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Tectonic shifts in the structures of international inequality?

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  • Arno TAUSCH

    (Department of Political Science, Innsbruck University)

Abstract

The article analyses further develops the neo-dependency approach already presented by the same author and looks at recent time series trends in the structure of international capital penetration, international savings, and the dynamics of “unequal transfer” and their effects on social well-being today. It emerges that the European Center is going to become the main loser in the structural changes that affect the position of Europe in the 21st Century. The world system approach, pioneered today, above all by Giovanni Arrighi and the late Andre Gunder Frank, teaches us that the centers of gravity in the world economy are dramatically shifting towards the Asia- Pacific region, and that the days of “Eurocentrism” are outnumbered. Foreign savings become an important indicator of the center-periphery structure of the world system and its changing nature (with its ongoing shifts favoring mainly the Asia – Pacific region) as well. Savings rate in Europe almost everywhere decline. It is simply unthinkable that ongoing changes in the structure of unequal transfer (ERDI, with ERDI being the exchange rate deviation index, developed by Stanford Professor Pan Yotopoulos) will not affect the entire system. The center received inputs to the tune of around 8 % of its current GDP through to the middle of the 1990s, however at the end of the 1990s we seem to have arrived at a historical junction where this very structure seems to evaporate and be substituted by another one.By and large, it is shown that the member countries of the “old” EU-15 are on the losing side in the shifts of unequal transfer (ERDI) from 1998 to 2002.. No “old” European country improved its position, on the contrary, “old Europe” becomes a region that is itself a victim of unequal transfer. It also emerges that ceteris paribus the Muslim world indeed became the main loser of these tectonic shifts. It is entirely conceivable that these pressures – as Gernot Kohler has shown – also explain a good part of the negative trends on the labor markets in the Muslim countries and in Europe. It is clear that rising rates of unequal transfer are causing rising rates of unemployment. Our approximate, admittedly crude measure is tto correlate DYN ERDI (in the short term, assuming that this reflects a longer-run tendency as well) with the changes in unemployment over the last 2 decades since 1980, observable from the ILO Laborsta data set. A non-linear function explains 16 % of the rise in unemployment (time series correlations, ILO Laborsta data series). So, while the Muslim world can optimistically evaluate recent trends in world savings, recent changes in unequal exchange rather differentiate between those Muslim countries with a favorable world economic prospect and those that further remain in a peripheral status. Inter alia, prospects for the following Muslim nations deteriorate due to rising unequal exchange, and they will be faced, according to this analysis, with a rising unemployment: Algeria; Bangladesh; Egypt; Eritrea; Iran, Islamic Rep. of; Kazakhstan; Malaysia; Mali; Mauritania; Morocco; Niger; Pakistan; Senegal; Syrian Arab Republic; Tajikistan; Tunisia; Turkey; Uzbekistan. The escalating violence in former Soviet Central Asia, most notably, Uzbekistan, is a dramatic example for the relevance of this approach. Thus it is shown in this article that transnational integration is and remains to be a contradictory process that does not lead 1:1 to a greater amount of social cohesion and sustainable development in the host countries of transnational penetration. Keywords: cross-section models, income distribution, inequality, international economic order, economic welfare, globalization; general welfare, social security and public pensions, macroeconomics – Asia including Middle East; macroeconomic analyses of economic development, comparative economic systems, cultural economics JEL classification: C21, D31, D60, F02, F15, I3, I31, H55, N15; O11; P50; Z10

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File URL: http://128.118.178.162/eps/dev/papers/0510/0510009.doc
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Bibliographic Info

Paper provided by EconWPA in its series Development and Comp Systems with number 0510009.

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Length: 46 pages
Date of creation: 10 Oct 2005
Date of revision:
Handle: RePEc:wpa:wuwpdc:0510009

Note: Type of Document - doc; pages: 46
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Web page: http://128.118.178.162

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Keywords: cross-section models; income distribution; inequality; international economic order; economic welfare; globalization; general welfare; social security and public pensions; macroeconomics – Asia including Middle East; macroeconomic analyses of economic development; comparative economic systems; cultural economics;

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