Read Online The Price of Civilization: Reawakening American Virtue and Prosperity by Jeffrey D. Sachs - Free Book Online
Authors: Jeffrey D. Sachs
Tags: United States, Social Science, History, Business & Economics, 21st Century, Economic Conditions, Poverty & Homelessness
Ads: Link
containerized ocean transport and worldwide air travel to provide low-cost global trade, the world’s economies have become more tightly interlinked thanever before, with a global division of labor that is vastly more sophisticated and intricate than anything in the past. In the nineteenth century, and indeed up to 1950, industrial production was based on the shipments of a few raw materials from various parts of the world to a manufacturing site in Europe, the United States, or Japan. Today, production at all stages of the value chain, from raw materials to final packaging, occurs in a complex network of sites, often linking dozens of production facilities in far-flung regions of the world.
The lead protagonist of the new globalization is the multinational company (MNC), with operations straddling more than one country and sometimes a hundred or more. Among America’s MNC giants (ranked by foreign assets in 2008) are General Electric, ExxonMobil, Chevron Corporation, Ford Motor Company, ConocoPhillips, Procter & Gamble, Wal-Mart Stores, IBM, and Pfizer Inc. 2 These companies often have half or more of their global workforce outside the United States. In 2010, for example, GE employed 133,000 workers in the United States and 154,000 overseas in more than sixty countries, with more than half of its $155 billion in revenue ($83 billion) earned outside the United States. 3 Another key indicator of the rising role of globalization in the U.S. economy is the share of corporate profits received from outside the United States, as shown in Figure 6.1 . While the data are fraught with measurement difficulties, there is no doubt that corporate profits are increasingly internationalized. The national income accounts suggest that more than 25 percent of corporate profits have come from abroad in recent years, up from around 5 percent in the 1960s. 4
In addition to the pivotal advances in information, communications, and transport technologies, changes in geopolitics have played a key role in the emergence of globalization. The first great event was the independence of Europe’s former colonies after World War II. Independence provided the political foundations for subsequent economic development. Then, starting in the 1960s, several developing economies in Asia, most notably Hong Kong, Taiwan, and South Korea, began to join the global market-based trading system, especially by welcoming foreign investments from the United States, Europe, and Japan and hosting export-oriented production facilities in specially designated export-processing zones. Then, in 1978, the biggest change of all occurred: the People’s Republic of China, with around 1 billion people at the time (and 1.3 billion today), opened its economy to global trade, finance, and foreign investment. In 1991, India followed suit. By now virtually all of the world is linked through trade, finance, and production.
Figure 6.1: Foreign Profits as a Percentage of Total Corporate Profits, 1948–2010
Source: Data from U.S. Bureau of Economic Analysis.
The main economic implication of globalization is that a tremendous and rapidly expanding range of sophisticated economic activities that once were carried out only in the United States, Europe, and Japan can now be carried out even more profitably in China, India, Brazil, and elsewhere. Goods and services that were once produced in the United States and Europe are now produced in developing countries around the world and then exported to the high-income economies as intermediate or final products. As the production of awidening range of goods and services is relocated to the emerging economies, U.S. employment and incomes are subjected to tremendous upheaval.
In 1985, merchandise trade between China and the United States was balanced at $3.9 billion in each direction, a level equal to 0.09 percent of U.S. GDP that year. By 2009, China’s exports to the United States had soared to $296.4 billion, equal to 2.1 percent of U.S. GDP
The lead protagonist of the new globalization is the multinational company (MNC), with operations straddling more than one country and sometimes a hundred or more. Among America’s MNC giants (ranked by foreign assets in 2008) are General Electric, ExxonMobil, Chevron Corporation, Ford Motor Company, ConocoPhillips, Procter & Gamble, Wal-Mart Stores, IBM, and Pfizer Inc. 2 These companies often have half or more of their global workforce outside the United States. In 2010, for example, GE employed 133,000 workers in the United States and 154,000 overseas in more than sixty countries, with more than half of its $155 billion in revenue ($83 billion) earned outside the United States. 3 Another key indicator of the rising role of globalization in the U.S. economy is the share of corporate profits received from outside the United States, as shown in Figure 6.1 . While the data are fraught with measurement difficulties, there is no doubt that corporate profits are increasingly internationalized. The national income accounts suggest that more than 25 percent of corporate profits have come from abroad in recent years, up from around 5 percent in the 1960s. 4
In addition to the pivotal advances in information, communications, and transport technologies, changes in geopolitics have played a key role in the emergence of globalization. The first great event was the independence of Europe’s former colonies after World War II. Independence provided the political foundations for subsequent economic development. Then, starting in the 1960s, several developing economies in Asia, most notably Hong Kong, Taiwan, and South Korea, began to join the global market-based trading system, especially by welcoming foreign investments from the United States, Europe, and Japan and hosting export-oriented production facilities in specially designated export-processing zones. Then, in 1978, the biggest change of all occurred: the People’s Republic of China, with around 1 billion people at the time (and 1.3 billion today), opened its economy to global trade, finance, and foreign investment. In 1991, India followed suit. By now virtually all of the world is linked through trade, finance, and production.
Figure 6.1: Foreign Profits as a Percentage of Total Corporate Profits, 1948–2010
Source: Data from U.S. Bureau of Economic Analysis.
The main economic implication of globalization is that a tremendous and rapidly expanding range of sophisticated economic activities that once were carried out only in the United States, Europe, and Japan can now be carried out even more profitably in China, India, Brazil, and elsewhere. Goods and services that were once produced in the United States and Europe are now produced in developing countries around the world and then exported to the high-income economies as intermediate or final products. As the production of awidening range of goods and services is relocated to the emerging economies, U.S. employment and incomes are subjected to tremendous upheaval.
In 1985, merchandise trade between China and the United States was balanced at $3.9 billion in each direction, a level equal to 0.09 percent of U.S. GDP that year. By 2009, China’s exports to the United States had soared to $296.4 billion, equal to 2.1 percent of U.S. GDP
Similar Books
