Redalyc. Industrial Convergence and the Persistence of the Nort-South Divide. Aportes

30 Pages·2005·0.15 MB·English

Aportes
Benemérita Universidad Autónoma de Puebla
[email protected]
ISSN (Versión impresa): 1665-1219
MÉXICO

2002
Giovanni Arrighi / Beverly J. Silver / Benjamin D. Brewer
INDUSTRIAL CONVERGENCE AND THE PERSISTENCE OF THE NORT-SOUTH
DIVIDE
Aportes, septiembre-diciembre, año/vol. VII, número 021
Benemérita Universidad Autónoma de Puebla
Puebla, México
pp. 11-39
APORTES: REVISTA DE LA FACULTAD DE ECONOMÍA-BUAP. AÑO VII NÚM. 21
A
PORTES
Industrial Convergence and the Persistence
of the Nort-South Divide
Giovanni Arrighi
Beverly J. Silver
Benjamin D. Brewer
It is now more than fifteen years since Nigel The conception of an interdependent,
Harris announced the disappearance of the interacting, global manufacturing sys-
Third World as economic reality and ideo- tem cuts across the old view of a world
logical representation. In a 1986 book enti- consisting of nation-states as well as
tled The End of the Third World: Newly one of groups of countries, more or less
Industrializing Countries and The Decline developed and centrally planned—the
of an Ideology, Harris argued that the emer- First, the Third and the Second Worlds.
gence of “a global manufacturing system” Those notions bore some relationship to
was making the very notion of a Third an older economy, one marked by the
World hopelessly obsolete.1 exchange of raw materials for manufac-
turing goods. But the new world that
has superseded it is far more complex
1 Previous versions of this paper were presented and does not lend itself to the simple
at the American Sociological Association Meeting, identification of First and Third, haves
Anaheim, August 2001; Lingnan University, Hong
and have-nots, rich and poor, industri-
Kong, May 2001; the Graduate School, Chinese
alized and non-industrialized.... The
Academy of Social Sciences, Beijing, May 2001; the
Annual Convention of the International Studies process of dispersal of manufacturing
Association, Chicago, February 2001; the Center for capacity brings enormous hope to areas
International Studies, University of Southern Cali- where poverty has hitherto appeared
fornia, November 2000; the Annual Meeting of the
immovable.... [T]he realization of one
American Political Science Association, Washing-
world offers the promise of a rationally
ton D.C., September 2000; the Universidad Nacio-
nal Pedro Henriquez Urena, Santo Domingo, Do- ordered system, determined by its inhab-
minican Republic, March 2000 and at the Confer- itants in the interests of need, not profit or
ence on Ethics and Globalization, Yale University, war. Harris [1987 [1986]: 200-2]
April 2000. We benefited greatly from the com-
ments of Hayward Alker, Charles Beitz, Peter Evans,
Harris’ contention that the North-South
Walter Goldfrank, Michael Mann, David Smith,
Ann Tickner and two anonymous reviewers for divide is becoming obsolete (although not
SCID. necessarily his prediction of a “rationally
[ 11 ]
12 ARRIGHI, SILVER & BREWER
ordered system”) has gained credence among North-South divide— remains a fundamen-
some of the best-informed observers of glo- tal dimension of contemporary global dy-
balization. (See, for example, Hoogvelt namics.
[1997: xii, 145]; Held et al 1999: 8, 177, The first section of the article lays out the
186-7]; Robinson and Harris 2000; Bur- premises and conceptual framework that
bach and Robinson 1999; Hardt and Negri undergird our analysis. The empirical anal-
2000). According to this view, the spatial ysis in the second section shows that there
restructuring of the last 20-30 years has has indeed been widespread convergence in
eliminated the structural divide between the degree of industrialization between
First and Third Worlds. “Worldwide con- former First and Third World countries;
vergence, through the global restructuring however, this industrial convergence has
of capitalism, means that the geographic not been accompanied by a convergence in
breakdown of the world into north-south, incomes between the two groups of coun-
core-periphery or First and Third worlds, tries. The third section offers an explanation
while still significant, is diminishing in im- for this puzzling combination of conver-
portance” (Burbach and Robinson 1999: gence in degree of industrialization on the
27-8). Polarizing tendencies are still at work one side, and lack of convergence in income
but within rather than between countries. levels on the other. Finally, the fourth and
“Core-periphery”—in Ankie Hoogvelt’s concluding section speculates on how sus-
words—“is becoming a social relationship, tainable this pattern of global inequality is
and no longer a geographical one” (1997: likely to be in the light of its past dynamic
145). and emerging sources of potential instabil-
We agree that the collapse of the Second ity.
World in the early 1990s makes the con-
cepts of First World and Third World anach- I. World Income Inequality,
ronistic. Moreover, even before the Second Development and “Globalization”
World collapsed, the Third World was large- Harris’ contention notwithstanding, there is
ly exhausted as a political-ideological force a broad consensus in the empirical literature
in world politics. We also agree that con- that inequality between countries is a far
vergence in industrialization levels makes more important component of total world
the association of First and Third Worlds income inequality than inequality within
with “industrialized” and “non-industrial- countries. The exact percentage of total
ized” misleading at best. Nevertheless, as world income inequality found in recent
this article will demonstrate, industrial con- studies to be accounted for by inter-country
vergence has not been accompanied by a rather than intra-country inequality in the
convergence in the levels of income and 1990s varies from a high of 86% (Korze-
wealth enjoyed on average by the residents niewicz and Moran 1997: 1017) to a low of
of the former First and Third Worlds. In 68% (Goesling 2001: 752). These and other
other words, the divide between the rich estimates (based on the decomposition of
nations of the former First World and poor the Theil index) all find that inter-country
nations of the former Third World —the income inequality accounted for at least
INDUSTRIAL CONVERGENCE AND THE PERSISTENCE OF THE NORT-SOUTH DIVIDE 13
two-thirds of total world income inequality years, Brian Goesling (2001: 752) finds a
in the 1990s (see also Milanovic 1999: 34; rather sharp decline in the percentage from
Firebaugh 1999: 1597-8; Firebaugh 2001).2 74% in 1992 to 68% in 1995. Nevertheless,
There is also a broad consensus in the as Goesling himself acknowledges, if China
empirical literature that today’s enormous is excluded from the analysis the declining
between-country income inequality is the trend in between-nation inequality “flattens
outcome of the “great divergence” in na- out” (2001: 756) —an important point to
tional incomes that began in the late eigh- which we shall return in the final section.4
teenth century,3 and that this gap continued The above debates on world income
to widen through the mid-twentieth century inequality do not directly address the issue
at least. Disagreements concern the trend in of the persistence or non-persistence of the
recent decades. Using FX-based data, Rob- North-South divide —the focus of this pa-
erto P. Korzeniewicz and Timothy Moran per. For in theory, the North-South divide
(1997) find that the between-country com- could decline in significance even if extreme
ponent of the Theil index increased from inter-country income inequality persists.
79% in 1965 to 86% in 1992. Using PPP- This would be the case if inter-country
based data and focusing on the period from inequality were accompanied by a signifi-
1988 to 1993, Branko Milanovic (1999: 34, cant switching of positions within the world
51) finds that the same component remained income distribution between former Third
roughly constant —that is, 75% in 1988 and World countries and former First World
74% in 1993. Also using PPP-based data countries. Even the most unequal of income
but extending the analysis another couple of distributions can be associated with an equal
distribution of wealth if yesterday’s recipi-
2 The differences among the estimates cited
above are almost entirely due to whether income 4 Milanovic derived the world income distribu-
data are converted into US $ at actual exchange rates tion of individuals for 1988 and 1993 from house-
without adjustment for differences in costs of living hold survey data from 91 countries, adjusted for
(FX-based data) or they are adjusted for “purchas- differences in purchasing power parity between the
ing power parity” (PPP-based income data) (Fire- countries. This study was made possible by the
baugh 1999: 1601 and table 3). Korzeniewicz and massive expansion in the data base on incomes that
Moran measure income in different countries at ensued from a major increase in the number of
actual exchange rates, while Milanovic and Goesling household surveys carried out in Africa and from the
use Purchasing Power Parities. Korzeniewicz and opening up of hitherto unavailable sources in China
Moran’s finding are based on data for 1992, Mil- and the former Soviet Union. Replicating this study
anovic’s for 1993 and Goesling’s for 1995. Goesling’s for earlier periods may be difficult or altogether
findings for 1992 (74%) are the same as Milanovic’s impossible. Goesling attempts to take the analysis
for 1993. back to 1980 but because of data gaps he relies on a
3 For reviews of the evidence, see O’Rourke basket of countries that changes from year to year in
(2001) and Firebaugh (2001). Since this was a a non-random (biased) fashion, making less than
period of simultaneous Western industrial and ter- convincing his conclusion that the percentage of
ritorial expansion, there is little agreement in the total inequality attributable to the between-nation
relevant literatures on whether present inequality is component of the Theil Index has been declining
primarily the legacy of Western industrialism or since at least 1980 (leaving aside the China issue
Western colonial imperialism. mentioned in the text above).
14 ARRIGHI, SILVER & BREWER
ents of high incomes are today’s recipients continuing importance of political geogra-
of low incomes and vice-versa. However, if phy in determining the world hierarchy of
an unequal income distribution is character- income and wealth.
ized by little long-term upward/downward As previously mentioned, there is a gen-
mobility, it can be taken to reflect an under- eral consensus in the relevant literatures
lying hierarchy of wealth. For wealth is that this global hierarchy of wealth is large-
nothing but «long-term income» (Harrod ly a legacy of the industrial and territorial
1958).5 expansion of Western nations in the nine-
It is such a stable hierarchy of wealth teenth and early twentieth centuries.6 This
that Giovanni Arrighi and Jessica Drangel consensus is consistent with the earlier ex-
(1986) found for the 1938-1983 period. pectation that decolonization and Third
Based on the world distribution of GNP per World industrialization would substantial-
capita, they identified three distinct clusters ly reduce the North-South income divide.
of countries (high-, middle- and low-income Once decolonization had occurred, theories
countries). Moreover, they found that long- of national development were nearly unan-
term upward/downward mobility of coun- imous across the ideological spectrum in
tries from one cluster to another was ex- maintaining that industrialization of one
ceedingly rare. Korzeniewicz and Moran’s kind or another was essential if Third World
(1997: Table 5) more recent data on the countries were to attain the standards of
position of countries within income quin- wealth enjoyed by First World countries.
tiles for the period between 1965 and 1990, Catching up with the standards of wealth of
likewise, confirms that cases of upward/ First World countries was the generally
downward mobility by countries across accepted objectiveo f Third World develop-
quintiles were few in number and insignifi- mental efforts. But the narrowing of the
cant in terms of their share of total world industrialization gap between Third and
population. These findings, in turn, are con- First World countries was just as generally
sistent with the literature that suggests that considered to be the most essential and
OECD countries constitute a “convergence effective means in the pursuit of that objec-
club,” that is a group of countries that tive.
experience income convergence in relation This expectation that industrialization
to one another but not in relation to the and income convergence would go hand-in-
broader constellation of countries (Abram- hand was reinforced by the expectation that
ovitz 1986; Baumol, Blackman and Wolff in the course of their own development the
1989; Peacock, Hoover and Killian 1988;
Jones 1997). The above findings point to the
6 We shall not question this consensus. Nor shall
we try to settle the dispute over whether present
5 Cf. Oliver and Shapiro 1995 and Conley 1999 North-South income inequality is primarily a legacy
for an analogous distinction between income and of Western industrialism or Western colonial impe-
wealth with reference to the long-term rigidity of a rialism. On the interdependence between these two
racial stratification of wealth within the United sources of the initial gap see Arrighi and Silver et al.
States. 1999, chapter 4.
INDUSTRIAL CONVERGENCE AND THE PERSISTENCE OF THE NORT-SOUTH DIVIDE 15
wealthy countries of the First World would “The Rest”—a group of countries outside
experience a gradual de-industrialization the North Atlantic accounting for over half
—what Daniel Bell (1973) called the “com- of world population— has “risen.” At the
ing of post-industrial society.”7 Since the basis of the claim lies the identification of
productivity of service activities was gener- development with “attracting capital, hu-
ally believed to be lower than manufactur- man and physical, out of rent seeking, com-
ing activities (see especially Clark 1957 and merce, and ‘agriculture’ (broadly defined),
Baumol 1967), the rate of growth of per and into manufacturing, the heart of modern
capita income was expected to decrease in economic growth” (2001: 1-2). In spite of
rich, de-industrializing countries and to in- accumulating evidence to the contrary, in-
crease in poor, industrializing countries. dustrialization and development thus con-
Eventually, all societies would become post- tinue to be used as synonyms as if industri-
industrial but in the meantime industrializa- alization were an end in itself, rather than a
tion was generally thought to be the surest means —and as it turns out, an increasingly
way for Third World countries to catch up ineffectual means— in the pursuit of na-
with First World standards of wealth. tional wealth.8
Indeed, such has been the power of this A first reason for focusing on industrial-
consensus that academic no less than popu- ization is thus to verify empirically the
lar discourse has come to treat “industrial- validity of the widely held hypothesis (turned
ization” and “development” as synonyms. into assumption) that industrialization is the
This semantic conflation of the ends of most effective means of catching-up with
development (catching up with First World Northern standards of wealth. A second
standards of wealth) with its allegedly most reason is that industrialization has costs as
effective means (industrialization) under- well as benefits. Some of these costs—such
lies Harris’ claim that the geographical as the pollution of air and water, the erosion
dispersal of manufacturing capacity means of the countryside, and the destruction of
that we can no longer identify zones of more natural beauty—though hard to quantify by
or less permanent prosperity (the North or means of synthetic indicators, are at least
former First World) and zones of more or visible. Other costs—such as those cap-
less permanent poverty (the South or former tured by Marx’s concept of “alienation”,
Third World). But in conflating industrial Weber’s “iron cage” and Durkheim’s
with wealthy, non-industrial with poor, “anomie”—are not just hard to quantify;
and industrialization with development, they are also largely invisible. As Dean
Harris is far from alone. A similar confla-
tion underlies Alice Amsden’s claim that
8 On the decreasing effectiveness of industrial-
ization as a means in the pursuit of income/wealth,
7 Daniel Bell’s expectation was itself based on see Arrighi and Drangel (1986: 53-57). Although
Colin Clark’s earlier analysis of sectoral shifts from this finding was incorporated in some later recon-
industrial to service activities in the course of eco- ceptualizations of national development (e.g., Ger-
nomic development (1957). For more recent analy- effi 1994: 44-45), it has largely been ignored in
ses, see Rowthorn and Wells (1987) and Alderson academic and popular discourses about develop-
(1999). ment.
16 ARRIGHI, SILVER & BREWER
Tipps (1973: 208) has noted, the ambiva- from the “statist” and “inward-looking”
lence towards modern industrial society that strategies that most theories of national
characterized the writings of Marx, Weber development had advocated in the 1950s
and Durkheim is conspicuous by its ab- and 1960s and began instead to promote
sence in early modernization and develop- capital-friendly and outward-looking strat-
ment thinking. Although ecological and en- egies.9 This change in the policies and ide-
vironmental concerns have of late become ologies of national development promoted
quite prominent in development discourse, by the hegemonic power corresponds to
the costs of industrialization continue to be what Christopher Chase-Dunn (1999) has
underrated in comparison with its real or labeled “ideological globalization”. An
imagined benefits. equally important aspect of the transforma-
Recent research on between-country in- tion in the global political economy that
come inequality abstracts completely from occurred around 1980 was the intensifica-
the costs and intensity of the developmental tion of competitive pressures on Third (and
efforts undertaken by Third World coun- Second) World countries that accompanied
tries in their attempts to catch-up with First but was only in part due to the emergence of
World standards of wealth and welfare. In the globalization project as ideology and
reality, a constant income gap has an alto- policy. This intensification in competitive
gether different meaning, depending on pressures is an important aspect of what
whether it is associated with a rising or a Chase-Dunn (1999) has labeled “structural
declining industrialization gap. Our focus globalization”.10
on the relationship between the North-South How did this combination of “ideologi-
income and industrialization divides is thus cal” and “structural” globalization affect
aimed also at assessing the success or fail- the developmental efforts of Third World
ure of Third World developmental efforts, states? Did it make it easier or more difficult
not in isolation from, but in relation to the for them to narrow the income gap that
intensity and cost of those efforts. separated them from First World countries?
Finally, we shall pay particular attention In order to answer these questions it is
to the major change that occurred around necessary to compare the outcomes of Third
1980 in the world context in which Third World developmental efforts in the periods
World development efforts unfolded. Phil- before and after 1980. Thus, in the next
lip McMichael (2000) has described the
change as a switch of the policy of the 9 On the implications of this switch for develop-
ment theory, see especially Toye (1993) and Gore
hegemonic power from promotion of the
(2000). As Hans Singer (1997) points out, the
“development project” launched in the late
description of development thinking in the post-war
1940s and early 1950s to promotion of the era as statist and inward-looking is correct but
“globalization project” under the neoliberal neither term had the derogatory connotations they
Washington Consensus of the 1980s and acquired in the 1980s.
10 For a detailed discussion of the mechanisms
1990s. As a result of the switch, the US
underlying this intensification of competitive pres-
government —directly or through the Bret-
sures see Arrighi 1994; Arrighi and Silver et al
ton Woods institutions— withdrew support 1999.
INDUSTRIAL CONVERGENCE AND THE PERSISTENCE OF THE NORT-SOUTH DIVIDE 17
section, we compare trends in industrial and We use GNPPC instead of GDPPC
income convergence or divergence for two (Gross Domestic Product per capita) be-
distinct periods of approximately equal cause our focus is on differences in national
length: the two decades before 1980 and the income and wealth. GNP is the sum of all the
two decades after 1980. wages/salaries, interest payments, rents,
profits and combinations thereof (mixed
II. Industrial Convergence and the incomes) that accrue to the residents of a
Persistence of the North-South Divide given political jurisdiction (normally a sov-
As previously noted, several studies have ereign state). Hence, GNPPC is simply the
shown that the North (or former First World) average income of a jurisdiction’s residents.
constitutes a “convergence club” at the high GDP is the same as GNP, except that it
end of the world income distribution. We excludes the incomes that the jurisdiction’s
shall take this finding as one of our premises residents derive from transfers from abroad
and assume further that joining this club (such as the repatriation of corporate profits
(that is, catching up with the income that on or migrant workers’ remittances) and in-
average accrues to its members) has been cludes incomes transferred abroad. Unlike
the primary objective of the developmental GNP, therefore, GDP measures the incomes
efforts of the countries of the South (or that have been generated (“produced”) within
former Third World). Starting from these a country, rather than the incomes that
premises, we shall investigate the outcomes accrue to a country’s residents.12
of these developmental efforts, measuring
the performance of a particular country by States, Canada, Western Europe, Australia, New
means of the ratio Zealand and Japan, while the countries classified as
Third World are those in Sub-Saharan Africa, Latin
America, West Asia and North Africa, South Asia
y = y / y
t i N and East Asia (except Japan). The data for both
income and manufacturing are from World Bank
where y is the GNPPC (Gross National sources. (For the exact countries included in the
i
Product per capita) of country i in a given following analyses as well as the sources, see Tables
1 and 2.)
year and y is the (weighted) average GNP-
N 12 We use GNP data converted into US$ at actual
PC of First World countries as a whole in
exchange rates (FX-based data) without adjusting
the same year. If y increases over time, the for differences in the cost of living (as PPP-based
t
income gap between country i and First data does) for analogous reasons. While PPP data
World countries is narrowing, and if it allow for a more adequate description of trends in
material consumption, FX-based data are a better
decreases, the gap is widening. Whenever
measure of differences in the relative level of in-
we calculate the indicator for groups of
come/wealth among residents of different countries
countries (such as the First or the Third in the global economy. Wealth in a global economy
World), we weight countries by their popu- is the command that people have over one another’s
lation size. 11 goods and services on the world market. PPP-
adjusted data actually obscure what we seek to
measure. For example, even though a book pro-
11 In calculating these ratios, and throughout this duced in India or China may be significantly less
paper, we classified as First World the United expensive than a book produced in the United
18 ARRIGHI, SILVER & BREWER
While Third World countries’ success/ mance in narrowing the industrialization
failure in narrowing the income gap that gap on the one side, and in narrowing the
separates them from First World countries income gap on the other. In order to assess
will be measured by the ratio y, their suc- the impact on Third World developmental
t
cess/failure in narrowing the industrializa- efforts of the radical change in the global
tion gap will be measured by the ratio political-economic environment that oc-
curred around 1980, we shall begin by
m = m/ m comparing changes in the three indicators
t i N
for the period 1960-1980, and then turn to
where m is the proportion of country i’s the same comparison for the period 1980-
i
GDP accounted for by manufacturing in a 1998/9.
given year and m is the same proportion for Figure 1 shows the scatter diagram of
N
the First World as a whole in the same year. the natural log of m/m for 1980 (y-axis)
i N
If m increases over time, the industrializa- and 1960 (x-axis). The diagonal is the line
t
tion gap between country i and First World of equality (no change between 1960 and
countries is narrowing, and if it decreases, 1980 in the value of m/m ). Points above
i N
the gap is widening. Whenever we calculate the diagonal denote a narrowing, and points
this indicator for groups of countries (e.g., below the diagonal a widening, of the in-
the First or Third World as a whole), we dustrialization gap.
weight countries by the size of their GDP.13 The most striking feature of the diagram
Owing to their common form, the indus- is the widespread tendency towards a nar-
trialization indicator (m) can be readily rowing of the industrialization gap. As we
t
compared with the income indicator (y). shall see, this tendency is a result both of
t
Through such a comparison, we can gauge First World de-industrialization and of Third
discrepancies between Third World perfor- World industrialization. Nevertheless, it is
still quite remarkable that only a handful of
States, purchasing any of these books takes a small- Third World countries (the countries indi-
er percentage of the income of the average resident cated by points on or below the diagonal)
of the United States than it would take to make the
did not manage to narrow the industrializa-
same purchases for the average resident of India or
tion gap. At the same time, several Third
China. One can think of this in terms of the differ-
ence it makes in the ability of differently located World countries (the countries indicated by
universities to maintain a world class library. points on or above the x-axis) succeeded
13 To be sure, manufacturing is a very heteroge- either in completely closing the industrial-
neous category with products subject to varying
ization gap or in overtaking the First World
levels of competitive pressure and varying profit-
in industrialization. Moreover, since the
ability. A central argument in the next section is that
there are mechanisms by which the geographical slope coefficient of the regression equation
distribution of profitability in manufacturing activ-
ities has been continuously reproduced along estab- ln m = 0.06 + 0.639 ln m
lished geopolitical (North-South) lines—despite 80 60
(adjusted R-squared = 0.5) (n=60)
continuous Southern efforts to invest in those man-
ufacturing activities with the highest returns avail-
able at any given point in time. is less than 1, there was a tendency towards
INDUSTRIAL CONVERGENCE AND THE PERSISTENCE OF THE NORT-SOUTH DIVIDE 19
convergence in the degree of industrializa- vergence in income levels. This lack of
tion not just between Third World and First overall convergence is evinced by the scat-
World countries but among the Third World ter diagram of the natural log of y/y for
i N
countries themselves. The less industrial- 1980 (y-axis) and 1960 (x-axis) shown in
ized among Third World countries, in other figure 2. The vast majority of points on the
words, were the ones that industrialized diagram fall below the diagonal line, indi-
faster.14 cating an increase in the gap separating the
In sharp contrast to this generalized ten- per capita GNP levels of those countries
dency towards convergence in the degree of from the average level for the First World.
industrialization, there was no overall con- Moreover, since the slope coefficient of the
regression equation
14 The regression equations used throughout this
section are used, not as models of causal relation- ln y = 0.053 + 1.10 ln y
ships, but as descriptive statistics—that is, as means (adjuste8d0 R-squared = 0.9) (n6=071)
to identify patterns in the relationship between
industrial and income convergence/divergence over
is greater than 1, there was no convergence in
time. In Section III, we shall offer our explanation of
the patterns identified in this section. income levels within the Third World either.
FIGURE 1
GDP in Manufacturing: 1960-1980
Africa North Africa - West Asia Latin America Asia
1
0.5
0
-4 -3.5 -3 -2.5 -2 -1.5 -1 -0.5 0 0.5 1
0 -0.5
8
9
1 -1
n
) i -1.5
n
m
m/i -2
n ( -2.5
l
-3
-3.5
-4
ln (m/m) in 1960
i n
* See Table 1 for data sources and countries included.