Development in an Era of Neoliberal Globalization by Henry Veltmeyer

Author:Henry Veltmeyer [Veltmeyer, Henry]
Language: eng
Format: epub
Tags: Political Science, General
ISBN: 9780415830935
Google: kVbSlAEACAAJ
Goodreads: 17242805
Publisher: Routledge
Published: 2013-08-13T00:00:00+00:00

The ‘globaloney’ or ‘states are still powerful’ view

A second interpretation starts from the premise that the argument set out above about the relative decline of nation states greatly exaggerates the extent of globalization. As an empirical matter, it is argued that the vast majority of production and investment – around 90 per cent – remains national in character. For example, Lipsey et al. write that:

given all the attention that ‘globalization’ has received from scholars, international organizations, and the press, [our data] are a reminder of how large a proportion of economic activity is confined to single geographical locations and home country ownership. Internationalization of production is clearly growing in importance, but the vast majority of production is still carried out by national producers within their own borders.

(1995: 60–61)

This ‘home country bias’, meaning that firms and consumers are much more likely to trade with and purchase from fellow nationals than across borders with foreigners, has been supported by numerous studies. For example, Helliwell, after reviewing the data on flows of goods, capital and people, concludes that ‘the striking size and pervasiveness of border effects reveal that the global economy of the 1990s is really a patchwork of national economies, stitched together by threads of trade and investment that are much weaker than the economic fabric of nations’ (1998: 118).

The long-standing Feldstein-Horioka (1980) finding that domestic savings and investment rates are highly correlated suggests that international capital markets remain limited as devices for redistributing the world's capital.7Zevin also argues that international financial markets are now only reaching the levels of integration that they attained in the late nineteenth century. In fact, he claims, ‘while financial markets have certainly tended toward greater openness since the end of the Second World War, they have reached a degree of integration that is neither dramatic nor unprecedented in the larger historical context of several centuries.’ (1992: 43) As Bairoch has written, ‘what many regard as a new phenomenon is not necessarily so’ (1996: 173). What globalization there is, therefore, is hardly new.

The rise of the ‘global firm’ is also cast into doubt. Veseth, for example, contends that a global firm signifies

a business form that both produces and sells in global pools – that it exhibits both demand-side and supply-side globalization. There is a qualitative difference between a global firm, as defined here, and a firm that produces in one place and sells everywhere or has international production processes but essentially sells in distinct local markets (with distinct local character and competition). The former type of firm is multi-local and the latter is transnational. These are important and growing types of business arrangements, but they are not global in a meaningful sense. … The definition of a globalized business is not easy to satisfy. There are not many truly global firms, but some do exist.8

(1998: 49–50)

Furthermore, the share of government spending in the national incomes of the core capitalist economies shows no sign of being reduced (despite the best efforts of neoliberal governments such as those of Thatcher and Reagan to achieve this outcome).

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