Africa falling off the map

rakesh bhandari djones at uclink.berkeley.edu
Sat Jun 29 19:31:09 MDT 1996


As Colin Leys pointed out in an essay in New Left Review about  a year ago,
that Africa has dropped off the map would come as quite a surprise to its
creditors.

>At 3:14 AM 6/29/96, Chris, London wrote:
>>With 10% of the world's population, Africa gets less than
>>2% of foreign direct investment.
>>Recent statistic.
>So? Is that good or bad?

Well, it is true; so whether it is good or bad,  development will have to
be carried out independent of FDI; thinkers like Fantu Cheru and Bill Rau
have outlined some of the possibilities.

>South Korea has grown stupendously with very
>little FDI;

Though South Korea has not received much in the form of FDI, it has not
been shy to the capital markets.  At times, it has endured "Latin American"
levels of indebtedness, right?  Though of course the indebteness has been
relieved by considerable export income.  If the suggestion is that
development has been possible outside and against the imperialist system,
then there must be some consideration of the fact  that development there
was jumpstarted by US military orders.

>Mexico has been one of the prime targets of FDI,

According to Jorge Casteneda in Foreign Affairs (a couple years back), most
capital flowing into Mexico has not gone into productive investment but
merely the purchase of assets.

While there is a tendency for the rate of profit to fall, the mass of
surplus value increases in compensation; that capital remains idle until
there are fresh investments in fixed capital at which point the idled
capital may even prove to be insufficient for renewed investment given the
increased scale at which capital must operate in order to be competitive.

There is therefore a desperate need  to valorize idle capital; it must look
for an outlet.  There is a contemporary relevance to Lenin's focus the
export of capital.  The purchase of Latin American assets at fire-sale
prices has been an important outlet in our our time.

Here is a post I sent last year on this topic:

Today's WSJ (8/15/95) headlined "Money Transfer: Bolivia is Selling Off State
Firms to Fund Its Citizens' Future."

In a rather frightening article Jonathan Friedland reports on the
privatization of the most profitable state enterprises in Bolivia. "But in
contrast to typical privatizations, the state gets nothing from these
sales, expected to generate between $1.5 billion and $1.7 billion. Rather,
half the value of the newly capitalized companies will go toward
modernizing the enterprises and the other half, in the form of shares to be
held by Cititrust Bahamas, a unit of Citicorp, will form the basis of new,
privately run pension fund."

Though Friedland does not dwell on the rather monumental opportunities
created for transfer pricing in the name of modernization, he does note
some criticism: "...a pension system misses the point in a land where
malnutrition is widespread, sanitation and housing are poor and education
and health services are lacking. 'It's pretty callous to say you'll have a
tough life, but you'll be fine when you are 65," says [National Democratic
Party;s] deputy leader Jorge Quiroga. 'Not many people in the altiplano
even make it to that age.'"

While it may be impossible to determine whether the investors are counting
on exactly that liklihood, Friedland also notes government will have to
absorb all debt, severance pay for laid-off workers  and the cost of any
environmental liabilities.

Also, the Univ of Chicago philosophy Ph.D.  prez of Bolivia Sanchez de
Lozado whose Spanish by the way is tinged by an American accent is
maintaining a state
of siege.

Rakesh





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