A World of Global Corporations Requires a World of Global Economic Policies

“General Motors Co. agreed Tuesday to deepen cooperation with its flagship Chinese partner on development of electric vehicle knowhow amid pressure from Beijing to hand over proprietary technology … GM, he said, makes a lot of money in the growing China market, and the partnership is an investment to keep that going.”

Elaine Kurtenbach, GM OKs electric vehicle cooperation with China, The Associated Press, carried online by the Lansing State Journal, September 20, 2011


“Our second set of findings provides empirical support for the view of Sutton (2007a) and others who argue that emerging market economies benefit from globalization through the vertical transfer of capability from foreign to domestic firms. We find this effect to be substantial for all three types of innovation that we study, suggesting that the supply chain of multinational enterprises and international trade are an important means for domestic firms to raise their capability. Our third and fourth set of findings indicates that the effects of globalization on innovation are all-encompassing, rather than affecting only a subset of firms.

Yuriy Gorodnichenko Jan Svejnar Katherine Terrell, Globalization and Innovation in Emerging Markets, Other Versions PDF at website of Yuriy Gorodnichenko, March 23, 2009


“The tests produced a large number of cointegrating vectors which implied a strong long run relationship between all markets. Thus, globalization seems to have greatly impacted international financial integration.”

From the abstract: Mohammed Ansari, Impact of globalization on stock market synchronization: some empirical evidence, International Journal of Commerce and Management, Volume 19 issue 3, 2009.


GM insists that its new deal with China will not give Chinese companies access to Volt technology.  But does that really matter.  Volt technology is already dated, the resulting jobs are in the pipeline; what matters is what comes next and GM is not obligated to develop new technologies in the U.S. or to use new technologies to produce vehicles in the U.S. – even though U.S. taxpayers are a key reason GM survived to produce the Volt and to sign a new technology development pack with China.

In the context of intense global competition, the world’s corporations can no longer afford to have national loyalties — to have them would undermine their access to the hugely expanded number of investment opportunities that globalization has created.  Today’s corporations must be ready at all times to abandon investments in one country to pursue more profitable investments in another country.

Although corporations and their leaders have become global citizens, most of the world’s people have not.  We live in and identify with nations.  We depend on national governments to protect and promote our economic welfare.  Very few of us move to other nations to pursue our economic interests in the way corporations do – we can’t afford to, national laws do not allow us to, and/or we don’t want to leave families and friends.

This puts the world’s people at an enormous disadvantage with regard to employment: we can’t count on the corporations that call our nations home to create jobs for us and we can’t shop the globe for jobs they do create.

In this new world, job creation must be the responsibility of our governments even more so than in the past.  And the world’s governments must cooperate to an unprecedented extent to foster sufficient global job and income growth to ensure opportunities for living wage employment for the citizens of every nation.

Over the course of the 20th century the U.S. people overcame huge policy differences among the member states to create a body of national policies covering banking, investments, workplace practices, rights of workers, and the responsibilities of businesses to the communities in which they operate.  The resulting uniformity of economic policies across states contributed enormously to the growth of a large and prosperous U.S. middle class and to a substantial reduction in poverty.

The same must now be done on a global scale to promote the growth of a global middle class and to reduce global poverty.  Without this global effort, the prosperity of the U.S. middle class will continue to deteriorate.