Clay Chastain & Purushottam Shah

SOCI/ANTH 4362, Globalization and International Development

Advisor: Dr. David Spener Fall 2009. Trinity University

 Leading

world manufacturer Export-oriented economy Transformation of social, political, and economic structures around the world

Exports of goods and services (% of GDP)

40.00

37.30
35.00

36.77

33.95

30.00

25.00

23.07

23.33 20.33

20.00

19.17

18.20

China India

15.00

13.23 11.00

10.00
10.00

6.64 6.19
5.00

7.15 5.38

0.00 1978 1985 1990 1995 2000 2004 2005 2006

Follows Jasmine and a group of rural teens as they work long hours for limited pay at a blue jeans factory in the city.
First two minutes

Most favored trade status Manufacturing shifted to cheap labor sources Chinas FDI increased dramatically

Cheap goods benefit consumers No direct job competition between US and China Domestic Chinese consumption has increased Gives way to increased mobility Living standards increase Pay rate is more than from agriculture

Exports in 1994 were 500,000 USD. In 1996 they were 160,000,000 in an individual factory. Total export from China $151 billion in 1996, a thirtyfold increase since 1976. Large subsidiaries Foreign investors recover costs

 Core

feature of capitalism Lowest prices for most goods Does not take into account externalities

 Global

interdependencies Worker exploitation Corporations focused only on maximum profit

Primarily women (70%) Poor living conditions Forced overtime, little pay Fines and penalties Deposits Local governments and factories profit

 Ruthless

military culture Owners, managers from military backgrounds Retired military officers hired as guards Physical screenings

 Humiliation

tactics] In a Korean-run factory in North China, one woman worker was put into a dog cage with a large dog and shown as a public display of humiliation for breaking the rules.

 Workers

become trapped Corporal punishment Press reported escapes

 Large no. of migrant rural workers Factories displaced farming Main workers are young Chinese peasant women Peasants live off the rent of the factory buildings Earn an average of $75/month which is higher than agricultural income

100% 80% 60% 40% 20% 0%

~60% In 2000: 45% of rural labor force have jobs off the farm more than 80% of households have at least 1 person working off the farm 2007

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Year

off-farm

busy season

part time

farm only

age cohorts 16-20a 21-25 26-30 31-35 36-40 41-50

Percentage with off-farm work in: 1990 (from deBrauw et 2004 (our data) 2007 (our data) al. (2002)) 23.7 78.6 93.1 33.6 82.8 87.5 28.8 71.0 76.4 26.9 65.1 67.2 20.5 54.0 65.7 20.8 44.0 54.1

How is off farm employment / migration affecting income inequality?

10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0

Urban Income

Rural Income

19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04

 FDI migrates towards lower wage nations Government creates EPZs Threaten to leave No formation of Labor unions Favors global markets over domestic

Exports of goods and services (% of GDP)

40.00

37.30
35.00

36.77

33.95

30.00

25.00

23.07

23.33 20.33

20.00

19.17

18.20

China India

15.00

13.23 11.00

10.00
10.00

6.64 6.19
5.00

7.15 5.38

0.00 1978 1985 1990 1995 2000 2004 2005 2006

1200 1000 800 600 400 200 0 19781980

GDP GDP/person

1985

1990

1995

2000

2004

East Asia receives 19.6% of total FDI

 Low

Government interference Labor laws violated Forced overtime Under-age workers Below minimum wage Corporal Punishment Government reaps profits

From ILOs Website.

Migration of FDI China taking away scarce FDI Mexico losing jobs & purchasing power Race to the bottom for wages

Exports of top five economies ($bil)

1,600 1,400 1,200 1,000 800 600 400 200 0

China

Germany
2000 2005

Japan
2007 2008

UK

US

Imports of top five economies ($bil)

2,500

2,000

1,500

1,000

500

China

Germany
2000 2005

Japan
2007 2008

UK

US

Monthly Change in Industrial Production

From ILOs Website

Source: ILO Website

Realistic solution to poverty Alternatives Case of Honduras Examples from Japan and Four Asian Tigers Moved up from low value to high Improved Health and education to children Parents wealth influence child In Indonesia, number of malnourished children reduced from a half in 1995 to a third in 1997 Other options

Following job losses in factories on the industrialized eastern coast of China, more than 20 million workers have reportedly returned to their residential rural areas.4 For instance, a reversal in rural-to-urban migration flows has been noted in China.

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