D Shniad wrote:
>What follows is a response to Doug's call to specify a bit more what we're
>talking about when we compare the relative magnitude of financial
>speculation to that of trade and other economic activity. (Caveat: I don't
>work with or have access to trade stats; what follows is the seat-of-the-
>pants calculation that I've done based on readings about speculation, etc. I
>invite those with access to the stats to respond.)
>
>The IMF estimates that foreign exchange transactions are more than $1
>trillion daily, while trade volumes are in the $3.5 trillion ballpark
>annually.
>
>If trade volumes are 5% of the total of the world's domestic output (a
>*very* conservative estimate), then the aggregate of the world's real output
>would be in the neighbourhood of $70 trillion per year.
Actually, gross global product was around $25 trillion in 1994, according
to the World Bank, making trade around 14% of output.
Let's look at some export/GDP ratios for 1980 and 1994 for evidence of some
globalizing "revolution." Of course it's always possible the revolution
started after 1994; someone check with Ed Herman on this.
EXPORTS AS PERCENT OF GDP
1980 1994
"developing" countries 23% 22%
Latin Amer/Caribb 16 15
Brazil 9 8
Mexico 11 13
S Africa 36 24
S Korea 34 36
Canada 28 30
Japan 14 9
Norway 47 33
Sweden 29 33
UK 27 25
U.S. 10 10
source: World Development Report 1996, table 13
>(If trade volumes
>are a somewhat larger portion of domestic production in the aggregate, then
>the world's aggregate production is somewhat smaller.) By comparison,
>aggregate international financial transactions come in at more than $300
>trillion per year.
>
>By these calculations, the aggregate of international *financial*
>transactions
>are more than four times the dollar magnitude of *real* production. It was
>on the basis of this observation that I made the statement that speculative
>activity had dwarfed the activity of productive capital.
No one disputes that there's lots of furious, pointless, even destructive
speculative activity going on. How, precisely, is it malignant, though?
Merely describing its magnitude is not to make the case.
Doug
--
Doug Henwood
Left Business Observer
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