Globalization, Poverty and Inequality E-Book

Raphael Kaplinsky

• Herausgeber: John Wiley & Sons
• Kategorie: Geisteswissenschaft
• Sprache: Englisch

Seitenzahl: 479

Veröffentlichungsjahr: 2013

Beschreibung

Globalization is characterised by persistent poverty and growing inequality. Conventional wisdom has it that this global poverty is residual – as globalization deepens, the poor will be lifted out of destitution. The policies of the World Bank, the IMF and the WTO echo this belief and push developing countries ever deeper into the global economy.

Globalization, Poverty and Inequality provides an alternative viewpoint. It argues that for many – particularly for those living in Latin America, Asia and Central Europe – poverty and globalization are relational. It is the very workings of the global system which condemn many to poverty. In particular the mobility of investment, and the large pool of increasingly skilled workers in China and other parts of Asia, are driving down global wages.

This poses challenges for policy makers in firms and countries throughout the world. It also challenges the very sustainability of globalisation itself. Are we about to witness the implosion of globalisation, as occurred between 1913 and 1950?

Using a variety of theoretical frameworks and drawing on a vast amount of original research, this book will be an invaluable resource for all students of globalization and its effects.

Leseprobe

GLOBALIZATION,POVERTY AND INEQUALITY

For Natasha

GLOBALIZATION,POVERTY ANDINEQUALITY

Between a Rock and a Hard Place

RAPHAEL KAPLINSKY

polity

Copyright © Raphael Kaplinsky 2005

The right of Raphael Kaplinsky to be identified as Author of this Work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988.

First published in 2005 by Polity Press

Polity Press

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Cambridge CB2 1UR, UK

Polity Press

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All rights reserved. Except for the quotation of short passages for the purpose of criticism and review, no part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher.

9780745635842

A catalogue record for this book is available from the British Library and has been applied for from the Library of Congress.

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Contents

List of Figures

List of Tables

A Guide to the Reader

Acknowledgements

Part 1  Setting the Scene

1   Global Dynamics

2   Globalization and Poverty

Part II  Gaining from Globalization

3   Getting it Right: Generating and Appropriating Rents

4   Managing Innovation and Connecting to Final Markets

5   The Global Dispersion of Production – Three Key Sectors

Part III  Losing from Globalization

6   How Does it All Add Up? Caught Between a Rock and a Hard Place

7   Does it All Add Up?

8   So What?

Notes

References

Index

Figures

Figure 1.1   Unit price performance of South African furniture exports and EU furniture imports, 1988–2000

Figure 1.2   Average reduction in unweighted tariffs by region, 1980–1998

Figure 1.3   The growth in the value of global trade and global GDP, 1950–2002

Figure 1.4   Stocks and flows of FDI, 1980–2002

Figure 1.5   Capital account as % GDP, 1890–1996

Figure 1.6   Internationalization and globalization compared

Figure 1.7   Average (unweighted) tariffs, thirty-five countries, 1860–2000

Figure 1.8   Merchandise exports as a share of merchandise value added, 1890–1999 (%)

Figure 1.9   A stylized view of global capital mobility, 1860–2000

Figure 2.1   People living on less than $1 per day (millions), 1820–2000

Figure 2.2   A falling number of people live in absolute poverty, 1970–1998

Figure 2.3   The many dimensions of relative poverty

Figure 2.4   Income distribution, Brazil, 1970–1998

Figure 2.5   Changing patterns of income distribution in China, 1985 and 1995

Figure 2.6   Gini coefficient of global inter-country income distribution (not weighted by population size), 1950–1999

Figure 2.7   Weighted and unweighted income distribution (gini coefficients), 1950–1999

Figure 3.1   The price of coffee beans in global markets (cents/lb), 1965–2000

Figure 3.2   The terms of trade of coffee producers, 1965–2000 (1965=100)

Figure 3.3   Index of wages in US$: the Dominican Republic, Costa Rica, Mexico and the USA, 1980–1990

Figure 3.4   The generation and dissipation of entrepreneurial surplus

Figure 3.5   Differential forms of property rights

Figure 4.1   A framework for achieving competitive advantage at the firm level

Figure 4.2   A simple value chain

Figure 4.3   Producer-driven and buyer-driven global value chains

Figure 4.4   Practice and performance in the upgrading challenge

Figure 4.5   Value chain upgrading: a strategic perspective

Figure 4.6   The ideal type of a successful value chain upgrading strategy

Figure 4.7   How producers connect to final markets

Figure 4.8   Two sets of factors determining the standards regime, and some examples

Figure 5.1   The textile and clothing value chain

Figure 5.2   Critical success factors in UK clothing markets: the view of ten of the largest UK clothing buyers, 2001

Figure 5.3   China’s share of US imports following removal of MFA import quotas, 2001 and 2002

Figure 5.4   The wood furniture value chain

Figure 5.5   The degree of outsourcing in the value chain by different types of UK buyers

Figure 5.6   What activities do different UK buyers outsource to different types of economies?

Figure 5.7   How UK buyers perceive their role in promoting process upgrading by their suppliers

Figure 5.8   How UK buyers perceive their role in promoting product upgrading by their suppliers

Figure 5.9   The automobile and components value chain

Figure 5.10 The dominating alliances in the global auto industry, c.2000

Figure 5.11 Geographical distribution of global auto production, 1929–2002

Figure 6.1   Share of developing countries in global manufacturing value added, 1960–2000

Figure 6.2   Sectoral shares of developing-country exports, 1981–2001

Figure 6.3   Structure of developing country exports, 1991 and 2000

Figure 6.4   Concentration in the US retail grocery sector: share of the five largest firms, 1992–2000

Figure 6.5   Market share of five largest grocery retailers in Europe, 2000

Figure 6.6   Five-firm concentration ratios in European coffee roasting and global buying, 1989–1998

Figure 6.7   World manufacturing export price, 1986–2000

Figure 6.8   Percentage of sectors with negative price trends, 1988/9–2000/1, by country grouping

Figure 6.9   Percentage of sectors with negative price trends, 1988/9–2000/1, by technological intensity

Figure 6.10 Percentage of sectors with negative price trends, 1988/9–2000/1, by technological intensity and country grouping

Figure 6.11 Low-income and high-income country ‘terms of trade’ in manufactures, 1969–1995

Figure 6.12 Terms of trade in manufactures of countries trading with the EU, 1979–1994 (per cent per annum)

Figure 6.13 Investment as a share of GDP, 1980–2001 (%)

Figure 6.14 China’s productivity growth in different types of enterprises, 1988, 1992 and 1996 (1990 constant prices)

Figure 6.15 US current account deficit with China and Greater China (China, Hong Kong and Taiwan), 1985–2001 ($m)

Figure 7.1   Developing countries’ barter and income terms of trade with the USA and Japan, 1982–1996 (1981=100)

Figure 7.2   Actual and projected global share of China’s consumption of base metals, 1950–2010

Figure 7.3   Shipping freight rates, 1973–2003

Figure 7.4   China’s growth in employment (% per annum), 1991–2001

Figure 7.5   The evolution of sectoral employment in China, 1978–1993 (million workers)

Figure 7.6   Balance of trade deficits, USA and UK, 1986–2003

Figure 7.7   The global labour force (2002)

Figure 7.8   US unemployment rates, 1983–2003

Figure 7.9   Global aid flows to developing countries, 1956–2003

Figure 8.1   Food-miles in the shopping trolley

Tables

Table 1.1   Merchandise exports as a share of GDP (%), 1950 and 1998

Table 1.2   The growing disarticulation of trade in manufactures:ratio of merchandise trade to merchandise value added, 1980, 1990 and 2000

Table 1.3   Merchandise exports as a share of GDP, 1870, 1913 and 1998 (%)

Table 2.1   World Bank estimates of absolute poverty, 1990 and 2001

Table 2.2   Contrasting estimates of global poverty, 1987–1998

Table 2.3   Changes in income inequality in seventy-three countries from the 1960s to the 1990s

Table 3.1   Declining unit prices and investment instability: the case of jeans manufacturing in the Dominican Republic

Table 3.2   Some indicators of the per capita global distribution of infrastructure (in ascending order of per capita incomes), 2000

Table 3.3   Examples of shifting rents

Table 4.1   Number of firms and workers in four clusters

Table 4.2   Correlation of cooperation and performance

Table 5.1   Hourly wages in the garment industry, 2002 (including fringe benefits)

Table 5.2   Share of global textile exports, 1980, 2000 and 2002 (%)

Table 5.3   Unit price trends (two-year moving averages) and number of countries exceeding 1 per cent of market share of wooden furniture imports to the EU, 1988 and 2001

Table 5.4   The ten largest global exporters of furniture, 1980, 1990 and 2001

Table 5.5   Share of automotive products in trade in manufactures, 2003 (%)

Table 5.6   Global exports of autos and components by new entrants, 1990, 1995 and 2002 ($000)

Table 5.7   Learning and comparative advantage in the auto components sector, 1998–2001

Table 5.8   Comparison of prices, net of import duties and value added tax, South Africa, the UK and the EU, 2002

Table 6.1   Share of global manufacturing value added, 1985 and 1998

Table 6.2   Share of manufactured exports, 1985 and 1998

Table 6.3   Three-firm concentration ratios in EU food processing industries, late 1990s (% share of market)

Table 6.4   Share of imports from China – EU, Japan and the USA, 1995 and 2002

Table 7.1   The scope for China’s increased consumption of basic metals, 1955–2003

Table 7.2   Employment in formal-sector manufacturing, 1995–2002

Table 7.3   Standardized unemployment rates in the major economies, 2001–3 (%)

Table 7.4   Development of the Chinese educational system, 1985–2002

Table 7.5   The size and geographical distribution of flows of foreign direct investment, 1991–2002

Table 8.1   Numbers living in absolute poverty, 1990 and 2001 (less than PPP$1 per day, millions)

Table 8.2   Growth in per capita incomes, 1970s, 1980s, 1990s and 1998–2002 (constant $1995) (% per annum)

A Guide to the Reader

In a disciplinary sense this is a crossover book. Elements of the analysis are drawn from development economics, from economic geography, from international political economy, from sociology, from management studies, from production engineering, and from the literature on the management of innovation. Consequently most readers will sometimes find themselves confronted by unfamiliar literature and unfamiliar jargon. At the same time, the text is designed to be accessible to a wide audience, including fellow researchers, policymakers, development professionals and students. For this reason I offer a guide to assist the selective reader. In addition each of the chapters incorporates summary boxes in almost all sections. These are designed both to assist non-specialist readers and to provide a route to the rapid reader. In this way it is hoped that both specialists and non-specialists can more easily find their way through the text.

The ultimate objective of the book is to explain the relationship between globalization, poverty and inequality, and to consider the policy implications of this analysis for low-income economies. At a minimum, therefore, those wanting to absorb the key argument should focus on the first, second and final chapters, in which the central propositions are stated, the empirical material is summarized and the conclusions are presented.

Readers who wish to understand in greater detail how and why I have reached these conclusions should read chapters 6 and 7. These chapters are focused at the macro-level and consider the workings of the global economy at large. Much of this discussion is backed by original empirical material and quantitative analysis, as is the analysis of globalization in three sectors in chapter 5. I am particularly concerned that these chapters should be read by those who have an expertise in more micro-related concerns such as micro-economics, production engineering and innovation management. This is because, in my experience, professionals with these more narrowly focused skills often tend to ignore the wider implications of their own expertise.

Conversely, the discussions in chapters 3 and 4 provide an introduction to the principles of management, production engineering and innovation management. I believe that this should be of particular concern to those readers with a specialism in macro-issues and who often consider the firm, or the chain and cluster of firms – entities which respond seamlessly to changes in economic policy – as a black box.

Student readers are at the forefront of my concern. I have attempted to keep jargon to a minimum, and wherever possible I have tried to provide an overview and literature review of key fields. Thus, for example, chapters 1 and 8 comprise a synoptic view of globalization, in historical perspective; chapter 2 summarizes the empirical material on global poverty and inequality and discusses the ambiguity of data and the various meanings attributed to poverty; chapters 3, 4 and 5 outline some of the key principles in the literature on innovation, on global value chains and on industrial districts and clusters; chapters 6 and 7 explain the underlying principles of the terms of trade and the theory of comparative advantage. In each case I have tried not only to present these ideas in accessible form, but also to draw the links between them and, where appropriate, to carry forward the discussion on to a new plane.

Acknowledgements

Polity Press has been an extremely supportive publisher, working with admirable professionalism. I have had only one problem, however, and this concerns the authorship of this book. I had wanted to have the book credited to Raphael Kaplinsky (and others), but this ran against publishing conventions. My reason for wanting this form of ascription is that almost all of the discussion in this book, in one form or another, draws on the ideas of others. In some cases it results from close research collaboration, in others from extended discussions over the years, and in yet others to specific acts of assistance. I have also of course gained from access to a series of high-quality research reports emanating from the institutions in which I work, and the networks in which I participate, not all of which have been published.

It is invidious to try and name everyone who has contributed in one way or another to the preparation of this book, because I am bound to leave some out. For these omissions I apologize. Those that I remember are as follows.

For assistance with the project as a whole I am indebted to my wife Cathy, who allowed me to bounce various ideas around, who tolerated my periods of introspection and who encouraged me to make the personal part of the professional; Mike Morris, who nagged me for some time to get on with it, and who gave detailed comments on some of the chapters; Jeff Henderson and an anonymous Polity reviewer, who provided comments on the text as a whole; Howie Rush, for his understanding and generous support during the writing of the book; and David Evans, who at various times answered technical questions and read some of the draft chapters. My son, Ben, was a source of awkward and probing questions at various stages of the books evolution, and these spurred me to try and make it more accessible to non-specialists I am afraid that I am unable to write to a legal agenda!

Various sets of the analysis are drawn from collaborative work. On autos, I owe thanks to Justin Barnes and Mike Morris; on furniture to Jeff Readman; on the analysis of global prices to Amelia Santos-Paulino; on innovation management to Justin Barnes, John Bessant and Mike Morris; and on industrial districts to Andrew Grantham. In each case I have referenced our joint publications, but this is only a small indication of the benefits of our various collaborations.

Others helped with specific inputs. Andrew Grantham and Jeff Readman not only provided detailed comments on some of the chapters, but also were a continuous source of unselfish assistance on many points of detail. Shaun Gannon, Rob Fitter and Jenny Kimmis willingly assisted me (or so they said!) with the materials used in chapters 1 and 8, chapter 3, and chapter 6 respectively. Branco Milanovic offered generous assistance when I was writing on income distribution, as did Martin Ravallion. William Martin and Jim Lennon provided me with some of the data used in Chapter 6. Tom Rawski supplied me with useful unpublished data on China, and Wing Lim helped me update the data on Chinese education and training. Sanjaya Lall was a generous source of data on changing patterns of global production and trade, Gary Hamilton illuminated my understanding of the role played by global buyers, Parvin Alizadeh was an important stimulant for my understanding of the restrictive assumptions of Ricardo, and Carlotta Perez set my thinking right on the links between financial and productive capital. Dave Kaplan provided insightful comments on chapters 1, 2 and 6, Hubert Schmitz on chapter 8, and Jorge Katz on chapter 6. Mike Barnard helped me to avoid pitfalls on early European history when my mind wandered, and Mike Boulter got me thinking about the personal and the professional. Finally, on points of detail, I am indebted to Theo Mars for a useful brief on dialectics, to Henry Bernstein for the important insight on the distinction between the residual and relational explanations for poverty, and to Dave Francis for helping me to make the book more accessible to a wider audience. Unwitting graduate students at the Institute of Development Studies, Sussex University, Manchester University and the London School of Economics provided a similar (unconscious) service.

So much for the detail. There is also a range of people who have assisted me more generally. My colleagues at both the Institute of Development Studies at the University of Sussex and the Centre for Research in Innovation Management have been a constant source of stimulation and support I often found myself writing for their attention. I have also gained greatly from participating in the global value chains group, and especially from Gary Gereffi and Tim Sturgeon.

I have been assisted in many practical ways throughout the writing of this book (and at other times) by Paula Lewis, who was unfailingly willing. Ellen McKinlay and David Held at Polity could not have been more helpful, and I am grateful to Caroline Richmond for her constructive editorial comments.

To all these people I offer my thanks. If only they would collectively agree to take responsibility for all the errors and misunderstandings I would be even more grateful. But that would be pushing my luck too far.

*  *  *

The author and publishers wish to thank the following for permission to reproduce copyright material:

Figure 3.5  Reproduced by permission of Santiago Acosta-Maya.

Figure 1.5  From R. E. Baldwin and P. Martin, Working Paper 6904, Cambridge, MA: NBER, 1999. Reproduced by permission of the authors.

Figure 6.5   From R. Bell, ‘Competition issues in European grocery retailing’, European Retail Digest, 39, 2003. Reproduced by permission of European Retail Digest.

Table 7.2  From J. G. Carson, US Weekly Employment Update, New York: Alliance Bernstein, 2003. Reproduced by permission of Alliance Capital Management.

Tables 1.1 and 1.3; figures 1.6 and 1.8  Calculated or adapted from CEPR, Making Sense of Globalization:A Guideto the Economic Issues, London: Centre for Economic Policy Research, 2002. Copyright, European Communities, 2002. Reproduced by permission of CEPR.

Figure 6.15  From Y. R. Cheong and X. Geng, Global capital flows and the position of China: structural and institutional factors and their implications, in J. J. Teunissen (ed.), China’s Role in Asia and the World Economy, The Hague, FONDAD, 2003. Reproduced by permission of FONDAD.

Table 2.3  From A. C. Cornia and J. Court, Inequality, growth and poverty in the era of liberalization and globalization, Policy Brief No. 4, Helsinki: Wider, 2001. Reproduced by permission of UNU-WIDER.

Table 6.3  From R. Cotterill, Continuing Concentration in Food Industries Globally: Strategic Challenges to an Unstable Status Quo,Storrs, CT: University of Connecticut, Food Marketing Policy Centre, 1999. Reproduced by permission of FMPC.

Figure 5.10  From P. Dicken, Global Shift: Reshaping the Global Economic Map in the 21st Century, London: Sage, 2003. Reproduced by permission of Sage Publications Ltd.

Figure 5.2  From P. Gibbon, At the cutting edge Financialisation and UK clothing retailers global sourcing patterns and practices, Competition and Change, 63, pp. 289—308. Reproduced by permission of Taylor & Francis Ltd. http://www.tandf.co.uk/journals.

Figure 7.8  From R. Hira, Implications of offshore sourcing, mimeo, Rochester Institute of Technology, 2004. Reproduced by permission of the author.

Box 4.1  IDS, Policy Brief No. 10, Brighton: Institute of Development Studies, 1997. Reproduced by permission of Institute of Development Studies.

Table 1.2; figure 6.7  From IMF, World Economic Outlook, 2002. Reproduced by permission of IMF.

Figures 3.1 and 3.2  Reproduced by permission of International Coffee Organization.

Figure 6.14  From G. H. Jefferson et al., Ownership, productivity change, and financial performance in Chinese industry, Journal of Comparative Economics, 28, 2000, pp. 786813. Reproduced by permission of Elsevier.

Figure 7.2; table 7.1  Reproduced by permission of Macquarie Bank.

Figure 6.1 2 From A. Maizels, T. Palaskas and T. Crowe, The Pre-bischSinger hypothesis revisited, in D. Sapsford and J. Chen (eds), Development Economics and Policy: The Conference Volume to Celebrate the 85th Birthday of Professor Sir Hans Singer, Basingstoke: Macmillan, 1998. Reproduced by permission of Palgrave Macmillan Publishers.

Figure 6.3  From M. Martin and V. Manole, Chinas emergence as the workshop of the world, mimeo, Washington, DC: World Bank, 2003. Reproduced by permission of the authors.

Figure 6.3  From W. Martin, Developing countries changing participation in world trade, World Bank Research Observer, 18, 2003, pp. 15986. Reproduced by permission of Oxford University Press.

Figure 2.6 From B. Milanovic, The two faces of globalization: against globalization as we know it, World Development, 31, 2003, pp. 66783. Reproduced by permission of Elsevier.

Figure 2.7  From B. Milanovic, The Ricardian vice: why Sala-i-Martins calculations of world income inequality are wrong, Social Science Research Network, 2002. Reproduced by permission of the author.

Box 4.1  From K. Nadvi, Industrial clusters in developing countries, special issue of World Development, 27, 1999, pp. 160526. Reproduced by permission of Elsevier.

Figure 1.9  From M. Obstfeld and A. Taylor, Global Capital Markets: Integration, Crisis and Growth, Cambridge: Cambridge University Press, 2004. Reproduced by permission of Cambridge University Press.

Figure 7.6  Adapted from: OECD, Trade balances for goods and services $ billion, national accounts basis, OECD Economic Outlook, issue 2, 2004, © OECD, 2004. Reproduced by permission of OECD.

Figure 7.9   Adapted from OECD, Standardised unemployment rates/ Taux de chômage standardisés, Main Economic Indicators/ Principaux indicateurs nomiques, issue 1, 2005, © OECD, 2005. Reproduced by permission of OECD.

Figure 7.5   From T. G. Rawski, Recent developments in Chinas labor economy, mimeo, University of Pittsburgh, Department of Economics, 2004. Reproduced by permission of the author.

Figures 2.2 and 2.4  From X. Sala-i-Martin, Working Paper 8933 and Working Paper 8904, Cambridge, MA: NBER, 2002. Reproduced by permission of the author.

Tables 4.1 and 4.2  From H. Schmitz, Global competition and local cooperation: success and failure in the Sinos Valley, Brazil, World Development, 27, 1999, pp. 162750. Reproduced by permission of Elsevier.

Table 7.5  From UNCTAD, World Investment Survey, Geneva and New York: United Nations. Reproduced by permission of UNCTAD.

Table 6.1; figure 6.1  From UNIDO, Handbook of Industrial Statistics, 1990. Vienna: UNIDO, 1990. Reproduced by permission of the United Nations Industrial Development Organization.

Figure 1.4; table 6.2  From UNIDO, Industrial Development Report 2002/2003: Competing through Innovation and Learning, Vienna: UNIDO, 2002. Reproduced by permission of United Nations Industrial Development Organization.

Table 5.1; figure 5.3  From USITC, Textiles and Apparel: Assessment of the Competitiveness of Certain Foreign Suppliers to the U.S. Market, Washington, DC: United States International Trade

Commission, 2004. Reproduced by permission of the United States International Trade Commission.

Figure 6.11  From A. Wood, Openness and wage inequality in developing countries: the Latin American challenge to East Asian conventional wisdom, World Bank Economic Review, 11, 1, 1997, pp. 3357. Reproduced by permission of Oxford University Press.

Figures 1.2 and 2.1  From World Bank, Globalization, Growth and Poverty: Building an Inclusive World Economy, Washington, DC: World Bank, 2002. Reproduced by permission of the World Bank.

Tables 2.1 and 8.1  From World Bank, Policy Research Report, 2002. Reproduced by permission of the World Bank.

Tables 3.2 and 8.2; figure 7.7  From World Bank, World Development Indicators, 2004. Reproduced by permission of the World Bank.

Tables 5.2, 5.5, 5.6 and 6.4; figure 1.3  From WTO, International Trade Statistics,Geneva:WorldTradeOrganization, 2004.Reproduced by permission of the World Trade Organization.

Figure 6.4  From N. Wrigley, Transforming the corporate landscape of US food retailing: market power, financial re-engineering and regulation, Tijdschrift voor Economische en Sociale Geografie, 93, 1, 2002, pp. 6282. Reproduced by permission of Blackwell Publishing

Part I

Setting the Scene

Part I sets the scene. It dismisses the simplistic view that participating in the global economy automatically solves problems of poverty and inequality. Part II sketches a positive scenario in which globalization provides the opportunity for reducing poverty and income inequality, but argues that grasping this opportunity requires a clear strategic focus and the effective management of innovation. Part III, by contrast, is more pessimistic. It suggests that, while some may gain from globalization, the very nature of global production and trading systems may act to enhance poverty and make income distribution more unequal for others. The final chapter considers the implications of the more pessimistic outcome outlined in Part III both for poverty-focused policies and for the sustainability of globalization itself.

The opening chapter focuses on the dynamics of globalization. It describes the primary character of the contemporary phase of globalization, and contrasts this with the pattern of globalization during the nineteenth century. Chapter 2 summarizes the literature on global poverty and contrasts two perspectives on globalization, poverty and inequality. The first is a residual explanation, favoured by the World Bank and other proponents of globalization. It argues that the bulk of global poverty is a result of the failure of producers to engage with globalization. If they participate in the global economy, it is believed, poverty levels will be reduced. The second perspective argues that poverty and inequality are relational to globalization. Instead of resolving global poverty, the workings of the global economy deepen the problem for many producers who are unable to compete effectively in a world of growing surplus production capacity.

1

Global Dynamics

1.1  What’s the problem?

In July 1969, I left South Africa as a political refugee. It was a blustery winter day and, as the boat sailed out of Cape Town harbour into the ‘Cape of Storms’, I looked up at Table Mountain. It had risen to the occasion to mark my departure with a fabled table-cloth covering. And I remember thinking: ‘I will never return to my homeland. The forces of racial and class domination which have subjected the majority of the population to poverty and political repression (and forced me into exile) are too well entrenched. It will change, but not in my lifetime.’ I shed copious tears as these thoughts swirled around my head.

For the next fifteen years I revelled in my identity as an ‘oppositionist’. I had participated in the struggle against apartheid, and had steeped myself in the Marxian culture of the times. I easily transferred this world-view and identity to broader pastures and, with many others at that time, engaged in debates and researched the ‘flaws in the system’. Poverty and repression were endemic; low-income countries were caught in a trap of dependency, and would not progress without fundamental structural change.