By Sarah Anderson and John CavanaghCorporate Watch
Summary of Findings
1. Of the 100 largest economies in the world, 51 are now global corporations; only 49 are countries.
2. The combined sales of the world's Top 200 corporations are far greater than a quarter of the world's economic activity.
3. The Top 200 corporations' combined sales are bigger than the combined economies of all countries minus the biggest 9; that is they surpass the combined economies of 182 countries.
4. The Top 200 have almost twice the economic clout of the poorest four-fifths of humanity.
5. The Top 200 have been net job destroyers in recent years. Their combined global employment is only 18.8 million, which is less than a third of one one-hundredth of one percent of the world's people.
6. Not only are the world's largest corporations cutting workers, their CEOs often benefit financially from the job cuts.
7. Japanese corporations have surpassed U.S. corporations in the ranking of the Top 200.
8. Over half of the sales of the Top 200 are in just 5 economic sectors; and corporate concentration in these sectors is high.
9. When General Motors trades with itself, is that free trade?: One-third of world trade is simply transactions among various units of the same corporation.
10. The Top 200 are creating a global economic apartheid, not a global village. The top eight telecommunications firms, for example, have been expanding global sales rapidly, yet over nine-tenths of humanity remains without phones.
There are now 40,000 corporations in the world whose activities cross national boundaries; these firms ply overseas markets through some 250,000 foreign affiliates.1 Yet, new calculations by the Institute for Policy Studies (IPS) indicate that the top 200 of these global firms account for an alarming and growing share of the world's economic activity.
Two hundred giant corporations, most of them larger than many national economies, now control well over a quarter of the world's economic activity. Philip Morris is larger than New Zealand, and it operates in 170 countries.2 Instead of creating an integrated global village, these firms are weaving webs of production, consumption, and finance that bring economic benefits to, at most, a third of the world's people. Two-thirds of the world (the bottom 20 percent of the rich countries and the bottom 80 percent of the poor countries) are either left out, marginalized, or hurt by these webs of activity.
IPS has conducted detailed analyses of the changing nature of global corporate power for over a decade. This new report uncovers an alarming acceleration in corporate concentration in individual sectors and in the overall power of the largest corporations in the world, and new data on the job-destroying activities of large firms.
The most alarming finding is that as corporate concentration has risen, corporate profits have soared, yet workers and communities are getting a shrinking piece of the growing pie. Figures from Business Week chronicle the explosion of corporate profits and CEO pay between 1990 and 1995 in the face of stagnating workers wages. The newest State of Working America by the Economic Policy Institute also reinforces our findings: median family income fell over 1 percent a year between 1989 and 1994 after four decades of expansion.3
Top 10 Findings
1. Of the 100 largest economies in the world, 51 are corporations; only 49 are countries. Wal-Mart-the number 12 corporation-is bigger than 161 countries, including Israel, Poland, and Greece.4 Mitsubishi is larger than the f ourth most populous nation on earth: Indonesia. General Motors is bigger than Denmark. Ford is bigger than South Africa. Toyota is bigger than Norway.
2. The combined sales of the world's Top 200 corporations are far greater than a quarter of the world's economic activity. Our calculations indicate that the Top 200's share of global economic activity has been growing rapidly over the past d ecade. In 1982, the Top 200 firms had sales that were the equivalent of 24.2 percent of the world's GDP. Today, that figure has grown to 28.3 percent of world GDP.
3. The Top 200 corporations' combined sales are bigger than the combined economies of all countries minus the biggest 9; that is they surpass the combined economies of 182 countries. At latest count, the world has 191 countries. If you subtr act the GDP of the big nine economies: the United States, Japan, Germany, France, Italy, the United Kingdom, Brazil, Canada, and China, the combined GDP's of the other 182 countries is $6.9 trillion. The combined sales of the Top 200 corporations is $7. 1 trillion.
4. The Top 200 have almost twice the economic clout of the poorest four-fifths of humanity. The world's economic income and wealth remain highly concentrated among the rich. Indeed, according to the United Nations, some 85 percent of the worl d's GDP is controlled by the richest fifth of humanity; only 15 percent is controlled by the poorest four-fifths.5 Hence, the poorer 4.5 billion people in the world account for only $3.9 trillion dollars of economic activity; this is only a little over half the combined revenues of the Top 200's $7.1 trillion.
5. The Top 200 have been net job destroyers in recent years. Their combined global employment is only 18.8 million, which is less than a third of one percent of the world's people. The world has just over 5.6 billion people.6 Of these, around 2.6 billion are in the workforce.7 Hence, the Top 200 employ less than three-fourths of one percent of the world's workers. Of the world's top five employers, four are U.S. (General Motors, Wal-Mart, PepsiCo, and Ford ), and one is German (Siemens). If one also includes the public sector in these calculations, the U.S. Postal Service is the world's biggest employer, at 870,160, roughly 160,000 more workers than GM's 709,000 workers.8
6. Not only are the world's largest corporations cutting workers, their CEOs often benefit financially from the job cuts. A total of 59 of the Global Top 200 are U.S. firms. Of these, 9 laid off at least 3,000 workers in 1995: AT&T, Boeing, Lockheed-Martin, BellSouth, Kmart, Chase Manhattan, GTE, Mobil, and Texaco. Even worse, the CEOs of these 9 made millions of dollars in the increased value of their stock options after announcing the layoffs. Indeed, on the day that the CEOs of these 9 firms announced the layoffs, the value of the stock options of their 9 CEOs rose $25,218,819.9
7. Japanese corporations have surpassed U.S. corporations in the ranking of the Top 200. Six of the top 10 firms are Japanese; only 3 are from the United States. Of the Top 200, the 58 Japanese firms account for almost 39 percent of total sales, while the U.S.'s 59 firms account for only 28 percent of total sales. The vast majority (186) of the Top 200 are headquartered in just 7 countries: Japan, the United States, Germany, France, the United Kingdom, the Netherlands, and Switzerland. South Korea and Brazil are the only developing countries to break into the Top 200.
8. Over half of the sales of the Top 200 are in just 5 economic sectors; and corporate concentration in these sectors is high. Half of the total sales of the Top 200 are in trading, automobiles, banking, retailing, and electronics. The concentrated economic power in these and other sectors is enormous.10 In autos, the top five firms account for almost 60 percent of global sales. In electronics, the top five firms have garnered over half of global sales. And, the top five firms have over 30 percent of global sales in airlines, aerospace, steel, oil, personal computers, chemical, and the media.11
9. When General Motors trades with itself, is that free trade?: One-third of world trade is simply transactions among various units of the same corporation.12 This figure has remained steady for the past few years, and is higher in certain countries.13 Two-fifths of Japanese exports, for example, are intra-firm.14 For manufacturing exports from Brazil, the figure is 44 percent.15
10. The Top 200 are creating a global economic apartheid, not a global village. The top eight telecommunications firms, for example, have been expanding global sales rapidly, yet over nine-tenths of humanity remains without phones. Television ads for AT&T and GTE give the impression that the telecommunications giants are bringing the world closer together. And yet while the top eight firms in this sector enjoyed sales of $290 million in 1995, 90.1 percent of all people live in a household that is not connected to a telephone line.16 Likewise in the financial sector, when banks boast of the new ease of global banking, they fail to mention the difficulties most of the world's people face in obtaining even a tiny loan. Close to 4.8 billion of the world's 5.6 billion people still live in countries where the average per capita gross national product is less than $1,000 a year; only a handful of these people have access to credit from transnational banks.17 This is despite the fact that the 31 banks in the Top 200 have combined assets of $10.4 trillion and sales of more than $800 billion.18
These findings offer a clear picture of the rising inequalities in the United States and the world between those who benefit from expanding corporate activity and those who are being left behind. This inequality, fueled by accelerated corporate concentration, deserves to be a central issue in the political debates of this period. This report stands as a challenge to both major political parties to address growing inequalities and the economic forces behind them.
1 United Nations Conference on Trade and Development, World Investment Report 1995 (Geneva: UNCTAD, 1996).
2 See Richard J. Barnet and John Cavanagh, Global Dreams: Imperial Corporations and the New World Order (New York: Simon & Schuster, 1994).
3 Lawrence Mishel, Jared Bernstein, and John Schmitt, The State of Working America (Washington, D.C., 1996).
4 The number of countries in the world has been changing rapidly. At latest count, there were 191. There are 30 countries whose GDP is greater than Wal-Mart, and 161 whose GDP is smaller.
5 These figures are from an interview with a statistician at the United Nations Development Program.
6 According to the World Bank, the world had 5.601 people in 1994. World Bank, World Development Report 1996 (Washington, D.C.: World Bank, 1996), p. 195.
7 The United Nations estimates that 47 percent of the world's population is in the workforce. See United Nations Development Program, Human Development Report, 1996 (New York: Oxford University Press, 1996), p. 194.
8 See Fortune, August 5, 1996, p. F-1.
9 See The Institute for Policy Studies, "CEOs Win, Workers Lose: How Wall Street Rewards Job Destroyers," April 24, 1996.
10 The figures in this section are from Morgan Stanley Capital International and the International Data Corporation, quoted in The Economist, March 27, 1993, p. Survey 17.
11 "A Game of Global Monopoly," The Economist, March 27, 1993, p.S17.
12 United Nations Conference on Trade and Development, World Investment Report 1995 (Geneva: UNCTAD, 1996).
13 In 1993, the United Nations calculated that of the $3.3 trillion in exports of goods and services in 1990, roughly $1.1 trillion was intra-firm trade (from UNCTC, E/C.10/1993/2, March 3, 1993, p. 8).
14 Dennis Encarnation, "A common evolution? A comparison of United States and Japanese transnational corporations," Transnational Corporations, UNCTC, February 1993.
15 Karl Sauvant, et. al, "Foreign direct investment and international migration," Transnational Corporations, UNCTC, February 1993, p. 43.
16 United Nations Development Program, Human Development Report 1996, p. 167.
17 World Bank, World Development Report 1996, p. 189; and United Nations Development Program, Human Development Report 1996, p. 145.
18 The bank sales are from Table 4; the assets are calculated by the authors from Forbes, April 22, 1996 and July 15, 1996.
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