Interesting questions. Good source for some of this is US BEA. Interesting paper presented in Ottawa on bringing the bacon back home:
http://www.bea.gov/papers/pdf/06IAOS_Ottawa5.pdf ----- Original Message ----- From: "Marvin Gandall" <[EMAIL PROTECTED]> To: <PEN-L@SUS.CSUCHICO.EDU> Sent: Sunday, May 27, 2007 11:55 AM Subject: [PEN-L] Developments in the world economy and the concept of foreign ownership > I have a question or, rather, one big one and a series of related ones. > > How "foreign" is a multinational which assembles and exports most of its > products abroad and retains most of its profits in the host country? China, > of course, is what's behind this question. > > If GM, Ford, and other American carmakers relocate the bulk of their > production from Detroit to Shanghai, can they still properly be considered > "foreign" corporations operating in China? As China's boundless domestic > market continues to expand, and if retailers like Walmart eventually have > more stores and employees there than in the US, should it still be described > as an "American" corporation? > > Answering my own question, if the majority of shareholders are American, or > if the earnings are repatriated back to US banks, then the ownership of > these China-centered corporations could still properly be regarded as > "foreign", even if the workforce no longer is. > > But here too the trend is strongly in the other direction. The "national" > shareholding character of US and other leading multinationals is becoming > rapidly diluted as institutional and private investors from the > faster-growing economies abroad acquire more ownership and control - an > outgrowth of the transformation of the developing countries from net > importers to exporters of capital, and their growing interest in equity > investment. > > So far as I'm aware, most of the earnings of the multinationals are not > being repatriated back to their home countries. The USD export earnings of > US firms operating in China, for example, are converted into yuan accounts > in Chinese banks, which the Chinese central bank then sterilizes by buying > USD's to roughly maintain the dollar peg and selling yuan-denominated notes > and bonds to contain inflation at home. But the earnings for the most part > stay in China. Is this not in fact the case? > > And doesn't it explain the insistent and increasing penetration of the > Chinese financial sector by Wall Street and other European and Japanese > banks eager to tap these earnings, as well as the domestic savings of the > rapidly-expanding mass of Chinese consumers? > > This is not how it used to be. Historically, nationalists fretted about > "foreign ownership" because it was transforming their country into a branch > plant economy where subsidiaries of large US, British and the other more > developed capitalist countries, often in order to circumvent tariff > barriers, largely produced for the host market rather than for export, and > repatriated the bulk of their earnings back home. Most of their production > and jobs also stayed at home. > > There was no other alternative. Transportation costs negated any advantage > to cross-border labour arbitrage, and the means of communication were too > underdeveloped to manage production at great distances. But the revolution > in transport and communications technology in the latter part of the 20th > century has changed all that, and profitable exporting from lower-wage > countries has now become possible. > > The transformation of China and Eastern Europe is in part a result of these > profound technological changes, because it afforded the massive transfer of > Western capital and jobs to these formerly autarchic regions, and enticed > their Communist party governments and populations with that prospect. The > opening up of these vast new cheap labour pools has accelerated the process > which contributed to their transformation. > > I tend to think this accelerating interpenetration of global capital in the > world economy is no more reversible than was the consolidation of local and > regional markets into national ones. If that's the case, it challenges > classical nationalist and Marxist concepts about foreign ownership and the > inevitability of inter-imperialist war based on the competing interests of > national bourgeoisies. But I'd be interested to know what others think, or > if they can direct me to material which contradicts the above. >
