $5.00 in Singapore, and $25 in Japan (02W1). Comments: The article notes that China's supply of unskilled labor is essentially infinite.

Skilled workers in China earn $100-$150/month working 50-65 hours/week. Unskilled workers get $50-70/ month (presumably for 50-65 hours/ week also) (Joseph Periera, Wall Street Journal (5/28/93)).

In the residential furniture industry (for export), Chinese workers make about $100/month and are housed in dormitory-styled buildings (02H1).

Go to top of Part 8-A-b - Labor Conditions - Asia ~
Go to List of References of this Literature Review ~
Go to Table of Contents of this Literature Review ~
Go to "Globalization: The Convergence Issue" ~
Go to Home Page of this Entire Web Site ~

PART (8-A-c) ~ AFRICA ~ [Ac1] Madagascar, [Ac2] Arab World,

Sub-Part [Ac1] ~ MADAGASCAR ~

Madagascar is an African country affected by the Africa Growth and Opportunity Act of 2000, Madagascar, wages are less than 40 cents per hour and forced overtime is a prevalent practice (Helene Cooper, Wall Street Journal (1/2/02)).

22% of the people in the Arab world earn less than $1 a day while 52% earn $2-$5/ day. Nearly 20% of the total Arab workforce is jobless ("UAE Tops Population Growth", Gulf News (2/4/02)).

Go to top of this Section (8-A) ~ Developing Nations -- Labor Conditions ~
Go to top of this Chapter 8 ~ Developing Nations ~
Go to List of References of this Literature Review ~
Go to Table of Contents of this Literature Review ~
Go to "Globalization: The Convergence Issue" ~
Go to Home Page of this Entire Web Site ~

SECTION (8-B) ~ ENVIRONMENTAL CONDITIONS ~ [B1]~Mexico, [B2]~Developing World, ~

Part [B1] ~ MEXICO ~ 

Mexican law prohibits local governments from taxing state-of-the-art factories in maquiladoras to pay for sewers (Sierra, (July/August, 1997)).

About 1.1 billion people lack access to safe drinking water, and 2.4 billion people to sanitation (05B1).

In developing countries, 90-95% of sewage and 70% of industrial wastes are dumped untreated into surface waters where they pollute water supplies (Ref. 15 of Ref. (02B2)). (Used in ifp.html as Ref. (02B1) in "Examples of effects of scarcity of infrastructure capital in the developing world")

Go to top of this Section (8-B) ~ Developing Nations - Environmental Conditions ~
Go to top of this Chapter 8 ~ Developing Nations ~
Go to List of References of this Literature Review ~
Go to Table of Contents of this Literature Review ~
Go to "Globalization: The Convergence Issue" ~
Go to Home Page of this Entire Web Site ~

The WHO (World Health Organization) identified 57 nations where a serious shortage of health workers is impairing the provision of lifesaving interventions such as child immunization and safe pregnancy. There is a current shortage of more than four million doctors, nurses and midwives. Almost half the nurses who registered in the UK since 1997 have come from countries such as the Philippines, Australia, India, South Africa and other sub-Saharan African countries. Ghana has lost more than 1000 nurses to the UK over the past 8 years ("Global Nurse Shortages on Agenda at WHO Meeting," BBC News (6/6/06) http://www.guardian.co.uk/gender/story/0,,1792375,00.html).

Estimated number of colleges and universities in India (from a chart) (number in thousands) (07G1):

Enrollment in Indian Colleges and Universities (in millions of students) (from a chart) (07G1):

The leading Caribbean and Latin American nations in sending health-care workers to the US (05M2).

Source: John Mollenkopf, City University of New York, US Census Bureau

A World Bank study released 10/24/05 found that 20% to nearly 50% of the college educated citizens of poor countries like Ghana, Mozambique, Kenya, Uganda and El Salvador lived abroad in an O.E.C.D. country. For Haiti and Jamaica the fraction was more than 80%. In countries like India, China, Indonesia and Brazil, less than 5% of the skilled citizens lived abroad in an O.E.C.D. country (Celia W. Dugger, "Developing Lands Hit Hardest by 'Brain Drain'", New York Times (10/25/05).).

Percentage of 15-year-olds in 2002 that fell below international education benchmarks (Source: UNICEF).

World Share of high-tech exports (Sources: National Science Foundation and the American Association for the Advancement of Science). (Emerging Asian includes China, South Korea, Taiwan, Singapore, Hong Kong, and India.) (In gci.html) (Table 1-4A)

53% of China's manufacturers offer more than 20 hours of training to workers, compared with 35% of US manufacturers (04F3).

Myanmar (Burma) has 156 universities compared with 32 in 1988 and women enjoy full equality ("Myanmar's Population Hits 53 Million", Xinhua General News Service (7/13/04).). (In cgi.html)

U.S. educational institutions collected $1.2 billion from Indian nationals in 2002 (Commerce Department data) (04H2).

Dalian, a port city in northeastern China, has 22 universities and colleges with over 200,000 students. More than half of these students graduate with engineering or science degrees. Those who don't are directed to spend a year studying Japanese or English and computer science (04F1). (in gci.html)

Undergraduate degrees in engineering granted annually (04C1): (Sources: U.S. Census Bureau; NASSCOM)

China 195,354; India 129,000; Japan 103,440; Russia 82,409; U.S. 60,914; South Korea 45,145 (04C1) (in gci.html)

In 2002, 60,000 engineers graduated from US colleges. China and India graduated about 300,000 (04H1) (in gci.html).

Singapore and five of its neighboring Asian nations beat the US in a recent math assessment test of eighth graders internationally (04H1). (in gci.html)

According to a survey by the National Council for Education Statistics, more than 50% of the roughly 3000 students earning graduate degrees in economics in the US come from foreign countries. Forty years ago, the figure was just above 20%. A 1996 survey of 500 of these students found they came primarily from prominent, well-educated families, and a large number planned to return home eventually to work in government, business or academia (02H2). (in gci.html)

India's software Exports (in millions of dollars) (from a graph) (data from India's National Association of Software and Service Companies) (Marcus W. Brauchli, Wall Street Journal (1/6/93))

Note: The 1993 figure is an estimate. Comments: These exports double about every 1.5 years.

India has almost 1700 engineering colleges, technical institutes and polytechnic schools, giving India the world's second-largest bank of English-speaking technicians in the world (94C1).

Wage competition from abroad doesn't just harm blue-collar workers. US professionals are starting to see job opportunities vanish as employers look for engineers and programmers in Ireland, Russia, Malaysia, India and Singapore where there are plentiful surpluses of well-educated professionals (93Z2).

A series of articles (93Z2) argues that global competition is transferring both high- and low-paying jobs overseas.

College Degrees Awarded in Trade-related Fields (93Z1):

Number of Applications to bring Foreign Professionals, Defined by the INS as "Specialty Occupations" into the US, in thousands (93Z1).

The professional class in America is now facing the same kind of job erosion from global competition as the working class, though it is not yet as severe. US companies are increasingly hiring highly skilled workers in Asia, the former Soviet bloc and Europe to perform jobs once reserved for American professionals. Or they import, temporarily, these foreign professionals to tackle demanding tasks in the US (93Z1).

37% of China's university graduates in 2000 were engineers, vs. 6% in the US (02W1).

Go to top of this Section (8-C) ~ Developing Nations - Human Capital ~
Go to top of this Chapter 8 ~ Developing Nations ~
Go to List of References of this Literature Review ~
Go to Table of Contents of this Literature Review ~
Go to "Globalization: The Convergence Issue" ~
Go to Home Page of this Entire Web Site ~

SECTION (8-D) ~ ECONOMIC CONDITIONS ~ [D1]~China, [D2] Latin America, [D3]~Developing Nations, [D4]~Koreas, [D5]~India, [D6]~Southeast Asia, [D7]~Africa, [D8]~Eastern Europe, [D9]~Global, ~

Manufacturing in Asia is relatively inexpensive, because companies in the formal sector subcontract production to unlicensed small- and medium-sized enterprises where wages are low (02E2).

According to the US Commerce Department, export-related jobs accounted for 23% of US private-sector job-creation between 1990-94. In 1994, exports supported 10.3 million jobs (more than 10% of private sector employment). These jobs pay 13% more than the national average wage (97R1).

China's reforms have turned a uniformly poor nation into an increasingly prosperous one, but the collapse of socialized medicine and cost increases have opened a gap between health care in the cities and the rural areas. China has experimented with reforms aimed at improving health care for peasants and the most important is an insurance plan in which participating farmers must make an annual payment of a little more than a dollar for basic medical treatments. Many peasants have complained that even the dollar is too big a burden and the coverage is inadequate. The government has made rural living standards a top priority, with increased fees and coverage, but has yet to make an impact on the health crisis. In less than a generation, China's rural population has gone from 0% uninsured to 79% uninsured (in terms of health care). More than 50% of urban residents enjoy coverage, supplied by their employers. The absence of adequate health care has sown deep resentment among the peasantry while helping to spread infectious diseases and making China more vulnerable to epidemics like SARS, and possibly bird flu. The failure to provide decent health care for peasants has reinforced the idea of China as two separate nations: one urban and increasingly comfortable, the other rural and increasingly miserable. Every year hundreds of millions of rural Chinese face the clash between health and poverty, knowing if they treat their illnesses they will lack the money needed for marriage, education and, sometimes, food. "There is basically no safety net at all for medical care in the village I live in", said a worker that aids poor sick people. "Our village has a lot of aged people with disease who are unable to get treatment, just staying at home in bed with barely enough to eat. They are shut in and can not work, and their disease and poverty have taken away their dignity." That China finds itself in this situation today is as remarkable as China's economic takeoff and is related to it. Until the beginning of the early 1980's, China's socialized medical system, with "barefoot doctors" at its core, worked public health wonders. Since then, China has dissolved its rural communes, privatized vast swaths of the economy and shifted public health resources toward the cities where people are richer. Public hospitals were urged to charge commercial rates and today the salaries of health care workers are linked to the amount of income they generate for their hospitals. The emphasis on profit has led trained health care workers to abandon the countryside and peasants are left at the mercy of unqualified caregivers and outright charlatans. There were township clinics in every area, no problem getting at least small illnesses treated everywhere. Unable to afford proper care, the first recourse of most peasants when they fall ill is to take whatever drugs they can find on the market to relieve their symptoms. Often they merely get worse or they spread it to others. Once a peasant's illness becomes debilitating, his relatives can face the decline of a breadwinner, and medical bills steep enough to bankrupt the family (06U4).

In China, inequalities between coastal and inland provinces, as well as between urban and rural areas, skyrocketed. This widening inequality could have disastrous consequences in the event of a political transition (06M3). (in gci.html) Comments: The difference in health care is increasing rapidly.

China has raised educational expenditures by a factor of 10 (in an unspecified number of recent decades) and 98.6% of 15-25-year-olds (in China) are now literate. China's middle school enrollment increased from 67% to 90%. ("Return of the Population Growth Factor: Its impact on the millennium development goals," Report of the Hearings by the All Party Parliamentary Group on Population, Development and Reproductive Health (January, 2007) p. 30). Comments: This data might refer only to the coastal regions of China, and not to the largely agricultural interior.

Chinese living on $1/ day or less: (from a chart)

Nearly 2/3 of China's 1.3 billion people have no health insurance at all, and many cannot afford any medical care (05B2).

As recently as the late 1970s, the Chinese government controlled all hospitals, employed all doctors, and offered almost universal health-care coverage. The entire system began breaking down in the early 1980s as market-style reforms led collective farms to disband and money-losing factories to close, leaving tens of millions of workers without jobs or insurance (05B2). At the end of 2003, the Chinese government offered health insurance plans to 109 million urban workers - less than 20% of China's 600 million urban dwellers. Coverage in rural areas is even spottier. 75% of private-sector employees remain uninsured (05B2). The Basic Medical Insurance typically covers 70-80% of hospital charges. Patients must pay the rest in cash in advance (05B2). The average monthly pay of Shanghai doctors is less than $400 - not much more than a taxi driver working overtime can make - but they can double their salaries by prescribing tests and dispensing drugs with high profit margins (05B2). There is no oversight on such medical decisions as there is in US HMOs, Medicare, etc (05B2). The Chinese government's share of total health spending has plummeted. Private outlays as a percentage of China's total health-care spending rose from 20% in 1978 to 60% in 2003 (05B2).

Nearly 48.9% of Chinese people cannot afford to see doctors and 29.6% are not hospitalized when they should be. China lacks medical resources, imbalance distribution, low coverage of Medicare, fast rise of medical costs, and inadequate government input. China has 22% of the world's population with only 2% of world's medical resources and 80% of those resources are in cities. 44.8% of the urban population and 80% of the rural population don't have medical insurance ("Senior Official Explains China's Major Health Challenges", Xinhua General News Service (1/10/05)).

Raising per-capita beef consumption in China to that in the US would require 49 million additional tons of beef per year. If that came from cattle in feedlots, American style, it would require 343 million tons of grain per year - an amount equal to the entire US grain harvest (data from Economic Research Service, USDA, Washington DC). (in Soils Degradation Review in this website)

More than 50% of China's rural population, over 390 million people, cannot afford medical care, and 40-60% slip into poverty after becoming sick. The average cost for hospital treatment is 2236 yuan ($269) with the average annual income in 2003 being 2622 yuan. Health coverage in rural China has relied on a collective system that at the end of the 1990's barely covered 10% of the population. A new voluntary scheme is scheduled to cover the entire population by 2010. Farmers wanting to join will pay a minimum 10 yuan a year which will allow them to apply for partial refunds that cover on average 27.25% of hospital bills ("China Plans Help for Rural Poor Who Have No Adequate Health Care", Agence France Presse (11/05/04)).

Remittances sent home by migrants are the biggest source of wealth accumulation in rural China (04C2).

The minimum wage in factories along China's coast is $50-$70/ month (04C2). However many of China's employers pay less than the minimum wage and require more than the 49 hours of work per week permitted by law. Enforcement of labor laws is lax (04C2). (In gci.html)

In 2003, China's GDP accounted for only 3.8% of the world's GDP, while its consumption of steel, coal, and cement amounted to 36%, 30%, and 55% of the world's output in 2001 ("Look on Green GDP Objectively", China Economic Net (6/30/04).).

China's middle class now numbers about 100 million - 7.1% of the population (Li Yuan, Paul Glader, Wall Street Journal (9/27/04) p. R4.).

Through the 1990s, Chinese farmers' incomes roughly tripled, but medical costs increased more than 8-fold (03W1).

In 1991, 39% of China's total health-care expenditures came directly out of pockets of individual citizens. By 2000, individuals paid directly for 60% of China's health-care costs (03W1).

In 1975, 85% of China's rural residents had community-financed health care. Today 10% do (03W1).

The average income for a rural resident (population: 700 million) in China is $286/ year (03W1).

China's GDP growth: seven-fold in past 20 years (02L2).

Over the past 10 years, per-capita income in China, has nearly doubled (97R1).

Go to top of this Chapter 8 - Developing Nations ~
Go to List of References of this Literature Review ~
Go to Table of Contents of this Literature Review ~
Go to "Globalization: The Convergence Issue" ~
Go to Home Page of this Entire Web Site ~

In 1980, Mexico's real per-capita income, adjusted for the differential price level between Mexico and the US, was about 33% of that in the US. Today it is about 22% (06M2). (in gci.html)

Mexican textile jobs that pay health benefits peaked at 195,000 in 2000, but fell to 127,000 in 2007, according to Mexico's Labor Ministry statistics (07D1).

Argentina is a society that has always thought of itself as Latin America's model for egalitarianism. In the 1990s the public sector was privatized (by "Structural Adjustments Programs" (SAPs) imposed by the World Bank, the IMF and the World Trade Organization) and the economic situation began to deteriorate. The financial crisis of 2001 pushed 50% of the population into poverty. Argentina's national currency collapsed; savings accounts were wiped out. All this made Argentina much more like the typically "segmented" (stratified) societies in the rest of Latin America. Some attribute Argentina's lingering income disparities to a decline in the quality of public education. At the peak of the 2001 crisis, half of all jobs in Argentina wound up in the "informal" sector. Few jobs in the informal sector provide benefits, protection, or true prospects for mobility. The situation could well be permanent; since privatization of the public sector (imposed by SAPs) in the 1990s usually changes public education to private education that students' families must pay for or see their children remain uneducated. Today, 25% of Argentina's population lives in poverty - quite a comedown for a nation that once prided itself in an egalitarian ethos (08L1).

Aircraft mechanics at Aeroman in San Salvador start at $300/ month and earn as much as $1000/ month, as compared to per-capita income in San Salvador of around $2,200/ year (05C1).

In Latin America, the richest 20% of the people account for more than half of the total regional income, while the poorest 20% account for less than 5% of income. The income gap between rich and poor in Latin America is about twice as wide as it is in the U.S. or Europe. The gap is widening and worsening disparities as regional economic growth slowed to an average of 1.3%/ year over the past 5 years (04L1). (in gci.html)

Latin America's GDP has grown an average of 4%/ year during 2001-03 - nearly triple the average during the 1990s (04M3). (Low US interest rates and high commodity prices due to high demand from China helped.)
During the last decade (1994-2003?) Latin American and Caribbean governments increased social expenditures, in real terms, by 58% per capita. Yet despite the growing GDP and the increased social expenditures, at least 20 million new poor slipped below the poverty line since 1997 (04M3).
Despite billions of dollars raised through the privatization of state assets such as telephone companies, iron mines and railroads, Latin America's overall debt-to-GDP ratio has risen to 51% of GDP in 2002 from 37% in 1997 (04M3).
Foreign investment in Latin America dropped by 20% during 1997-2002 (04M3).
Latin America's unemployment was 15% in 2002, vs. 10% in 1997(04M3).
Latin migrants sent home an estimated $40 billion in 2004 (2003?), surpassing foreign direct investment in the region (04M3).
Comments: Some currency crises during the late 1990s (1997-98?) may explain some of the above observations - but certainly not the unemployment data. The high GDP growth may reflect growing earnings by multinational corporations and the migration of people from rural agriculture economies to the slums ringing large urban areas.

In 10 years income per person has grown by only 9% in Mexico, about one-fifth of the growth during the 1960s and 1970s (03M3).

In 1982, manufacturing shop floor workers' wages in Korea, Taiwan and Singapore were all less than Mexico's. By 2002, these Asian countries' wages were double to triple Mexico's. The Asian countries upgraded work skills at a rate that Mexico did not. Mexico is still suffering from long-tern structural difficulties - education under-performance, infrastructure shortages, state-owned oil and electricity monopolies that have difficulty in supplying Mexico efficiently, and a tax system that needs reform (03G1). Comments: These difficulties are all symptomatic of Mexico's inability to accumulate financial capital for infrastructure and human capital development in excess of the needs created by Mexico's continuing high population growth rate.

According to a study cited by the US GAO, manufacturing wages in Mexico exceed those of the Dominican Republic by almost 67%, and are about 92% higher than in Honduras (03G1).

In Latin America economic growth has been essentially flat for the past 5 years (02F1). Comments: This means that per-capita economic growth has been falling.

Real wages in Mexico were less in 1999 than in 1980, despite NAFTA and some 4000 maquiladoras plants employing over one million workers ("Five Years After NAFTA, Rhetoric and Reality of Mexican Immigration in the 21^st Century", Center for Immigration Studies, and US Dept. of Labor, Bureau of Labor Statistics, Office of Productivity and Technology, May 1999).

Over the past 10 years, per-capita income in Chile has nearly doubled (97R1).

Go to top of this Chapter 8 ~ Developing Nations ~
Go to List of References of this Literature Review ~
Go to Table of Contents of this Literature Review ~
Go to "Globalization: The Convergence Issue" ~
Go to Home Page of this Entire Web Site ~

For the world's poor, globalization has resulted in a loss of self-respect and hope (06M3).

A large group of developing nations, from Latin America to Africa to the former Communist countries have experienced a quarter century of decline or stagnation, punctuated by civil wars and international conflicts. (During this same quarter-century, the rich country economies of the world grew by almost 2%/ capita/ year.) These developing nations experienced deterioration in living standards as key social services became privatized and more costly (e. g. water in Cochabamba, Bolivia and Trinidad, electricity in Argentina and Chad). To add insult to injury, Western pundits arrived by jet, stayed in luxury hotels, and hailed the obvious worsening of economic and social conditions as a step toward better lives and international integration. For many people in Latin America and Africa, globalization appeared to be nothing more than a new and more attractive label for the old imperialism or re-colonization. The leftward tilt of Latin American politics may be a byproduct of this (06M3). (to gci.html) (in InformalEconomy.doc - ie,html)

Efforts were urged to elevate the status of the 600 million people living in the 50 most vulnerable countries in the world. The world's poorest countries achieved an annual average economic growth rate of 6% in 2004. Of the 50 least developed countries, 34 are experiencing increases in extreme poverty. An additional 100 million people could join the 370 million people already living in abject poverty ("Over Two-thirds of the World's 50 Poorest Countries Are Experiencing Increases in Extreme Poverty," Associated Press (9/19/06.).

Of the 6.4 billion earthlings, about 4.8 billion exist below the Mexican standard of living. At least one million illegal immigrants settle in the US annually. Traditionally, US immigration has averaged about 250,000 annually. The US is accepting more people for permanent resettlement than all other nations in the world combined ("US: Confronting Compassion," Cagle Syndication Service (5/22/06)).

Unsafe water is responsible for 80% of diseases and 30% of deaths in developing countries ("Water Stress in Sub-Saharan Africa," Council on Foreign Relations (8/7/06).). Comments: This reflects the extreme shortage of financial capital that characterizes the developing world.

In many developing countries around the world, life expectancies and health care have improved, as have educational opportunities (07D1).

Informal land occupation in urban areas as a percentage of all housing in 2000: Source: Human Housing Matters: A Global Analysis by Shiomo Angel (05M1)

Comments: Huge urban slums ring most large urban areas in the developing world.

The population Reference Bureau has found that 56% of the developing world's population lives below the internationally established poverty line of $2/ day (Popline (Sept.-October 2005)). Percent of the population below poverty line by country: Uganda- 97%: Nicaragua- 80%: Tanzania- 73%: Pakistan- 66%: China- 47% (Popline (September-October 2005)). (in gci.html)

The share of income retained by coffee producers in developing nations dropped from 20% in the 1970s to 13% in the 1990s and probably dropped further with the dramatic price decline for green coffee in 2001/02 (03S5).

Nearly three billion people live in rural areas of developing countries (03D3).

Some Gross national incomes per-capita in 2000 (US$ / year)

Source: United Nations, World Urbanization Prospects: The 1999 Revision (1999) (Sales No. E.01.XIII.11) (In gci.html)

For the past two decades, the World Bank has often required trade liberalization as a condition for loans to poor countries. A study of national household income surveys from 1985-91 with studies from 1992-97 found significant increases in inequality - during a time when trade liberalization increased markedly. In 1988 the average income of the poorest 10% of the people in the countries studied was 30.7% of the average of all people. By 1993, it had declined to 24.8% (Joseph Rebello, Wall Street Journal (8/23/02)).

A 2002 World Bank study has challenged one of the Bank's most cherished ideas about the virtues of freer trade and investment. "Globalization", the 2002 study argues, generally widens the income gap between the world's poorest people and the richest. The study was based on a review of national surveys of household income in 88 developing countries. It concludes that trade and investment liberalization promotes income equality only among middle-income and rich countries. Among poor countries-those with per-capita incomes of less than $5000/ year-it simply increases inequality (Joseph Rebello, Wall Street Journal (8/23/02)). Comments: The median per-capita income in the developing world is under $2/ day (under $730/ year).

A report (01C1) examines the impact of economic globalization on poverty alleviation and other indicators of human well-being. It refutes repeated claims on the part of the leaders of the Bretton Woods institutions - World Bank, IMF, WTO and government officials that globalization is the best way to help the world's poor. The report concentrates on the three decades of globalization's most rapid growth and finds that the outcomes for the poor were exactly the opposite of what is claimed by globalization advocates, and in fact finds that globalization policies have contributed to increased poverty, increased inequality between and within nations, increased hunger, increased corporate concentration, decreased social services and decreased power of labor vis-à-vis global corporations. The first section of the report provides 7 indexes with more than 100 quotes from prior reports - quoting such sources as the World Bank, the UN and the US CIA - demonstrating globalization's negative impacts on economic and social well being. The second half of the report explains why different components and institutions of economic globalization intrinsically led to these negative outcomes (http://www.igf.org/).

A World Bank study showed that poverty in developing nations steadily rose until the 1980s, when it began to recede as globalization increased. 24 countries that welcomed greater integration into the global economy in the past 20 years, including China, India and Mexico, achieved annual growth rates of about 5% in the 1990s. But countries such as Egypt, Algeria, Iran and Pakistan, described as "less globalized" economies saw their economies stagnate or decline (Wall Street Journal (12/6/01)). Comments: China has a culture very supportive of education. India has a huge English-speaking population. Mexico is extremely well-positioned relative to a major customer for its wares - the US. Education in Egypt, Algeria, Iran and Pakistan is focused strongly on religion rather than science, technology, business, etc. Also the Muslim influence on business climate tends to be negative.

A study by two Harvard University professors showed that, of a sample of 117 countries, those with more open economies grew 4.5%/year between 1970-89, while those with relatively closed economies grew at only 0.7%/ year (97R1). Comments: The non-sustainability of developed world trade deficits needs to be factored in here, and probably was not.

Multilateral external debt among the lowest-income nations grew from 15% of total debt in 1980 to 24+% in 1992. This reflects the drying-up of other sources. Multilateral loans come with much stricter terms. Neither the World Bank nor the IMF will directly forgive or restructure debt (95G1).

In debt-for-equity swaps, a corporation purchases a debtor nation's IOUs from a bank, and then trades it for one of the country's state-owned assets such as a steel mill or telephone company. While privatization may often be necessary for saving nationalized industries, many observers are concerned that the process causes countries to part with their assets at fire-sale prices. During 1985-92, debt-for-equity swaps accounted for nearly 36% of all debt conversions (95G1).

During the past decade, 80% of funds owed by developing nations to commercial banks, as well as a much small share of loans from governments and multilateral institutions have been restructured (95G1).

External debt of developing nations increases by $1 trillion every 10-15 years (World Bank data) (in 2000 dollars) (02F2) (in gci.html).

Go to top of this Chapter 8 ~ Developing Nations ~
Go to List of References of this Literature Review ~
Go to Table of Contents of this Literature Review ~
Go to "Globalization: The Convergence Issue" ~
Go to Home Page of this Entire Web Site ~

North Korea suffered a loss in per-capita gross national product from $991/ year to $457 (in the 1990s). The economy was further hurt by the sanctions for failing to curb missile sales, and the loss of trading partners after the fall of the Soviet bloc (New York Times (5/15/01)).

A survey by the Korea Traders Association of 460 foreign buying offices in South Korea found that two-thirds plan, within two years, to change their partners or shift their bases to China and Southeast Asian Countries, which can provide less expensive goods (Wall Street Journal (9/26/91)).

In India, inequalities between Southern Indian states and the slow-growing Northeast are also skyrocketing (06M3). Comments: One result so far has been a Maoist insurgency in northeast India that is extending southward along the Indian coast and is evolving into a civil war. (to gci.html)

17,107 Indian farmers committed suicide in 2003 (the most recent year for which government figures are available). High suicide rates and rural despair helped to topple the previous government in 2004 and put the current government in power. 86.5% of farmer suicides were indebted farmers, with an average debt of $835, and 40% had suffered a crop failure (06S1). Comments: Another document gives over 117,000 suicides over a longer span of time.

Fifteen years of economic reform have opened Indian farmers to global competition and has given them access to expensive and promising biotechnology. For this reason, the current Indian government (normally a strong ally of the US) has become one of the loudest critics in the developing world of Washington's US$18 billion in subsidies to US farmers. Frustration is also building among Indian farmers with American multinational companies peddling costly, genetically modified seeds that increase the already high risks of farming in India (06S1).

Food production, once India's pride, has failed to keep pace with India's population growth during the past decade.

2/3 of India's population lives in the countryside (06S1).

Farm subsidies, once a linchpin of India's economic policy, have dried up for all farmers except those producing staple food grains, e.g. wheat. As a result, Indian farmers must now compete or go under. To compete they must buy high-cost (genetically modified) seeds, fertilizers and pesticides, but all this makes them more vulnerable to moneylenders that charge exorbitant rates (e.g. 5%/ month) and compel farmers to sell their crops to him at a price lower than they fetch on the open market. They also compel farmers to sign a blank document that gives the lender the right to collect the farmer's property at any time (06S1).

Nearly 60% of Indian agriculture depends entirely on rain (as opposed to irrigation) making agriculture an especially risky business (06S1).

In August 2001, a few months after the US Trade Development Act-2000 became effective (which gave duty-free access and trade preference to African and Caribbean countries), more than half of the Bangladeshi factories reported to have no orders. After September 11, 2001, orders declined rapidly so that by December 2001, it was estimated that nearly 1300 garment factories closed, and 400,000 women lost their jobs (Ward, 2004). Additionally, external competition has increased since the entry of China in the WTO and the end of the MFA (Multi-Fiber Agreement) in December 2004. The MFA had provided Bangladesh with a guaranteed market in North America under the quota regime. At the end of 2004, all such quota restrictions were abolished. (Judy L. Baker, Nazrul Islam, Somik Lall, "Dhaka: Improving Living Conditions for the Urban Poor," Bangladesh Development Series Paper No. 17, The World Bank Office, Dhaka (June 2007) 158 pages http://www.worldbank.org.bd/bds)

Rafiq Dossanti (Stanford University) and Martin Kenney (University of California, Davis) predict that India will have more than 500,000 people working in back-office or "business process" jobs by 2006, up five-fold in less than 4 years (Neil King Jr., Wall Street Journal (9/27/04) p. R1.).

Feeding the farmers
The tragic reversal of roles is the result of India's national policies that have neglected agriculture and farming in the wake of globalization, says Devinder Sharma. Among his recent works include two books GATT to WTO: Seeds of Despair and In the Famine Trap (03S1).
The tragic and shocking reversal of the role - feeding the farmers who have been feeding the country all these years - is the culmination of national policies that have neglected agriculture and farming in the wake of globalization and economic liberalization. Tamilnadu's courageous decision to provide free noon meal to farmers and their families will soon trigger a domino effect, with many more states announcing similar programs for farmers in distress. After all, denials from the government notwithstanding, more than 10,000 farmers have committed suicide since 1987 in the states of Tamilnadu, Andhra Pradesh, Karnataka, Kerala, Maharashtra, Madhya Pradesh, Gujarat, Rajasthan, Orissa, West Bengal, Uttar Pradesh and even in the frontline agricultural state of Punjab (03S1). (Continued below)

India has 550 million farmers and another 200 million agricultural workers. Withdrawing state support to agriculture and farming, and increasingly leaving farmers at the mercy of monsoon and markets, the national policies were in reality being drawn to shift the national resources for the benefit of only the business and industrial houses. Successive governments made the blunder of buttressing industry at the cost of farming in 1991, have only exacerbated the crisis by moving scarce resources to bolster inefficient and corrupt industries. While India's agriculture continued to be neglected, industry continued to receive tax-holidays, cheaper credit, highly subsidized land, and excise duty relief. (Continued below)

In fact, the pink newspapers and some pro-liberalization economists led the assault on farming saying that it is not the poor farmers who needed adequate infrastructure, cheap credit, an assured market, and a remunerative price but the small percentage of rich industrialists, business and trade that needed to be showered with the state exchequer. Agriculture credit became a low priority, with some committees suggesting withdrawal of credit support to farmers. Credit for housing and buying a car is available at 9-11% rate of interest while crop loans to farmers fetch a hefty interest of 17%. In reality, farmers were worse-off with almost 60% of them depending upon private moneylenders. The more the poverty levels, the more the rate of interest. In the infamous Kalahandi belt of Orissa, better known for hunger and starvation, I know of farmers who receive loans from private money-lenders at a interest rate of 460%. In neighboring Madhya Pradesh, the rate of interest varies from 160% to 250% and in Jharkand, tribals in Palamau district pay back at a interest rate of 130% (03S1).

The World Trade Organization (WTO) is in the process driving millions of farmers from their meager land holdings to head for the urban centers looking for menial jobs. Agriculture instead is being assigned to the corporate and business houses. Over 51 million tonnes of surplus food grains rot in the open, a majority of the 320 million hungry people in India could have been adequately fed. (Continued below).

Corporatization of agriculture, privatization of water, and pushing farmers to face the vagaries of the market, is all aimed at driving out farmers from farming. Ironically, the world's biggest private enterprise, considering that every fourth farmer is an Indian, is under a threat from privatization. Economic liberalization therefore is aimed at destroying the very foundations of the farming systems thereby paving the way for a corporate takeover of Indian agriculture (03S1).

India is also aggressively pursuing the conversion of labor-intensive to capital-intensive agriculture with a similar lack of attention to the functioning of the overall system (03S1). Corporations getting into agriculture in India receive tax-holidays, cheap credit, highly subsidized land, and excise duty relief. Traditional farmers must borrow money from private lenders at 130-460% interest and go to jail when they default. India has 550 million farmers and another 200 million agricultural workers. Conversions to capital-intensive agriculture typically reduce labor content by on the order of 95%. This implies a mass exodus of roughly 700 million people to the rings of slums surrounding India's cities. This will likely end up being the largest forced migration of people in all of human history, besides producing a lot more surplus food (currently 51 million tonnes) and a lot more hunger (currently 320 million people) and starvation. (In gci.html)

India's per-capita economic output is less than $500/year. India's middle class generally earns $100/month (Marcus W. Brauchli, Wall Street Journal (1/6/93)).

Unemployment in Indonesia's workforce in 2006 is 10% of its 120 million workers (vs. 8% in 2000) (06W4).

Manufacturing jobs in Indonesia contracted 1.1%/ year during 2000-2005 (a period when Indonesia's work force was expanding by 1.3%/ year) (06W4).

Indonesia's labor force grows by 2.5 million workers per year (Marcus W. Brauchli, Wall Street Journal (3/25/93)).

Over the past 10 years, per-capita income in Indonesia has nearly doubled (97R1).

In Thailand, per-capita income has more than doubled (97R1).

The poor Africans who land daily on beaches of the Spanish Canary Islands come from countries that have seen no economic growth in 50 years (06M2).

Ghana, a country often touted as an African success case, had a per-capita income 50% that of Spain in 1957 (when it gained independence). Today its per-capita income is 10% that of Spain (06M2). (in gci.html)

For large swaths of Africa where about 200 million people live, today's income level is less than it was during the US presidency of John F. Kennedy (06M3). (to hm99.doc) (in gci.html)

80% of people in sub-Saharan Africa survive on less than $2/ day (03D3).

In 2000, Africa's economic growth rose to 3.2% from 2.7% in 1999, just enough to keep pace with population growth. The African Development Bank (AfDB) said that the number of African countries achieving gross domestic product growth rates above 5% had been falling since the mid-1990s. African economies must grow by 8% a year to make a dent in poverty -- both the productivity and volume of investments must increase and structural reforms must continue. The modest rise was helped by the economic growth in its 10 biggest oil-exporting countries averaging 4.7%. For example Nigeria spurted to an estimated 3.0% from 1.1% in 1999, Libya's grew by 3.5%, up from 2.0% in 1999, and Equatorial Guinea achieved 21.3% in 2000. The Bank expects a rise in economic growth rate in 2001 to 4.1%, which it says will give a real per capita income increase of 1.8%. But with the threat of AIDS, in the most seriously affected countries, GDP per capita will be 5% lower by 2010 than would have been the case without AIDS. The epidemic affects individuals at ages when they are most industrious and productive. Senegal leaders never denied the existence of AIDS, and mounted an aggressive prevention campaign. Senegal has one of the lowest HIV infection rates in Africa, 1.8% of the adult population in 2000 (Reuters (5/29/01)).

Debt Service as a percent of Exports for Africa and Developing Countries (from a graph) (95G1)

The external debt owed by Sub-Saharan African nations (other than South Africa) totals $180 billion - three times the 1980 total, and 10% higher than its entire output of goods and services (95G1).

Half of Bulgaria's external debt was forgiven in 1993 (95G1).

Poland had 40% of its external debt forgiven in 1994 (95G1).

According to a recent human rights report, over 800,000, or 7% of the population, are in bondage in the Saharan country of Niger. Slavery has been practiced here for hundreds of years. Masters own slaves and treat them like any other possession, breeding them for stock like animals. They are worked, beaten, tortured and traded like livestock. They have no status. They are non-people. Even their children are owned by their masters, taken from their mothers as young as two years old. This is not a story in a history book. This is 21st century slavery. Some experts estimate that there are 27 million slaves in the world today (05A1). Modern slavery includes trafficking, debt bondage, prostitution, child labor and serfdom. Most strikingly, the traditional form of slavery, known as "chattel slavery," still exists rooted in custom, culture and history. Niger, one of the poorest countries on earth. Ilguilas Weila, Niger's Martin Luther King is the founder of the civil rights organization Timidria, established to fight, non-violently, for the freedom and rights of the slaves and the poor. Shortly after we interviewed Ilguilas Weila, he was arrested on charges of fraudulently trying to raise money from Anti-Slavery International, allegations which the London-based NGO refute. Ilguilas Weila has been refused bail - he's now been in prison for over a month (05A1).

Human trafficking volume is an estimated $10 billion/ year ("UNICEF Says Human Trafficking Now a 10-billion-dollar Industry", Push newsfeed (4/4/05)).

The UN warned that growing poverty and urbanization might triple the population of the world's slums to three billion by 2050. Kofi Annan noted that slum-dwellers in Africa, Asia and Latin America account for 30% of a global urban population ("UN Warns Three Billion May Be Living in World's Slums by Mid-Century", Agence France-Presse (4/4/05)).

Approximately 70% of the world's poor live in rural areas with limited livelihood opportunities outside of agriculture (04W3).

UN: World's slum population soaring The number of people living in slums is expected to triple to 3 billion by 2050 as a result of growing poverty and urbanization, the UN warns. "The core problem facing the international community is our continuing failure to come to grips with the world's slums," (Statement by Anna Tibaijuka, head of the UN's housing agency Habitat, 4/4/05 during the opening of a meeting in Nairobi, Kenya.   Al-Jazeerah/Agence France-Presse (4/4/05)) (In gci.html)

Number of people living on less than $1/ day, by region, in millions (Source: World Bank) (Wall Street Journal (9/13/00)):

In one of the first signs of the tightening federal budget, the Bush administration has reduced its contributions to global food aid. The administration has said it was unable to honor earlier promises and would pay for food only in emergency crises like that in Darfur. The cutbacks come when the number of hungry is rising for the first time in years. As a result, charities have eliminated programs that intended to help the poor feed themselves through improvements in farming, education and health. Catholic Relief Services had to cut back programs in Indonesia, Malawi and Madagascar. Officials say the food aid budget was at least $600 million less than what charities would need. The administration attributed the cutbacks to the demands this year, especially in Africa, and the delay in approving a budget. The majority of resources is going to emergency food aid. One administration official voiced concern that the best way to avoid future famines is to help poor countries become self-sufficient with cash and food aid now. Several members of Congress are trying to convince the administration that food aid should not be cut. Representative Emerson, Republican of Missouri, led an effort that persuaded the administration to release 200,000 tons of grain for emergency food aid to Sudan. Now she is lobbying to finance foreign food aid programs fully and increase the money. She also said Europe should increase its food aid and relieve some of the pressure on the US, which is the largest donor to UN food programs. Further complicating aid is a debate at the WTO over concerns that the US has used food aid to dump surplus at subsidized prices ("US Cutting Food Aid That Is Aimed at Self-Sufficiency," New York Times (12/22/04)).

In 1976, the wealthiest 1% of Americans owned 19% of all private material wealth in the US. In 1997 they owned over 40% of all wealth. This share exceeds the wealth owned by the bottom 92% of the US population combined population (1997 Annual UN Development Report/ UNICEF 1997 and WHO 1998).

Share of global income going to the richest 20% and the poorest 20% of the world's population (1997 Annual UN Development Report/ UNICEF 1997 and WHO 1998):

The World Bank estimates that 1.3 billion people subsist on $1/ day or less (World Bank, "Food Security for the World", statement prepared for the World Food Summit, 11/12/96). (In gci.html)

The UN estimates that at least 100 million people, worldwide, have no home. If those with especially insecure or temporary accommodations, such as squatters, are included, the number of homeless exceeds 1 billion. In many developing nations, squatter communities are home to 30-60% of the urban population (Martin Brockerhoff and Ellen Brennan, "The Poverty of Cities in Developing Regions," Population and Development Review, March 1998) (A. S. Oberai, "Population Growth, Employment and Poverty in Third-World Mega-Cities", St. Martin's Press, New York, 1993). (In gci.html)

The number of people living on less than a dollar a day in 20 developing nations across Asia fell to 688 million between 1990 and 2002, 21.5% of the population. If the poverty threshold is set at $2 a day, 60% of developing Asia's population was poor in 2002, vs. 75% in 1990 ("ADB Warns of Increasing Inequality in Asia", Agence France Presse (8/26/04).).

Talbot (97T1) estimates that in the 1970s 20% of total income was retained by producers, while the average proportion retained in consuming countries was almost 53%. Between 1980/81 and 1988/89, producers still controlled almost 20% of total income, while 55% was retained in consuming countries. Between 1989/90 and 1994/95, the proportion of total income gained by producers dropped to 13%, and the proportion retained in consuming countries surged to 78%.

There are concerns that TNCs (Trans-National Corporations) abuse their market power, add downward pressure on rural wages and disempower farmers through unfair contractual arrangements. Linkages between farmers and TNCs are based on contracts between unequal parties, one party consisting of a mass of unorganized small-scale farmers with little bargaining power and few of the resources needed to raise productivity and compete commercially, and the other party being a powerful agribusiness, offering production and supply contracts which - in exchange for inputs and technical advice - allow it to exploit cheap labor and transfer most risks to the primary producers (03S5).

GDP-per-capita income data by country is put out by the CIA (01U6).

Copenhagen Consensus 2004 attempted to prioritize the limited means available for development of poor nations. Ten challenges were identified: communicable diseases: armed conflicts; education; financial instability; governance and corruption; malnutrition and hunger; population and migration; sanitation and water; and subsidies and trade barriers. In Copenhagen, nine economic experts will gather in May, 2004 to analyze the opportunities corresponding to each challenge (04D2).

An estimated 1.8 billion people in developing nations live in forests and woodlands, arid regions, steeply sloping hillsides, or other lands unsuitable for modern food production (Norman Uphoff, "Challenges Facing World Agriculture in Our New Century", in Norman Uphoff, editor, Agro-ecological Innovations: Increasing Food Production with Participatory Development, London, Earthscan, 2002?). Comments: The population of the Developing World in 2000 was around 4.9 billion, so this gives us an idea on how much farther the mechanization of developing world agriculture has to go - and on how many more people need to be crowded into the slums surrounding most cities of the developing world before the world's pool of unskilled labor is capable of earning better-than-subsistence wages.

The number people living in urban slums worldwide could double to 2 billion in less than 30 years, the U.N. Human Settlements Program (UN-HABITAT) said 10/1/03. (in gci.html)
UN-HABITAT's new book, Global Report on Human Settlements: The Slum Challenge, explores the reasons behind slum growth and examines policy responses in recent decades.  The book marks the first global assessment of slums and is written in support of the Millennium Development Goal of improving the lives of 100 million slum dwellers by 2020 (03U3).

Go to top of this Section (8-D) ~ Developing Nations -- Economic Conditions ~
Go to top of this Chapter 8 ~ Developing Nations ~
Go to List of References of this Literature Review ~
Go to Table of Contents of this Literature Review ~
Go to "Globalization: The Convergence Issue" ~
Go to Home Page of this Entire Web Site ~

China's industries remain far behind their US counterparts in technology, innovation, managerial expertise and marketing know-how. But international economists say China is advancing steadily and will compete with US industries in making complex, high-value products such as aircraft and semiconductors (02I1).

Output per hour and real compensation per hour in the US non-farm business sector (Data are relative to an index for which 100 represents the situation in 1977.) (Data are from "The Economic Report of the President, 1986".) (87T1).

US productivity growth rate: 2.7%/ year during 1960-70; 0.9%/year during 1979-85 (87T1). Productivity growth rates in countries like West Germany and Japan are 3-5 times the US rate, but a far lower job-creation rate than the US (87T1).

Productivity in the Big Three's new Mexican plants is said to be 75-80% of the productivity in the average US auto plant (Karen Lissakers, Wall Street Journal (11/19/92)).

The productivity of American advanced technology and services companies is so much greater than that of foreign rivals that the US is running close to a $100 billion/year trade surplus in those business sectors (93Z2).

Productivity, wages, and unit labor costs relative to the US, total manufacturing, 1990 (96G1) (from a chart)

Comments: Unit Labor Costs = Wages/ Productivity.

Even with the increasing ease of technology transfer and capital mobility, other factors can hold down productivity in poor countries, such as low levels of human capital (e.g. education) and poor public infrastructure and transportation services (96G1).

What counts most in a modern global economy isn't the cost of labor, but the level of organization and automation (James K. Glassman, "Waging the NAFTA War", Forum, Pittsburgh Post Gazette (9/19/93)). Comments: Automation is just another facet of capital - extremely mobile. Organization can be duplicated cookie-cutter fashion anywhere about the globe - very high mobility.

Labor productivity in Mexico's export industries is typically 80% to 100% of US levels, while wages are 10-15% of US levels. The Mexican government used armed forces to intimidate workers and establishes business associations to fix wage rates, which are kept low to attract foreign capital. NAFTA provides more incentives for US businesses to train Mexican workers than American workers (Jeff Faux, Pittsburgh Post Gazette (9/8/93)).

The capacity of fiber-optic lines connecting telephone systems into India increased almost seven-fold from 2001 to 2002 (04D1). (in gci.html)

Go to top of this Chapter 8 ~ Developing Nations ~
Go to List of References of this Literature Review ~
Go to Table of Contents of this Literature Review ~
Go to "Globalization: The Convergence Issue" ~
Go to Home Page of this Entire Web Site ~

Indonesia's appeal to foreign investors is diminished by poor infrastructure, government corruption, an unreliable judiciary, and complicated bureaucratic procedures (06W4).

The average American wage is about $135/ day. The average Chinese wage is around $135/ month, for working 14-16 hours per day, 7 days/ week, often under harsh, sweatshop conditions. Some Chinese factories pay $50 to $80/ month. To maintain political stability, China needs 15-20 million new jobs/ year (07M1). (in gci.html as (07M1))

In China, doctorate-level scientists command $25,000/ year, compared with nearly 10 times that in the West (04S3). (About 80% of total drug R&D costs go toward scientists' salaries (04S3).)

Monthly wages in Japan and China in $US (Sources: National Bureau of Statistics, China; International Labor Organization) Wall Street Journal (9/27/04) p. R-11.

(In gci.html)

Go to top of this Chapter 8 ~ Developing Nations ~
Go to List of References of this Literature Review ~
Go to Table of Contents of this Literature Review ~
Go to "Globalization: The Convergence Issue" ~
Go to Home Page of this Entire Web Site ~

In 2006 there were 10 Mexicans among the world's 946 billionaires. Carlos Slim is the world's richest man, with a fortune worth $59 billion. In 1990 the Mexican government of President Carlos Salinas de Gortari sold his friend, Mr. Slim, the Mexican national phone company, Telmex, along with a de facto commitment to maintain its monopoly for years. Then it awarded Telmex the only nationwide cellphone license. Today Telmex has a 90% share of Mexico's landline phone service and controls almost 75% of Mexico's cellphone market. Mexicans pay well above average for landline, cellphone and Internet access. Many of Mexico's billionaires were created by the government during the privatization of state-owned companies in the 1990s. Former Mexican president Vincente Fox appointed a former Telmex executive as minister of communications in 2000 (07P1).

"In country after country water privatization has failed to provide either the investment promised or has led to price rises which force the poor to use other dirty water sources," said Olivier Hoedeman, research coordinator with the Dutch campaign group Corporate Europe Observatory (CEO) (05B1).

The CEO says the European Commission's trade department is continuing to promote the expansion of private water multinationals headquartered in Europe, while the Dutch government seems "obsessed" with promoting public-private partnerships in developing countries via development aid. "This is despite the fact that water in The Netherlands is delivered exclusively by public water utilities which are among the most effective and sustainable in the world," said Olivier Hoedeman, research coordinator with the Dutch campaign group Corporate Europe Observatory (CEO) (05B1).

At the water forum in Kyoto in Japan in March 2003, the European Union (EU) promoted the idea of "public-private partnerships", where Olivier Hoedeman, research coordinator with the Dutch campaign group Corporate Europe Observatory (CEO) says management control is transferred to the private sector while financial risks are left for the local governments (05B1).

Approximately 5% of the world's water is run by the private sector but 95% of that is by European companies (05B1).

"Although the privatization wave has lost a lot of momentum in recent years due to the many failures, not the least in cities in developing countries, there is still a strong ideological push to promote private sector management, including from the World Water Council, an international water policy think-tank " Hoedeman told IPS (05B1).

Financing of Water Infrastructure Seminar Final report
http://www.siwi.org/downloads/WWW-Symp/2004_WWW_SIWI_World_Bank_Seminar_Final_Report.pdf
The Final Report is now available from the Financing of Water Infrastructure Seminar, which took place during the 2004 World Water Week in Stockholm. The Report is available as a PDF at the SIWI web site. 21 Jan 2005.
I saved this 23-page document in E:\pdffiles\www_SIWI_World_Bank_Seminar_Final_Report.pdf

Go to top of this Chapter 8 ~ Developing Nations ~
Go to List of References of this Literature Review ~
Go to Table of Contents of this Literature Review ~
Go to "Globalization: The Convergence Issue" ~
Go to Home Page of this Entire Web Site ~

The gap between economic haves and have-nots has frequently widened, not only in wealthy countries like the U.S. but also in poorer ones like Mexico, Argentina, India and China (07D1).

While globalization was expected to help the less skilled . . . in developing countries, there is overwhelming evidence that these are generally not better off, at least relative to workers with higher skill or education levels," according to economists Pinelopi Koujianou Glodberg of Yale University and Nina Pavcnik of Dartmouth in the spring 2007 issue of the Journal of Economic Literature (07D1).

In many developing countries the income gap has grown sharply since the early 1970s. A 2006 study in Latin America (a region long marked by profound gaps between rich and poor) by World Bank Economists Guillermo Perry and Marcelo Olarreaga found that the income divide deepened after economic liberalization in 9 of the 12 countries examined (07D1).

Income gaps are widening in fast-growing Asian nations as well, including Thailand and India. It's even grown in the past decade in South Korea, a country long known for an egalitarian commitment to education (07D1).

Between 1984 and 2004, China's income inequality as measured by the Gini index (0 is perfect equality, while 100 is perfect inequality) increased from 29 to 47, according to World Bank researchers Martin Ravallion and Shaohua Chen. From 2000 to 2005, per-capita income of the bottom 10% of urban households in China rose 26%, while those at the top saw gains of 133% (07D1).

In Mexico, wages at the bottom 10^th percentile of urban full-time workers increased 12% between 1987, when Mexico first took steps toward opening its economy, and 2004. Since 2000, the percentage of Mexicans living in extreme poverty has also fallen below 20% for the first time ever in Mexico's history. The World Bank estimates that the top 10% of Mexicans accounted for 39% of Mexico's total spending in 2004, while the bottom 10% accounted for less than 2% (07D1).

In Latin America, the sense of alienation has powered populist presidential candidates who won in Ecuador, Bolivia, Nicaragua and Venezuela and came close to carrying Mexico in 2006 (07D1).

Almost half of the world's population works in "shadow economies" (Probably another term for "informal economies"). They generally lack birth certificates, legal addresses or, crucially, deeds to their shacks and market stalls. Without legal documents, they live inconstant fear of being evicted by local officials or landlords. As a result, the poor are unable to invest in, or even plan for, the future. In many countries, 80% of homes and businesses are unregistered, while about a third of the developing world's GDP is generated in the "underground economy." (Probably another term for "informal economies"). Would-be entrepreneurs in developing countries often face a tangle of bureaucratic requirements and high fees that discourage them from seeking legal status. As a result, these small-scale business owners can't obtain legal loans, enforce contracts or develop their businesses beyond a narrow sphere (07A1).
Go to List of References of this Literature Review ~
Go to Table of Contents of this Literature Review ~
Go to "Globalization: The Convergence Issue" ~
Go to Home Page of this Entire Web Site ~