IKEA is as Bad as Wal-Mart

My mother still owns, and uses, the same vacuum cleaner she bought early in her marriage, just after World War II. She still lives in the house my father -- not a carpenter by trade, but an electrician -- built in the early 1950s with the help of his brothers, a small but sturdy Cape Cod-style dwelling with hardwood floors and solid wood doors that close with a hearty, satisfying clunk (as opposed to the echoey click of hollow-core doors).

Today the idea of anything -- a household appliance, a piece of furniture, a house -- being built to last is almost laughable. When your vacuum cleaner stops sucking, you most likely haul it out to the curb and trek to Target or a big-box home-goods store to replace it. Even if you could readily find someone to repair it, the trouble and the cost would be prohibitive. If you need a bookcase, there's always IKEA: Sure, you'd prefer to buy a sturdily built hardwood version that doesn't buckle under the weight of actual books, but who has extra dough to spend on stuff like that? The IKEA bookcase is good enough, for now if not forever.

That cycle of consumption seems harmless enough, particularly since we live in a country where there are plenty of cheap goods to go around. But in her lively and terrifying book "Cheap: The High Cost of Discount Culture," Ellen Ruppel Shell pulls back the shimmery, seductive curtain of low-priced goods to reveal their insidious hidden costs. Those all-you-can-eat Red Lobster shrimps may very well have come from massive shrimp-farming spreads in Thailand, where they've been plumped up with antibiotics and possibly tended by maltreated migrant workers from Burma, Cambodia and Vietnam. The made-in-China toy train you bought your kid a few Christmases ago may have been sprayed with lead paint -- and the spraying itself may have been done by a child laborer, without the benefit of a protective mask.

"Cheap" is hardly a finger-waggling book. This isn't a screed designed to make us feel guilty for unknowingly benefiting from the hardships of workers in other parts of the world. And Shell -- who writes regularly for the Atlantic -- isn't talking about the shallowness of consumerism here; she makes it clear that she, like most of us, enjoys the hunt for a good deal. "Cheap" really is about us, meaning not just Americans, but citizens of the world, and about what we stand to lose in a global economic environment that threatens the very nature of meaningful work, work we can take pride in and build a career on -- or even at which we can just make a living.

Discount chains pretend to be the most democratic of enterprises, willing and able to fill our every need at a price we can afford: Ingenious slogans like "Design for All" (Target) and "Save money. Live Better" (Wal-Mart) make that point pretty well. Shell asserts that an excess of cheap goods -- and the drive to make and sell them ever more cheaply -- is putting a deadly squeeze on workers worldwide. Most liberal-leaning citizens are aware of the profit-making schemes of Wal-Mart and, even if we actually shop there, find them distasteful (although Shell notes that among economists, the chain has its defenders).

But Shell asserts that even outlet malls and seemingly benign, friendly, progressive stores like IKEA are part of the problem; along with more obvious bad guys like Wal-Mart, they perpetuate a cycle that, far from nurturing creativity and innovation in the marketplace, ultimately benefits a relative few at the very top of the economic chain. Shell notes that before retiring in February 2009, "Wal-Mart CEO Lee Scott Jr. took home in his biweekly paycheck what his average employee earned in a lifetime." You might say that, for Scott, the good news is that everybody can afford to shop at Wal-Mart; the better news is that he himself doesn't have to.

Shell begins by outlining the history of mass production in America (perhaps not surprisingly, firearms were among the first items to be mass-produced) and the rise of the discount chain. In the late 1800s a sickly farmer's son named Frank W. Woolworth opened the first "five-and-dime"; later, foreshadowing a future that workers around the world now seem doomed to live out, he quipped, "We must have cheap labor or we cannot sell cheap goods. When a clerk gets so good she can earn better wages elsewhere, let her go."

The understanding is that she'll have somewhere else to go, where her skills and talents are wanted or needed, considered something worth paying for. But increasingly in our current work climate, more skills only make a worker more expensive and possibly more demanding, not more desirable. With meticulousness and daring, Shell approaches this problem and the myriad thorny issues twined around it, incorporating the research and views of an assortment of economists, political scientists and law professors to build her case. At the core of her argument is the idea that the wealth of cheap goods available to us doesn't make our lives better; instead, it fosters an environment that endangers not just the jobs of American workers but the idea of human labor, period.

It's impossible to grapple with the global economy without addressing the tricky subject of China, and Shell does so with the right amount of clear-eyed empathy. She notes that China as a nation has grown wealthier while its poor have become poorer. According to figures released by the World Bank, between 2001 and 2003 the income of the poorest 10 percent of China's 1.3 billion people had fallen by 2.4 percent, to less than $83 per year. In that same period, the country's economy grew by 10 percent, and its richest people became 16 percent richer.

Many of China's poor work in factories, earning ever-shrinking pay under inhospitable or dangerous conditions, as the American conglomerates who do business there press the Chinese government to revise or reverse regulations that might make these laborers' work lives more tolerable. The government, understandably eager for China to take its place at the global-commerce table, is all too eager to comply. A Shanghai journalist makes a piercing comment to Shell: "We do not yet have the luxury to concern ourselves too much with things like human rights."

But Shell is careful to point out that China isn't the source of the "cheap goods" problem. She quotes Mark Barenberg, a professor of law at Columbia University and an expert on international labor law: "The severe exploitation of China's factory workers and the contraction of the American middle class are two sides of the same coin." The idea is that when global corporations squeeze labor in China and other developing nations, they're able to use the threat of low-wage competition to, as Shell puts it, "roll back decades of hard-won gains in wages, benefits, and dignified treatment for workers in the United States." In other words, employers in the United States can easily use the threat of downsizing and outsourcing to gain more power over, and squeeze more juice out of, their employees -- who, in turn, enjoy increasingly less protection from unions.

While the Chinese are hardly the villains of Shell's story, certain Swedes have plenty to answer for: Shell's chapter on IKEA is the most gently damning in the book. Shell is quick to admit that IKEA products -- from bookshelves to tables to lamps -- are very nicely designed. And the ingenuity of designing furniture so that it can be shipped efficiently, compactly and cheaply, with an eye toward environmental concerns, is admirable. But Shell also points out the hypocrisy inherent in IKEA's philosophy.

As a clever IKEA commercial, directed by Spike Jonze, points out, an old lamp (or bookcase or table) doesn't have feelings; any piece of furniture can and should be replaced at any time. The ad, and the whole IKEA approach, suggests that objects have no lasting meaning or value. They're disposable; when we tire of them, we should just throw them out. Then why, Shell asks, does IKEA personify its products by naming them, à la the Lack coffee table or the Kura loft bed? "If IKEA thinks it's crazy to care deeply about objects, why," she asks, "does it sell a wok named after a girl?"

IKEA makes money, and lots of it, by passing on to the consumer the cost of assembling its products, thus turning the consumer into part of its workforce: Depending on how you look at it, we either save money by putting IKEA furniture together ourselves, or we pay for the privilege of putting IKEA furniture together ourselves.

Regardless, these tables and bookcases aren't, and aren't intended to be, heirloom pieces. But Shell wonders if our expectations are too low. We no longer expect craftsmanship in everyday objects; maybe we don't feel we even deserve it. "Objects can be designed to low price," she writes, "but they cannot be crafted to low price." But if we stop valuing -- and buying -- craftsmanship, the very idea of making something with care and expertise is destined to die, and something of us as human beings will die along with it: "A bricklayer or carpenter or teacher, a musician or salesperson, a writer of computer code -- any and all can be craftsmen.

Craftsmanship cements a relationship between buyer and seller, worker and employer, and expects something of both. It is about caring about the work and its application. It is what distinguishes the work of humans from the work of machines, and it is everything that IKEA and other discounters are not."

What's more, IKEA is the third-largest consumer of wood in the world and uses timber that comes mostly from Eastern Europe and the Russian Far East, where, Shell points out, "wages are low, large wooded regions remote, and according to the World Bank, half of all logging is illegal." IKEA president and CEO Anders Dahlvig asserts that the timber his company uses is harvested legally, and the company does employ forestry experts to monitor the company's suppliers. But Shell points out that IKEA has only 11 forestry monitors, not nearly enough to keep a watchful eye on all those suppliers worldwide, and five of those specialists are devoted to China and Russia, a vast spread of territory by itself. Dahlvig says that hiring more inspectors would cost too much; he'd have to pass the cost on to the consumer.

Would enlightened consumers pay a little more, maybe, to buy products made from wood that had been, unquestionably, legally harvested? Maybe -- but it's not the consumer's choice to make, at least not right now. And if there's one thing that makes reading this eye-opening book an ultimately frustrating experience, it's that Shell can't offer many helpful solutions to this tangle of economic and moral problems, aside from urging us to be more aware as consumers.

Still, she does cite one example of an organization that at least tries to get it right: Wegmans, a chain of supermarkets with stores located mostly in the suburbs of New York state, Pennsylvania, New Jersey, Virginia and Maryland, offers its employees job-training programs, health insurance and retirement benefits. The company operates on the supposition that if it treats its employees respectfully, they'll be better prepared (and more willing) to serve the needs of customers. The approach seems to work: Wegmans profits financially by fostering and retaining customer loyalty, and its employee turnover rate is low -- roughly 6 percent, measured against an industry-wide rate of more than 30 percent. The company also buys a large percentage of its produce from small, local farmers, and has been doing so for 20 years.

If "Cheap" is a harrowing document of the pursuit of profit at the expense of our basic humanity, the example set by Wegmans -- Shell saves it for the end of the book -- sounds almost too good to be true, the kind of crazy business idea that, according to the logic of outfits like Wal-Mart, shouldn't work. In reality, it's one of the foundations of good business: Treat your employees well, and they'll serve you well in return. The cost may be higher, but the price is right.

Related Articles:

http://globalbestpractice.blogspot.com/2009/07/green-power-takes-root-in-chinese.html

http://globalbestpractice.blogspot.com/2009/05/web-that-speaks-your-language.html

http://globalbestpractice.blogspot.com/2009/07/pervasive-nature-of-corruption.html

Source: http://www.salon.com/books/review/2009/07/12/cheap/index.html?source=rss

Tags: IKEA, Walmart, China, Cheap labor, low-cost producer, Outsourced manufacturing, World Bank, Columbia University, Russian forests and timber, Global Economic News, Global Development News, Salon,

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The Pervasive Nature of Corruption

In common usage, corruption is often used to refer to all types of immoral or harmful behaviour by public officials. But in the social sciences and policy discussions, corruption refers specifically to the illegal use of power by politicians or bureaucrats for their own benefit. The important point is that this definition does not presume that corruption is damaging, though it may be.

How damaging it is has to be established by theory and evidence, and here there is considerable debate. Corruption involves two related activities. First, public power has to be acquired or purchased. Resources are therefore spent in bribes or in efforts to directly capture political power. These activities can waste resources which could have been more productively invested.

Public power

Secondly, public power is then used to create benefits for public officials, or those who have bribed them, or create obstacles for others. The benefits are beneficial for those who get them, but can be damaging for society.

For instance, public power can be used to create monopolies to import goods, or to grant contracts at inflated prices. In extreme cases of predation, public officials and their friends can simply loot resources. Public officials can also create obstacles that citizens have to pay to avoid, like red tape and unnecessary restrictions.

The economic effect of the second set of activities can therefore also be negative and the total effect of corruption is then clearly negative. International agencies like the World Bank and the IMF assume that corruption does have negative effects and also that it can be removed by reforms. Therefore, they use their influence to persuade developing countries to spend time, effort and money to reduce corruption.

In this, they are often supported by civil society organisations and NGOs who are also against corruption for obvious reasons. The policies they recommend include greater transparency and accountability, stricter prosecutions and punishments, and liberalisation to reduce the amount of discretion that public officials have to create privileges or allocate resources. But much investment in these policies has generally not achieved significant reductions in corruption.

Political corruption

No one can be in favour of corruption. The question really is that, if corruption is so bad, why is it so pervasive? Why does every developing country suffer so greatly from corruption? And why have all the resources spent on fighting corruption achieved so little in terms of sustained and lasting reductions in corruption, and what should we be doing about it? To answer these questions we need to look at what the simple analysis of corruption is missing out.

First, it misses the fact that much of the corruption in developing countries is political corruption driven by the fact that political power is often based on the ability of politicians to deliver resources or privileges to their clients that they cannot offer through the budget. Here the significant difference with advanced countries is that in the latter, the budget is big enough to allow competing parties to offer credible spending plans to voters that can potentially win one of them a majority.

In developing countries this is very difficult because the small budget cannot offer much to voters. Rather, power is constructed through political networks where powerful faction leaders are rewarded with privileges to maintain political stability, mobilize voters and enable the state to function.

Social cost

This is also corruption because resources are being spent, sometimes illegally, to construct these networks and the privileges created for the political organisers are often illegal as well. But the problem is that in the absence of a fiscal base to allow social democratic politics, it is difficult to imagine how else politics can be organised. In these contexts, the only feasible solution is to make politics more stable and developmental so that the budget can grow over time. But attempts to immediately root out all corruption typically fail.

A second problem with the simplistic analysis is that what public officials ‘deliver’ varies greatly. It is not always a monopoly or an obstacle. Sometimes citizens have to pay to get resources to which they are legally entitled and which are socially desirable, such as food grains for poor people.

Here corruption has a social cost, but it may be less than the cost of not having the programme at all. Another example is when states make resources available for investment in new or risky areas. If the state has the capacity to ensure that these resources are not entirely wasted, economic development can take place even in the presence of corruption. The corruption associated with support for industrial policy is often observed in East Asian countries. In these cases the bribe is a bit like an illegal tax, which has a cost, but the net effect of intervention can be growth-enhancing for the economy.

Buying influence

These sorts of reasons explain why corruption can be associated with collapsing economies but also with some of the most dynamic economies in the developing world. Clearly developing countries have different mixes of corruption. In poorly performing economies predatory types of corruption dominate as well as corruption that creates obstacles for investors.

In high-growth developing countries corruption is more like profit-sharing between business and public officials in a context where public officials facilitate and enable businesses to grow. If we cannot get rid of all corruption immediately, we should certainly try to attack predatory behaviour and looting and try to create incentives for public officials to behave in developmental ways.

This is a very different strategy from the moralistic approach of much of global anti-corruption policies today. And it has to be remembered that in advanced countries the rich do buy influence, but because of higher levels of institutionalisation, they usually buy influence legally, through lobbying, contributions to political parties, contributions to think-tanks and universities, and by employing ex-politicians on their boards. This is another reason why corruption gradually disappears as a country becomes richer. But if we are concerned about justice and democracy, we should be just as concerned with the legal forms of influence-buying in advanced countries.

Source: http://english.aljazeera.net/focus/2009/06/200962632221819406.html

Tags: Corruption, Lobbying, Political Corruption, East Asia, bribery, developing countries, IMF, World Bank, Al Jazeera, Public Power, Political influence, NGO, NGO’s, Global Best Practice,

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World Bank Cuts 2009 Global Growth Forecast

The World Bank has cut its 2009 global growth forecast, saying the world economy will shrink by 2.9 percent and warning that a drop in investment in developing countries will increase poverty.

"The global recession has deepened," the Washington-based multilateral lender said in a report.

Global trade is expected to plunge by 9.7 percent this year, while total gross domestic product for high-income countries contracts by 4.2 percent, the bank said. It said economic growth in developing countries should slow to 1.2 percent — but excluding relatively strong China and India, developing economies will contract by 1.6 percent.

The bank's latest forecast is a sharp reduction from its March prediction of a 1.7 percent global contraction, which it said then would be the worst on record. Economic damage to developing countries "has been much deeper and broader than previous crises," warned the report, issued Sunday in Washington.

"Unemployment is on the rise, and poverty is set to increase in developing economies," it said. The global economy should start to grow again in late 2009, but "the expected recovery is projected to be much less vigorous than normal," the report said. It said banks' ability to finance investment and consumer spending would be hampered by the overhang of unpaid loans and devalued assets.

"To break the cycle and revive lending and growth, bold policy measures, along with substantial international coordination, are needed," the World Bank said. Investment and other financial flows to developing countries plunged by an estimated 39 percent in 2008 to $707 billion, the World Bank said. It said foreign direct investment in developing countries is projected to drop by 30 percent this year to $385 billion.

Eastern Europe and Central Asia have been hit hardest and the region's gross domestic product is expected to plunge by 4.7 percent this year, the bank said. It said growth should recover next year to 1.6 percent.

GDP in Latin America and the Caribbean should shrink by 2.3 percent this year before rebounding to expand by 2 percent in 2010, the report said. In the Middle East and North Africa, growth is expected to fall by half this year to 3.1 percent, while that of sub-Saharan Africa will drop to 1 percent from an annual average of 5.7 percent over the past three years, the bank said.

East Asia should post a 5 percent expansion, supported in part by China's stimulus-fueled growth, the bank said.

Source: http://www.mercurynews.com/business/ci_12663954?source=email

Tags: World Bank, GDP, Investment, Credit, China, India, Eastern Europe, Central Asia, Caribbean, North Africa, Global Economic News, Developing Economies, Global Trade, Global recession, Unemployment, Global Development News, Global Blog Network, Economics,

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America Snubbed as China, India, and Russia Summit

Challenging America will be the focus of meetings in Yekaterinburg, Russia, on Monday and Tuesday for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other leaders of the six-nation Shanghai Co-operation Organisation.

The alliance comprises Russia, China, Kazakhstan, Tajiki stan, Kyrgyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia.

The attendees have assured American diplomats that dismantling the US financial and military hegemony is not their aim. They simply want to discuss mutual aid – but in a way that has no role for the US or for the dollar as a vehicle for trade among these countries. The meeting is an opportunity for China, Russia and India to “build an increasingly multipolar world order”, as Mr Medvedev put it in a St Petersburg speech this month.

What he meant was this: we have reached our limit in subsidising the US military encirclement of Eurasia while also allowing the US to appropriate our exports, companies and real estate in exchange for paper money of questionable worth. “The artificially maintained unipolar system”, Mr Medvedev said, was based on “one big centre of consumption, financed by a growing deficit, and thus growing debts, one formerly strong reserve currency, and one dominant system of assessing assets and risks”.

Keen observers of America, if not effective managers of their own economies, these countries argue that the root of the global financial crisis is that the US makes too little and spends too much. Especially upsetting is US military expenditure – such as military aid to Georgia or the presence in the oil-rich Middle East and central Asia – using money that foreign central banks recycle.

Overconsumption by US citizens, US buy-outs of foreign companies and dollars the Pentagon spends abroad all end up in foreign central banks. These governments face a hard choice: either recycle the dollars back to America by buying US Treasury bonds or let the “free market” force up their currencies relative to the dollar – thereby pricing their exports out of world markets, creating domestic unemployment and business failures. US-style free markets hook them into a system that forces them to accept unlimited dollars. Now they want out.

This means creating an alternative. Rather than making merely “cosmetic changes as some countries and perhaps the international financial organisations themselves might want”, Mr Medvedev concluded his St Petersburg speech: “What we need are financial institutions of a completely new type, where particular political issues and motives, and particular countries, will not dominate.”

For starters, the six countries intend to trade in their own currencies so as to get the benefit of mutual credit, rather than give it to the US. In recent months China has struck bilateral deals with Brazil and Malaysia to trade in renminbi rather than the dollar, sterling or euros.

Many foreigners see the US as a lawless nation. How else to characterise a country that holds out a set of laws for others – on war, debt repayment and the treatment of prisoners – but ignores them itself? The US is the world’s largest debtor, yet has avoided the pain of “structural adjustments” imposed on other debtor nations. US interest rate and tax reductions in the face of exploding trade and budget deficits are seen as the height of hypocrisy in view of the austerity programmes that Washington has forced on other countries via the International Monetary Fund and other vehicles.

It is no mystery to other countries how the US remains above the law. Foreigners see a financial system backed by American military bases encircling the globe. The IMF, World Bank, World Trade Organisation and other Washington surrogates are seen as vestiges of a lost American empire no longer able to rule by economic strength, left only with military domination. They see this hegemony cannot continue without adequate revenues and are attempting to hasten the bankruptcy of the US financial-military world order. If China, Russia and their allies have their way, the US will no longer live off the savings of others, nor have the money for unlimited military spending.

US officials wanted to attend Yekaterinburg as observers. They were told no. It is a word that Americans will hear much more in the future.

The writer is professor of economics at the University of Missouri

Source: http://www.ft.com/cms/s/0/e9104e82-58f7-11de-80b3-00144feabdc0.html

Tags: Unipolar, Multipolar, decline of the American empire, Russia China India summit, Shanghai Co-operation organization, Global Development News, USD, IMF, World Bank, WTO, reserve currency, economic hegemony, Medvedev, Jintao, Manmohan Singh, renminbi, Brazil, Malaysia,

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G20 Communiqué – Emergence by Emergency

So where do we stand, now that the momentous G20 event has concluded?

Well, one thing is for sure. Some pundits will be “up in arms” over the lack of tangible progress resulting from the summit.

However, this pundit is particularly impressed with the visible contours of the new global financial system.

In this author’s opinion, the most important takeaway from the G20 summit is that we, as citizens of the world, now have evolving multi-lateral coordination occurring on a global level.

See here: http://www.number10.gov.uk/Page18914

 

“We face the greatest challenge to the world economy in modern times; a crisis which has deepened since we last met, which affects the lives of women, men, and children in every country, and which all countries must join together to resolve. A global crisis requires a global solution.”

 

On a practical level, the implicit consensus understated here, is not to be overlooked. We now officially live in an age where a global consensus has developed in the sphere of the global political economy.

On a practical level, to get 20 human beings to agree on any one-thing is, in my view, a major accomplishment. As an experiment in analogy, take your 20 best friends and try to get them all to agree on a restaurant, and a time to meet…

After you’ve completed this simple experiment, then take 46 sovereign nations (the G19 + EU), and get them all to agree on immediate coordinated financial and regulatory action.

Impressive indeed!

 

“We start from the belief that prosperity is indivisible; that growth, to be sustained, has to be shared; and that our global plan for recovery must have at its heart the needs and jobs of hard-working families, not just in developed countries but in emerging markets and the poorest countries of the world too; and must reflect the interests, not just of today’s population, but of future generations too.”

 

“We believe that the only sure foundation for sustainable globalisation and rising prosperity for all is an open world economy based on market principles, effective regulation, and strong global institutions.”

 

Clearly, the march toward an increasingly integrated world lurches onward.

 

“In order for our financial institutions to help manage the crisis and prevent future crises we must strengthen their longer term relevance, effectiveness and legitimacy.”

 

“So alongside the significant increase in resources agreed today we are determined to reform and modernise the international financial institutions to ensure they can assist members and shareholders effectively in the new challenges they face.”

 

“We will reform their mandates, scope and governance to reflect changes in the world economy and the new challenges of globalisation, and that emerging and developing economies, including the poorest, must have greater voice and representation.”

 

And now the real take home:

 

“we commit to implementing the World Bank reforms agreed in October 2008. We look forward to further recommendations, at the next meetings, on voice and representation reforms on an accelerated timescale, to be agreed by the 2010 Spring Meetings;”

 

“we agree that the heads and senior leadership of the international financial institutions should be appointed through an open, transparent, and merit-based selection process; and”

 

“building on the current reviews of the IMF and World Bank we asked the Chairman, working with the G20 Finance Ministers, to consult widely in an inclusive process and report back to the next meeting with proposals for further reforms to improve the responsiveness and adaptability of the IFIs (International Financial Institutions).”

 

When we take into consideration that the G20 represents approximately 85% of global GDP, and provided that these reforms do not get bogged-down in partisan complexities, then we can look forward to a financial future that is, for better or worse, on the vanguard of a new era of co-operation and integration, the likes of which the world has never experienced before.   

http://www.g20.utoronto.ca/2009/2009-london-communique090402.html

 

 

 

World Development Indicators

In a recent release from the World Bank, the institution unveiled the World Development Indicators (WDI) publication which is the World Bank's premier annual compilation of data about global development.

From the publication, some interesting facts emerge.

“Developing economies now produce 41 percent of the world's output, up from 36 percent in 2000"

“The combined output of the world's economies reached $59 trillion in 2006.”

“China now ranks as the second largest economy in the world, and 5 of the 12 largest economies are developing economies.”

Are any of these facts surprising to anyone?

http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:21726167~pagePK:64257043~piPK:437376~theSitePK:4607,00.html

http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK:21725423~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html

http://ddp-ext.worldbank.org/ext/GMIS/home.do?siteId=2

Top Receivers of Migrant Remittances In 2007

Migrant remittances, long a staple of the international economy, continue to be a "cash cow" for many nations. A recent report from the World Bank indicates that the global remittance transfer market is alive and well.

For 2007, the nations receiving the highest dollar value of remittances from foreign-workers were.

1. India ($27 billion)
2. China ($25.7 billion)
3. Mexico ($25 billion)
4. Philippines ($17 billion)
5. France ($12.5 billion)

Remittances by foreign-workers to the home nation are not officially included as a measure of a nation's Foreign Direct Investment (FDI), although surely, it is exactly that. From an economic perspective one can think of foreign-worker remittances as Peer2Peer investment.

Whereas FDI is a measure of the amount of foreign direct investment flowing to a nation, remittances are cash transfers from workers in foreign countries to people in the home nation. FDI is predominantly a B2B (Business to Business) or B2G (Business to Government) phenomenon, while remittances are predominantly a P2P (Peer to Peer) phenomenon. This raises the prospect of an interesting global economic question... what percentage of remittances are used by individuals in the home nation as personal investment capital?

Also, is it a coincidence that India & China are at the top of the remittance list, and are also two of the globe's fastest growing economies?

It's interesting to note that France is 5th on the list, as it is by far the most developed nation within the Top 5. The other four nations in the Top 5 are well-known for exporting workers, but France is not a nation that immediately comes to mind, when one thinks of a source of foreign-workers.

Where might all these French workers be plying their trades?

http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:21692926~pagePK:34370~piPK:34424~theSitePK:4607,00.html