The Interface of Global Class Formation

and Core-Peripheral Relations:

Toward a Synthetic Theory and Analysis of Global Inequalities[i]

 

Anthony Roberts and Jason Struna

Department of Sociology and

Institute for Research on World-Systems (IROWS)

University of California, Riverside

                                                                                                     

Draft v. 8/9/2010 Words= 11,962

To be presented at the American Sociological Association annual meeting in

Atlanta, Georgia August 15, 2010 PEWS Session on “Global Class Formation.” This is IROWS Working Paper #61 available at http://irows.ucr.edu/papers/irows61/irows61.htm

 

Abstract

Emergent transnational social formations coupled with the persistence of structural inequalities, evidenced in the core-periphery hierarchy, suggest the need for theoretical consilience between the global capital school and world-systems perspectives.  To this end, we draw upon Arrighi’s (1994) systemic cycle of accumulation model to account for the novelty and continuity of nascent transnational social structures such as the Transnational Capitalist Class (Sklair 2001; Robinson 2004) and the global proletariat (Struna 2009).  Empirically, the study employs a series of panel regressions to estimate the effect of core-periphery differentials and foreign capital investment on transnational working class formation and major sector productivity.  Findings indicate a recent growth, 2001-2007, in inter-zonal transnational capital-labor relations, via manufacturing employment in US, German, and Japanese foreign affiliates, and the persistent unevenness of labor productivity from 1980-2005.  Preliminary findings suggest the emergence of an objective, trans-zonal working class structure, constructed through TNC capital-labor relations.   However, the international division of labor (core-periphery hierarchy) remains important for explaining differentials in labor productivity.   We concluded that the emergence of a global proletariat is being contextualized by the endurance of international inequality, thus, the composition of transnational social formations will be determined by the continuity of international inequalities in the transition to a new regime of accumulation.    

This paper seeks to reconcile, at least partially,  the theoretical divide between specific variants of what has come to be called the “global capitalism school” (Robinson 2004; Sklair 1999) and world-systems perspectives (Wallerstein 1974, 1979; Wallerstein and Hopkins 2000; Chase-Dunn 1998; Arrighi 2001; Arrighi and Moore 2001) by assessing empirical indicators that may offer evidence for the former, as well as confirm the enduring significance of aspects of the latter.  Specifically, we seek to explain the ways extant and emergent transnational labor-capital relations suggest that we are indeed in the midst of an “epochal shift” based on the enlargement of global circuits of productive capital (Robinson 2004: 4), and may be poised to enter a new systemic cycle of accumulation (Arrighi 1994; Arrighi and Moore 2001). Preliminary empirical analysis, using proxy data to estimate cross-national trends in transnational working class formation, confirms a trans-zonal distribution of global workers integrated in vertical regimes of accumulation (transnational corporations).  Additional analysis of cross-national variations in labor productivity for major economic sectors shows persistence of core-periphery inequalities in production processes between world-system zones. Therefore, while the distribution in transnational capital-labor relations, as measured by foreign affiliate employment, is moving beyond international inequalities, the persistence of differential production systems indicates the endurance of the international division of labor.

            Although we endeavor to understand broad structural-conjunctural changes in the main attributes of the contemporary world-economy, the nature of available cross-national data concerning employment, productivity, and capital intensiveness partially restricts our quantitative analysis to what amounts to proxy measures of global labor-capital relations (inward FDI from US, Japanese, and German investors per worker in national labor force) and transnational class formation (manufacturing employment in US, Japanese, and German foreign TNC affiliates).  The measures discussed below serve as important indicators of relations that constitute the emergent qualities proposed by adherents to the global capitalism perspective, and persistent tendencies overdetermined by world-systemic hierarchies.  Essentially, the relations on the ground, represented by the data used in this study, reflect favorably on the strengths of both theoretical traditions used herein, and therefore indicate the need for a synthetic theoretical approach to contemporary global social relations.

            The focal point of our synthetic theory is the formation of transnational working class, in context of persistent international inequalities.   From a historical materialist perspective, the global capitalism school orients the epochal shift of capitalism, i.e. the transnationalization of production, toward the development of a division of labor based on property ownership and transnational capital-labor relations (c.f. Sprague 2009, P.500-501).   The purpose of adopting a class-based analysis, in a synthesis of global capitalism and world-systems perspectives, is to understand how transnational bodies are articulated by international inequalities and other structural constants of the world-system.   From a class-based perspective, we argue that changes in the nature of capital-labor relations represent the fundamental changes in capitalist accumulation from international circuits of production to global circuits of production (c.f. Robinson 2004, Ch.2).   Further, we stress that the transformation of the world-economy, from a system centered on national modes of accumulation to a transnational mode of accumulation is accompanied with a transition from a global class system defined by linkages between national classes to a true global class system composed of a transnational capitalist class and a transnational working class.

In a world-historic context, based on Arrighi’s (1994) framework of systemic cycles of accumulation, we argue that global class formation is the development of a transnational regime of accumulation and we conceptualize the emergence of the transnational capitalist class (TCC), as a class-for-itself (Robinson 2004), as the nexus of new territorial and economic powers, namely the TNC and TNS actors, driving the formation of new systemic logics.    The implementation of the TCC project (Robinson 1996, 2004, 2008, 2010) and the global financial collapse in world-system, according to our perspective, indicates the ‘terminal crisis’ (Arrigh 1994, P. 215) of US hegemony and its intensive regime of accumulation and the beginning of a new potential systemic phase defined by a transnational mode of accumulation.   

From a class-based analysis, the formation of a conscious transnational capitalist class and the emergence of new modes of accumulation are resulting in the formation of a transnational working class (Robinson 2010; Struna 2009).    Our empirical analysis is directed at understanding how the transnational working class, as a newly forming social body of the emerging regime of accumulation, is developing and how the international division of labor is shaping the properties of an objective transnational working class structure.

            At the intersection of transnational class formations and core-periphery inequalities, we find how transnational bodies, specifically, a segment of the transnational working class, are being reproduced relative to extant structures of international inequality in the short-term.   In all major sectors, labor productivity remains highly differentiated along core-periphery dimensions, yet, in manufacturing, inter-zonal differences are reducing.   According to our analysis, the incorporation of the periphery into industrial transnational production circuits has integrated peripheral labor into an objective transnational working class at an increasing rate, as measured by TNC Employment, while, at the same time, foreign capital structures peripheral labor into low-capital, low-value production.   As studies on world income inequality that emphasize the role of industrialization suggest (Alderson and Nielsen 1999; Firebaugh 2003; Milanovic 2005)  non-core nation-states are indeed industrializing in the contemporary period.  Insofar as industrialization incorporates segments of populations previously excluded from capitalist relations of production into labor-capital relations, proletarianization – and embourgeoisement for those articulated into fractions of the dominant class – by definition occurs (Goldthorpe 1969; Robinson 2004; Wallerstein 2000).  When those relations are embodied in contractual agreements and social circumstances that operate in cross-border contexts they exhibit transnational attributes as well (Robinson 2004; Sklair 2001; Struna 2009).  Again, evidence presented herein relating to the proliferation of TNC employment in manufacturing between the core and the periphery empirically verifies increases in transnational labor-capital relations.

             The empirical basis of our analysis utilizes two outcomes: cross-national manufacturing employment in US, German, and Japanese foreign affiliates and cross-national labor productivity by major sector (agriculture, industry, and service).   Two panel datasets and country-year samples are analyzed for each outcome.  A key limitation of our study is the availability of data on transnational actors and macroeconomic variables.  Therefore, the temporal scope of our study is limited.  Foreign affiliate employment is analyzed over the period of 2001 to 2007.   Labor productivity is analyzed over the period of 1980 to 2005.   Using random-effects models (REM), four independent regressions form the empirical foundation of the study.    Findings of the models suggest a trans-zonal formation of the global working class, while, simultaneously, global and national labor is distributed into differential production systems associated with world-system zones.

 

Globalization and Transnational Formations

The contemporary phase of world economic integration, commonly referred to as globalization (Bhagwati 2004; Brenner 1999; Chase-Dunn 1998; Cox 1996a; Dicken 1998), is part of a recurrent pattern of systemic pulsation (Chase-Dunn and Gills 2003; Chase-Dunn, Kawano, and Brewer 2000).  During phases of integration, national societies become more interconnected through economic, military, and socio-cultural linkages.   During phases of disintegration, national societies deconstruct prior networks of integration and erect barriers to interaction.   The current phase of economic globalization is one of three waves of globalization since 1795 (Chase-Dunn, Kawano, and Brewer 2000) to exhibit such integrative tendencies.    However, while the modern world-system experiences pulsations up and downward, the secular trend is a constant increase in the scale and magnitude of transnational economic forces.  The implication of this structural trend is the increasing intensification of global class relations.   Therefore, we claim transnational class formation is connected to previous phases of systemic integration, however, each new phase has generated a qualitative shift towards more enduring transnational capital-labor relations.   In simple, graphical terms, transnational class formation can be understood as a step function paralleling the upward trend towards greater economic integration in the capitalist world-system.  

            Dispute over the novelty of globalization and global class formation has been a central theme in the developing body of globalization literature (c.f., Arrighi 2001; Embong 2000; Moore 2001; Robinson 2001; Van Der Pijl 2001; Went 2001).  On the one hand, globalization theoretically and practically represents a continuation of centuries old processes of alternating expansion and contraction of the world-system, like the pulsation suggested above, with an acknowledged deepening and intensification of inter-linkages between elites evidenced in the current (30-40 year or so) period (Arrighi 2001).  On the other hand, globalization is posited as a qualitatively new phase or epoch in the development of world capitalism marked by transformations in the international division of labor that have led to diverse transnational social formations including the transnational capitalist class (TCC), the transnational working class, (TWC), and the transnational state apparatus (TNS) especially as they relate to transnational corporations as the primary institutional actors around which these formations crystallize (Cox 1996b; Robinson 2004; Robinson and Harris 2000; Sklair 2001).

            Much of this paper will concern the latter school of thought, broad-based and not without its own internal debates about the contours of capitalist globalization.  Often referred to as the ‘global capitalism school,’ the perspective begins with the premise that “transnational practices” (Sklair 1999: 157) associated especially with transnational corporations, form the primary basis for other social shifts and transformations in the world system (Robinson 1996; Sklair 2001; Sprague 2009; Struna 2009).  Robinson (2000, 2004, 2008) in particular develops a theoretical perspective of globalization, which defines contemporary world-economy restructuring as a new epoch of world capitalism.  Specifically, Robinson (2010) argues:

Since the 1970s, the emergence of globally mobile transnational capital increasingly divorced from specific countries has facilitated the globalization of production (I include services here); the fragmentation and decentralization of complex production processes, the worldwide dispersal of the different segments in these chains, and their functional integration into vast global chains of production and distribution. World production is thus reorganized into new transnational, or global, circuits of accumulation through which values move instantaneously. (P. 5)

 

This re-articulation of national factors of production into a more seamlessly interconnected global production structure with patterns of accumulation distinct from those identified by world-systems perspectives (Arrighi and Drangel 1986; Wallerstein 1979)  is a fundamental transformation of world capitalism that constitutes an “epochal shift” (Burbach and Robinson 1999).  From Robinson’s (1996; 2004) perspective the contemporary phase of economic globalization is historically unique because the transnationalization of capital has eroded the power of nation-states to function as containers of production and dominant economic decision-makers privileging instead transnational social formations based on transnational corporations (TNCs) that operate at the behest of the Transnational Capitalist Class (TCC) (Robinson and Harris 2000; Sklair 2001).

            It is argued that these new actors/containers of power move beyond the scope of nation-states and require the constitution of institutions that exist at a specifically transnational level (Robinson 1998; Robinson 2002).  According to Robinson (2008), transnational circuits of production, and transnational labor-capital relations require the development of an emergent transnational state (TNS) apparatus: “a loose network comprised of inter- and supranational political and economic institutions together with national state apparatuses” that arise in an effort to manage to the various contradictions that evidence themselves at the many levels of the global social order (P.34).  Robinson (2004) states “in highly simplified terms, [that] the global mobility of capital alters the relationship of nation-states to capital accumulation” and that such a changed relation reflexively implicates power structures and social classes in a process that cuts “across national boundaries, and has brought [institutional] changes in the relationship between dominant and subordinate” groups globally (Robinson 2004: 43).

            While theorists like Robinson (2004) and Robinson and Harris (2000) advance relatively convincing perspectives on the development of a transnational state apparatus and provide historical-conjunctural evidence to support their claims, conventional empirical work that tests the effects of institutional factors that may or may not indicate policy or ideological convergence, broadly conceived, is relatively sparse (Beckfield 2006; Solt 2008).  For the purposes of our analysis, we utilize the K.O.F Globalization Index – Restrictions Index (Dreher 2006; Dreher, Gaston, and Martens 2008) as a proxy measure of institutional convergence.  Where national policy is amenable to FDI penetration and product/ surplus extraction, the potential for integration into transnational production circuits, ceteris paribus, is relatively high.  While we cannot know from this data the precise mechanism inducing national policies that facilitate capital investment, the ability of TNCs to influence policy (Cox 1996b; Gill and Law 1989; Ietto-Gillies 2002; Robinson 1996) is well documented.  Thus, insofar as we can expect low barriers to economic activity to be associated with the agents for whom the policies are enacted – TNCs, and therefore the TCC itself – and can observe effects of these policies on patterns of TNC employment and productivity, we can assume that institutional convergence is at least nominally occurring, and that a rough network of transnationally oriented policies exist.  Deregulation serves as a prime indicator of the reconfiguration of national economic policy into a singular framework (TNS) facilitating the expansion of transnational capital across the globe.

            Without belaboring the point, it is worth emphasizing the contingent nature of the TNS (and of the constituent relations that require TNS formation): these “new structures and relations … are emergent rather than accomplished” (Robinson 2004: 43 emphasis in original).  Far from sounding the death knell of nation-states in general, and from suggesting a transcendence of the social conditions that allow national states and cultures to make sense, strong versions of the global capital perspective acknowledge that global social formations like the TNS, the TCC, and the transnational working class (TWC) – especially the latter – continue to be influenced by “old and new social hierarchies” demarcated by the north and south, and the core and periphery “that cut across national boundaries” (Robinson 2004: 43).  Insofar as the global capitalism perspective has Marxian roots, it can be assumed that capitalist practices in the distant and not so distant past – the international and nation-state-centric conditions that characterized previous epochs – will continue to exert a great deal of influence on the emergent social conditions of the current period.  To paraphrase Marx (1959 [1852]), agents – transnational or otherwise –  make their own history, but not as they please.

 

Transnational Class Formation

To be sure, the notion of cross-border class relations is not new: even if Arrighi, Hopkins, and Wallerstein (1985) fail to identify a specific objective theoretical mechanism responsible for the formation of classes, they nonetheless state that “by effecting the socialization of labor on a world scale, the world market [determines] the most general context of the class contradictions, and therefore of class struggles of capitalist society” (Arrighi, Hopkins, and Wallerstein 1985: 142).  From the beginning of interstate capitalist relations, then, the world-systemic environment overdetermines class relations in at least a ‘basic’ way.  Here, however, the likely class-based outcome is a world-systemic division of labor centered on differentials of control and remuneration of workers in commodity chains (Arrighi, Hopkins, and Wallerstein 1985; Wallerstein and Hopkins 2000) relative to their national-cultural origins.  In a sense, the relations of exploitation operant across political frontiers hinge more on opportunities essentially beyond the control of the dominant class, than on differential conditions something like a TCC consciously constructed.  

            Again, in contrast, the global capitalism perspective is based on the identification of transnational processes linked especially to global circuits of production, and the concomitant constitution of social formations implicated in those processes.  Without denying the complexity of social stratification within societies, let alone between them, that arises from relations in the marketplace (Arrighi, Hopkins, and Wallerstein 1985; Wallerstein 1979; Weber 1978 [1925]), a production-centered approach to class formation (Marx 1906 [1867]; Marx 2006 [1933]; Poulantzas 1975; Robinson 2004; Struna 2009) provides both an analytically manageable method of determining objective class boundaries, and a means of assessing a wide range of exploitation relations not captured by market-centered approaches.  In the latter, the ‘life chances’ (Weber 1978 [1925]) of similar and disparate groups provide the impetus for locating individuals along a continuum of income distributions within and between societies (Arrighi and Drangel 1986; Firebaugh 2003; Korzeniewicz and Moran 1997; Korzeniewicz and Moran 2009), and therefore eschews differentials in exploitation that are present regardless of relative incomes and rates of remuneration.  Production-centered approaches, instead, while acknowledging heterogeneous experiences of class-life within and between classes locally and globally (Cox 1996a; Robinson 2002; Struna 2009), allow for a more systemically holistic assessment of conditions determined by labor-capital relations observable across national and zonal contexts.

            Regardless of the geographic derivation or destination of FDI that results in fixed capital formation, ownership and control, on the one hand, of the means of production as well as the rights to the products and surpluses created by workers engaged with that capital on the other are the primary determinants of the labor-capital relation.  Likewise, the variable component of FDI devoted to the payment of wages indicates direct relations between capitalists and workers regardless of the distance between the payer and the recipient, and/ or the existence of political boundaries that have proven particularly porous to these kinds of value flows – as well as remittances home.  Finally, in respect to the types of capital FDI may engender, relations between owners of FDI and workers who interact with their capital are not the only direct relations that obtain: constant circulating capital in the form of to-be-finished commodities creates relations between workers located at different points in the production process.  The incremental completion of commodities in value chains that cross borders therefore provides the material basis for transnational class formation both in terms of the antagonistic (labor-capital) aspect, and the constitution of class in-itself (i.e., a global working class in this instance) as it relates to FDI.

            Our subsequent tests of the relation between FDI and rates of productivity in recipient nations, as well as TNC employment in subsidiaries seeks to understand the ways these labor-capital relations and relations within the global working class are differentially distributed relative to the core-periphery hierarchy.  While they do not directly measure the qualitative shifts in labor-capital relations, they do provide a glimpse into the ways that value is extracted in different regions of the global system of production by TNCs.  If indeed systemic convergence is occurring, and transnational processes are causing the constitution of transnational classes, from the perspective of the global capitalism school we should observe trends in productivity rates and employment that suggest gaps between zones of the world-system and nation-states are diminishing in the long run.  In addition, from the global capitalism perspective, as flows and stocks of FDI controlled by TNCs penetrate into areas formerly excluded or marginally articulated into the world-system increase, workers confronting the various embodiments of capital should begin to exhibit similar tendencies along value chains. 

            However, the overwhelming force of structures persistent for so long in the world-system – namely the power of the core to dominate the periphery and semiperiphery economically, socially, and institutionally – should also be expected, from a strong world-systems perspective to exert a great deal of influence in the contemporary period despite the quantitative increases in cross-border relations.  In terms of the ways these structures overdetermine differentials in productivity and TNC employment, we should expect to see a great deal of continuity in the international division of labor from a world-systems approach.

            In contrast to the respective expectations of the supposedly competing theories, our synthetic theoretical approach contends that transnational class formation is occurring – that there are indeed objective indicators of relations between (and within) labor and capital that are extant transnationally – but, that the emergence of these relations will be tempered and constrained by the core-periphery hierarchy and the attendant social from which the class relations emerged.  Formal expectations of the theory would predict the emergence of a trans-zone structure of class, while the structure of the international division of labor continues to contextualize the value and surplus in the world-system.  In the transition phase from an international production system to a global production system, we expect, over time, a convergence in value-adding processes across world-system zones.  Therefore, in the formative period of transnationalization, while workers are being fused into cross-zone circuits, the valorization of production is still differentiated along core-periphery dimensions.

 

Transnational Class Formation and the World-Historical Perspective

Robinson and Harris (2000) view class formation in contemporary globalization as transitioning from international processes with national agents acting through national states like those described above, to transnational processes wherein transnational agents function along extra-state institutions.  Robinson (2004; 2008; 2010) and others (Robinson and Harris 2000; Sklair 1999; Sklair 2001; Cox 1996) have developed an extensive body of literature dedicated to discussing the emergence of a transnational capitalist class as a class-for-itself, and the emergence of a transnational working class (TWC), as a growing class-in-itself.   In addition, Robinson’s conceptualization is consistent with prior approaches to class fractionation of the transnational capitalist class (c.f. Sklair 2001).   According to Robinson (2010):

 

The TCC is a class group grounded in global markets and circuits of accumulation. The globally-integrated production and financial system underscores the increasing interpenetration on multiple levels of capital in all parts of the world, organized around transnational capital and the giant TNCs. (P. 7)

 

Further, his conceptualization of the TWC defines the group has more fractured and as more of an objective class:

 

A global working class has emerged that runs the factories, offices, and farms of the global economy, a stratified and heterogeneous class, to be sure, with numerous hierarchies and cleavages internal to it – gender, ethnicity, nationality, and so on. (P. 7)

 

Recent theoretical developments (Struna 2009) have attempted to further conceptualize and flesh out the contours of the global proletariat via a “spatial-productive” perspective that fractionates members of the global proletariat on the basis of both where they expend their labor-power, and their connections to one another (and the TCC) as a result of their participation in transnational circuits of production (Struna 2009).  However, empirical theoretical work that tests these assumptions has not yet been undertaken.  In part, the current work attempts to lay some groundwork for such an undertaking.

            Empirical bodies of research on the TCC have confirmed the presence and growth of the transnational capitalist class in the world-economy (Kentor 2005; Kentor and Jang 2004; Staples 2006; Carroll and Carson 2003; Sklair 2001).   General findings suggest the TCC is a growing class-in-itself as ownership and control over foreign assets become more dispersed across national boundaries and more concentrated into a select corporate groups.    Little to no evidence suggests a growing consciousness among transnational business elites beyond factors like “global vision,” “global best practice,” and certain aspects of transnational forums like Davos which limits the empirical confirmation of Robinson’s core thesis of contemporary globalization as a political and economic project of the TCC.   In addition to TCC class subjectivity, little to no empirical work has been directed at estimating the objective class structure of the TWC.   

The transnational forces of globalization, according to Robinson’s perspective, can be conceptualized as a project of the TCC.   Further, as a project of the TCC, the transnationalization of capital, and its accompanying transformations of global structures, have resulted in the increasingly irrelevancy of the North-South divide.   For Robinson (2004), transnational class formation has become the central global stratification system, where global proletariats in the global South have a shared experience and social location with the global proletariats in the global North.   Outside of Robinson’s historical analysis, the question of global inequalities remain to be empirically tested and confirmed by other research. 

            A contrasting perspective to Robinson is the world-historical perspective on globalization, who states that globalization has been a consistent since the inception of capitalism and the European-centered world-system (Wallerstein 1974; Arrighi 1994; Chase-Dunn 1998; Chase-Dunn, Kawano, and Brewer 2000).   The internationalization of capital and the mediation of capitalist expansion, according to this perspective, have been in development since Dutch hegemony (or the Genoese-Iberian complex).   Traditionally, core hegemonies have facilitated the expansion of the capitalist project through successive regimes of accumulation (Arrighi 1994).    The contemporary phase of globalization, from the world-historical perspective, is embedded in historical dynamics of world capitalism, where contemporary integration can be interpreted as a function of the decline of the intensive, US regime of accumulation and the beginning of a new phase of accumulation.    The global dimensions of economic production and political control can be traced to prior regimes and hegemonies.   Rather than conceptualization globalization as a new epoch, the world-historical perspective perceives contemporary globalization quantitatively rather than qualitatively new.  Further, in regard to global inequalities, unlike Robinson, the world-system perspective perceives international inequalities as structural constants (Chase-Dunn 1998), which continue to influence capitalist class relations (Silver and Arrighi 2001).  

            Barr et al. (2006), in line with the world-historical perspective, analyzes a series of qualitative case studies of emerging elites in different core zones of the modern world-systems.   The specific processes of elite integration, during the 19th and 20th century, and emerging structures remains unclear.    Preliminary conclusions have suggests a growth in the global elite prior to the 1970s, however, more substantive research is required to explore and empirically embed historical analysis.   Further, similar to the global capitalism scholars, there has been a general neglect toward empirically and quantitatively analyzing the emergence of a global working class.   

 

The Core-Periphery Hierarchy and Global Class Relations

In the world-systems perspective, global inequalities are conceptualized as a series of nested social structures stratified along dimensions of economic, political, and social power.    Our analysis focuses on the intersection of two enduring structures of inequalities embedded in global networks of inter-societal connections – the core-periphery hierarchy and global class relations.   On the international scale, the core-periphery hierarchy is a tri-modal partitioning of national societies into hierarchical ordering.   According to Wallerstein (1974), the world-economy is organized into a tri-modal international division of labor: the core, semiperiphery, and periphery.    Core nation-states are defined by strong, effective states on the national and international scale, which specializes in high-value, capital-intensive production.   Periphery nation-states are defined by weak, ineffective states and low-value, labor-intensive production.  

Core-periphery relations are defined primarily as exploitive for the purpose of reproducing power differentials in the world-system.    The exploitive nature of core-periphery relations is the central mechanism in reproducing the hierarchical distribution of national societies.   

Income-based measures of the core-periphery hierarchy (Arrighi and Drangel 1986; Babones 2005) confirm the long-term endurance of a tri-modal distribution in value (national income, measured by GNP).    Network measures of world-system (Clark and Beckfield 2009; Mahutga 2006; and Snyder and Kick 1979) offer the advantage of measuring world-system position in relative terms based on international connectivity.   Snyder and Kick (1979), utilize four international networks to construct a block measure of world-system position.    Based on networks for trade flows, military interventions, diplomatic exchanges, and conjoint treaty memberships, they find countries are organized into ten block groups, however the similarity between groups constitute a tri-modal distribution of countries.   The empirical confirmation of the core-periphery hierarchy lends substantive support to the notion of class formation being articulated through the international division of labor because the differentiation of production processes in the world-system would suggest differential capital-labor relations in global circuits of production. 

In regard to labor and class relations, the core-periphery hierarchy contextualizes workers and capitalists along its structural dimensions.   In the core, workers experience a high degree of political protection, higher wages, and produce greater value.   In the periphery, workers experience a high degree of coercion, low wages, poor working conditions, and produce little value (Chase-Dunn 1998).   In terms of inter-zonal connections, the higher exploitation of peripheral workers has contributed to the formation of class alliances between core and peripheral capitalists (Bornschier and Chase-Dunn 1985).    The operation and reproduction of the core-periphery hierarchy tends to moderate the formation of class relations, which reproduces class fractionation on the basis of the hierarchal ordering of national societies.   From a world-historic perspective, in networks of commodity production, nodes of capital-labor relations contained in the core are formed and reproduced through wage employment; however, capital-labor relations in the periphery show a higher degree of coerced labor (Wallerstein and Hopkins 2000).  Further, production linkages connecting inter-zonal nodes are managed and serviced by core capital, especially in high-value production (Arrighi and Drangel 1986).   Therefore, according to the world-system perspective, class relations are embedded and contextualized by the geopolitical and geoeconomic structure of the world-system (core-periphery hierarchy).

The recent transition in regimes of accumulation is accompanied with transformations in the global class structures.  Current globalization, as a structural transformation of the world-economy, and the transition into new modes of accumulation has generated the conditions for the emergence of an objective global class structure (Robinson 2004).   From a world-historic perspective, however, the formative process of global class structure has been a persistent, adjacent process to larger structural trends of systemic pulsation (Chase-Dunn and Lio 2010; on pulsation, see Chase-Dunn and Hall 1997, P. 204).   The recent wave of intensified economic integration marks the transition into a new regime of accumulation, however, which would suggest the development of a new set of class relations (Chase-Dunn, Kawano, and Brewer 2000).    As a transnational regime of accumulation (c.f. Robinson 2004), we argue, class relations are reflective of the transnational circuit of production emerging in the world-economy.   Therefore, while an objective global class structure has been a persistent structural feature of the world-economy, the current phase of capitalist accumulation, defined by transnational relations, represents a unique moment in the realization of an objective global working class structure.

 

The Intersection of Global Inequalities: A Synthetic Theory

The main focus of the paper is to offer at least a preliminary analysis of the political-economic conditions that refute or support claims of the apparently competing schools of thought represented by world-systems and global capitalism perspectives.  Much of the world-historic tenor of the global capitalism perspective emanates from world-systems research contextually, logically, and substantively, and therefore exhibits a great deal of consilience with the tradition than many of its promulgators suggest (c.f. Brown et. al 2010).  On the other hand, many of the tendencies identified by the global capitalism school represent the logical theoretical extension of world-systems research, and may be properly situated not in terms of a successor to the perspective, but as a contribution to the field.  However, there are some important differences, many of which are identified above, that indicate at least a nominal break between the perspectives concerning periodization, structural-agentic features, and emergent tendencies.

            Thus far, we have discussed the emergent qualities of transnational labor-capital relations and class formation generally from the standpoints of the both the global capitalism school and the world-systems perspective relative to the core-periphery hierarchy and previous moments of the inter/transnational division of labor.  Even if we assent to the assertion that the TCC is a dominant class in some spheres (Sklair 2001), the persistence of a trimodal structure of accumulation suggests that the TCC will remain affected by the core-periphery hierarchy as it continues its ascendance worldwide.  Concomitantly, the formation of an objective global proletariat with transnational fractions operating on the basis labor-capital relations created by TNC employment will continue to coalesce relative to zonal positions and regional articulations as well even as transnational labor-capital relations continue to grow in magnitude and complexity.

            One of the primary attributes of our synthetic approach to the sociology of globalization, then, concerns the use of the production-centered approach to class formation advanced by the global capitalism school, coupled with the world-historical conceptualization of the world-economy advanced by the world-systems perspective.  Thus, while global labor interacts with capital in its various forms within TNC productive structures via subsidiary employment at increasing rates across zones, the types of labor-power expenditure and qualities of labor inputs will continue to be determined by zone-specific historical circumstances that effect rates of productivity.  While there is evidence for a growing constellation of TCC actors (Carroll and Sapinski 2010; Wall et al 2010), a pronounced paucity of empirical research on transnational working class formation and structure indicates the necessity of the current study.

            As for the TNS, an absence of empirical investigations that move beyond structural-conjunctural approaches also points to the academic gap this study hopes to fill.  By assessing the relation between TNC employment and restrictions to economic activity, or rather the absence of restrictions to direct investment and commodity/ surplus extraction, we believe that we observe a proxy measure of institutional convergence, or at least the outlines of policies that indicate the emergence of governance structures amenable to the needs of TNCs and other TCC actors.  While the agential aspects of the nascent TNS (Robinson 2004) are not apparent in policy measures of restrictions or incentives, the outcomes relative to employment and investment would suggest that at least a skeleton of transnational state structures have been erected.  In the very least, the culture-ideology of consumerism (Sklair 2001) that is responsible for institutional convergence across zones and regions can be expected in the long run to crystallize in legal and juridical terms.  While we can offer only theoretical support for this claim, it is on the basis of such crystallizations that we expect the TNS to act in the capacity of hegemon in the next systemic cycle of accumulation (Arrighi 2001).

            The empirical tests identified below have been designed to assess, again at least preliminarily, to what degree international structures like the core-periphery hierarchy, and so called nation-state-centric geographic structures and locations continue to persist and exert pressures on the world division of labor; and the degree to which emergent transnational social formations, specifically, the transnational working class, have significantly altered the structural conditions on which world-systems theory is based.  Here, in short, we hope to show patterns of persistence and emergence that more perfectly reflect extant social relations than either of the contrasted and sometimes divergent perspectives can explicate on their own.

As may be expected, we also intend to assess the impact of inward foreign direct investment (FDI) on TNC affiliate employment.  As a primary measure among diverse literatures and perspectives of globalization and transnational capital’s world-systemic reach (Alderson and Nielsen 2002; Arrighi and Drangel 1986; Dicken 1998; Firebaugh 2003; Robinson 2004), we expect to see an increase in foreign affiliate employment where higher rates of inward FDI exist.  Foreign capital penetration has persistently been associated with the maintenance of international inequality (Dixon and Boswell 1996; Korzeniewicz and Moran 1997; Bornschier and Chase-Dunn 1985).   Our theoretical interpretation of foreign capital penetration on transnational working class formation is primarily derived from the perspectives of transnational class formation associated with the global capitalism perspective (Struna 2009; Robinson 2004; Sklair 2001).   In the formation of a global production system, the transnational capital-labor relations are constructed from the vast linkages developed by global capital.  The circuitry of global capital is the primary mechanism developing transnational capitalist-proletariat relations, where transnational capitalists integrate labor into transnational circuits of production (Robinson 2004).

Consistent with world-system perspectives on income inequality (Dixon and Boswell 1996; Beer and Boswell 2002), we conceptualize the impact foreign direct investment as a form sectoral disarticulation[1] (Amin 1974; Stokes and Anderson 1990).  Labor in foreign-controlled production are becoming more engaged with transnational capital than national capital; productivity differentials persist between international geographies of inequality (the core-periphery hierarchy) while capital-labor relations becomes augmented by transnational circuits. As an extension of sectoral disarticulation, we argue that international inequality is causing a class disarticulation by augmenting national class structures, where segments of the formerly national proletariat are engaged in transnational production circuits, thus, resulting in an uneven and fractional development of the transnational working class.   The pattern of this unevenness, in its current form, is primarily along dimensions of the core-periphery hierarchy, where core transnational workers are producing greater value than transnational periphery workers.  

            In an effort to specifically assess the impact of the core-periphery hierarchy on current patterns of transnational labor-capital relations, we intend to test the degree to which employment by a transnational firm through foreign affiliates is determined by the world-system position (Snyder and Kick 1979).  We assume that the core-periphery hierarchy will influence to a great degree the absolute level of employment by foreign affiliates. A central argument in the world-system literature discussion on global class formation (c.f. Chase-Dunn 1998) has been the fractioning of class structures along dimensions of the core-periphery hierarchy.  However current research on the transnational capitalist class (Carroll and Sapinksi 2010; Carroll 2009; Kentor 2005) has found preliminary support for the formation of transnational capitalists, but, also, a high degree of regionalization in TCC and TNC connections (Carroll 2009; Wall et al 2010).  However, transnational elite connections between core-based TNCs and their agents maybe stronger (Carroll and Sapinski 2010), but periphery TNC employment rates could be higher than core because of efforts to extract higher values from ‘cheaper’ labor, thus transnational capital-labor connections, and the formation of the transnational working class maybe located in the periphery.  

In the formation of the transnational mode of accumulation, constellations between transnational elites are expected to emerge from the core of the world-economy (Arrighi 1994).   Prior moments of hegemony and transformations in the capitalist mode of accumulation developed with the creation of political-economic alliances (Ibid).   In our perception, the emergent properties of the current and previous regimes accumulation are articulated through the international division of labor.   As a point of reconciliation between global capital and world-historical perspectives (c.f. Robinson 2001; Arrighi 2001), we embedded transnationalization in world-historical trends, specifically, the systemic cycle of accumulation.   Our conceptualization of the emergence of a global production system is the resolution to previous systemic crises.

            The impact of economic globalization on the formation of a global working class in-itself is expected to be strongly positively associated insofar as institutional structures that foster transnational or cross-border transactions relative to production are likelier to produce transnational labor-capital relations by definition.  According Robinson (2004), the emergence of a transnational mode of production, has eroded national production systems as containers of capital.  Transnational corporations, as central actors in the formative process, have structured national economies into transnational production circuitry.  The institutional congruence between the institutional environments of TNC headquarters and the host countries of foreign affiliates is indicative of transnational class formation.

            It is assumed that variations in productivity will be observed in the major sectors of economic activity – agriculture, manufacturing, and services – as well as in geographic regions, and world-system zones.  Here, both the persistence of the core-periphery hierarchy and the North-South divide (Arrighi 2001) are expected to have major impacts on the rates and levels of exploitation experienced by workers in different industries, locations, and zones of the capitalist world economy/ global economic system.  Further the inter-zonal differences in capital-intensities in production, from long run, systemic uneven development explains a substantial divergence in sectoral labor productivity.  Production inputs in the core are often composed of substantially more capital, are technologically advanced, and organized by corporate producers with high organizational efficacy.  However, we can assume in the long run that the homogenization of production processes that are likely to accompany the transnationalization of circuits of production – especially in manufacturing and services, and capital intensive agriculture – will generate convergences in rates of productivity within sectors and between regions and zones.  In essence, we should expect similar productive structures experienced by workers in transnational chains to create similarities in production relations measured by productivity itself.  In the short-term, however, residual effects of international production differentials and the international division of labor should persist in the world-economy.

            All of these measures represent a preliminary effort to assess the degree to which transnational class relations are either extant or developing.  As an indicator of global relations of exploitation and a marker of the world division of labor, rates of foreign affiliate employment, and productivity per worker in major sectors represented in the samples, predicted by world-system position, foreign direct investment, and degree of cross-border regulation, seeks to demonstrate the power of a synthetic world-systems/ global capitalism model of global economic tendencies.  Again, patterns of persistence and emergence that verify and refute elements of each of the disparate approaches to world economy are expected in general.  As measures of transnationalization of production circuits and therefore of production relations (read, class relations), employment by TNCs and labor productivity are essentially untapped resources for empirical estimation.  We hope the measurement of these factors can shed some light on transnational labor-capital relations.   

 

 

Analytical Strategy

In order to indirectly test the propositions of the synthetic theory, we employ four multivariate regression models for total manufacturing employment in a US, Japanese, and German foreign affiliate; agriculture labor productivity; industrial labor productivity; and service labor productivity.  Two datasets and samples were generated from secondary sources for country-year observations.   The purpose of the regression analysis is to offer insight into the primary mechanisms causing transnational capital-labor relations (employment in transnational firms) and production differentials across representative samples of countries in the contemporary world-economy and the international division of labor.

 

Data

Table 1 provides an overview of the variables included in the analysis[2].  Data for total foreign affiliate employment in manufacturing comes from Measuring Globalisation database (OECD 2010) and several other secondary databases.   The OECD database offers data on both outward and inward activities of multinationals by parent company country location.  The data for foreign affiliate employment forms an unbalanced panel with 252 observations for 47 countries over the period of 2001 to 2007.   The employment sample is composed of 18 highly developed countries (core); 18 developed countries (semiperiphery); and 11 developing countries (periphery).

            Data for the labor productivity dataset is decomposed into three major economic sectors.   Data for the measures in the database were drawn from several secondary sources.  Productivity data forms an unbalanced panel 252 observations for 62 countries over the period 1980 to 2005 (measured at five year intervals).   The productivity sample is composed of 15 high developed countries (core); 21 developed countries; and 26 developing countries (periphery).

 

Dependent Variables

The models are organized around four dependent variables: aggregated multinational employment in US, German, and Japanese foreign affiliates; agriculture labor productivity; industrial labor productivity; and service labor productivity.  

Aggregated multinational employment measures the absolute number of manufacturing employees in foreign affiliates weighted by national total labor force.  Foreign affiliate manufacturing employment is the ratio of total full-time and part-time employment in a firm where at least 10% of ownership (direct or indirect) belongs to a US, German, or Japanese parent company (OECD 2010) to size of the total labor force.  Recent research shows over 93% of outgoing transnational corporate connections (parent-foreign affiliate connections) are concentrated in the United States, Canada, Japan, and Europe (United Kingdom, Germany, France, and the Netherlands).  Based on Wall et al. (2010), the United States, Japan, and Germany account for over half of all outgoing transnational corporate connections. Our measure of transnational capital-labor relations utilizes United States, German, and Japanese multinational corporations because data availability and proportional representation of transnational corporate connections. The outcome measure is the summation of foreign affiliate employment.    The measure was transformed (log(x) because of univariate outliers and severe positive skew.  

Sector labor productivity is the average value-added by the sector (in current US dollars) per sector worker.  Sector labor productivity is calculated by dividing value-added by the size of the sector labor force.   The number of workers in a sector was calculated by the percentage of total labor force in sector times total labor force.   The measures were transformed (log(x) because of univariate outliers and severe positive skew.

 

Independent Variables – Employment Model

The baseline model for the multinational employment analysis contains six control variables: share of manufacturing (% GDP); secondary education enrollment (gross % of total population); total labor force (as % of total population); economic freedom index; regional location; and OECD membership.   The controls are based on conventional mechanisms explaining cross-national variation in manufacturing employment in foreign affiliates.

The size of the manufacturing sector, measured as percentage of GDP, is drawn from WDI data (World Bank 2008).    National economies with larger manufacturing sectors are expected to attract a higher number of multinational manufacturing firms (Kim 2006).   

Secondary education enrollment, as a percentage of gross total population (all ages), is drawn from WDI data (World Bank 2008).    For capital-intensive and skill-intensive production, an educated labor force is one of several necessary conditions to establish facilities (Shatz and Venebles 2000).  Secondary enrollment is expected to have a positive association with foreign affiliate employment in manufacturing.

Total labor force, as a percentage of the total population, is included in the baseline model to control for the condition of labor surplus.  National economies with greater surpluses of labor are predicted to have a positive association with foreign affiliate employment because of the favor labor market conditions and lower effective bargaining power of national labor.   Data for total labor force and population is from WDI data (World Bank 2008).  

A central consideration in the investment and cultivation of a foreign affiliate is the extent of regulation imposed by national governments, which create administrative costs on firms.   One major factor in multinational location decisions are the costs associated with operation (Shatz and Venables 2000; Becker et al 2005). To measure the regulatory environment of a country, we used the Heritage Foundation Economic Freedom Index (Heritage Foundation 2008).   The index is calculated from 10 sub-indices measuring specific dimensions of regulation, from business freedom to labor freedom.    The index is scored from 0 to 100, with 100 indicating absolute economic freedom and 0 indicating complete regulation.   The expectation is a positive association between regulation and employment.

In addition to the previous variables, two dichotomous variables are included in the baseline model to control for geographic location and institutional similarity.   Dichotomous variables were constructed to indicate a country’s location in a United Nations Region (North America, Oceana, Europe, Asia, Africa, and Latin America).   Europe was used as the comparison group in the employment model.    Another dichotomous variable was constructed to indicate a country’s membership in the OECD in order to control for institutional similarity in OECD member nations, which could be an attraction for corporations from OECD member nations.    

            According to the synthetic theory, three mechanisms are identified as primary articulators of transnational employment relations.   World-system position is measured as a series of binomial variables indicated a country’s status in the core, semiperiphery, or periphery.   Data on world-system position is drawn from an updated version of Snyder and Kick (1979) in Bollen (1983) and Bollen and Appold (1993), which uses a multiple network block modeling methodology for assigning world-system position.   

            The other mechanisms causing the formation of transnational capital-labor linkages, is the capital itself, measured as the total inward FDI from the United States, Germany, and Japan, and the degree of global economic integration.   Total outward FDI from reporting country to partner country is drawn from the OECD database (OECD 2010) weighted by national total labor force (World Bank 2008).  The purpose of the measure is to quantify the extent of foreign capital-labor relations forming through transnational investment abroad and its influence on foreign affiliate employment. FDI controls were excluded from the model due to data unavailability for country-specific FDI and limited sample size. The measure for total inward FDI is a summation of FDI from US, German, and Japanese investors.  The variable was transformed (loge(x)) because of univariate outliers and non-normality.   

Economic policy is measured by a sub-index in the K.O.F. Economic Globalization Index (Dreher 2006; Dreher, Gastons, and Martens 2008).   The restrictions index is calculated from four variables:  hidden import barriers; mean tariff rate; taxes on international trade; and capital account restrictions.  Higher values indicate a less restrictive regime and less regulation of capital and trade flows.  

 

Independent Variables – Productivity Models

All three productivity models share the same baseline model of four control variables:  secondary education enrollment (% of gross population); urban population (% of total population); trade openness (trade as % of GDP); and UN region.  In addition to a dichotomous measure for geographic location, we included a time dummy variable for the year 1990 in the analysis to control for effects associated with historical changes after 1990, specifically, the collapse of the Soviet Union.   Economic development, GDP per capita (constant US dollars) was dropped from the analysis due to collinearity issues[3] with world-system position and urban population.   Each control variable was included in the analysis to test the mechanisms of the synthetic theory against conventional causes of differences in labor productivity.

            Secondary education enrollment, as a percentage of gross total population (all ages), is drawn from WDI data (World Bank 2008).    Human capital theories of labor productivity (Schultz 1961; Welch 1970; Black and Lynch 1996; Aggregy, Eliab, and Joesph 2010) argue that greater human capital, in particular education, increases labor productivity.  The expected association between secondary education and sector productivity is a positive, linear relationship.

            Urbanization, as percentage of total population in urban settings, is drawn from the WDI database (World Bank 2008).   The expected association between urbanization and sector labor productivity is positive.  

            Trade openness is calculated by total exports plus total imports divided by GDP.   Data for trade openness comes from the WDI database.    The log of trade openness was used in the analysis because of univariate outliers and non-normality. The predicted association between trade openness and sector productivity is positive – as countries engaged the global economy more, international competition and standards requires an increase in labor productivity in order to compete in world markets (Krugman 1981; Grossman and Helpman 1991; Alcala and Ciccone 2004) .

            Similar to the employment model, two variables are used to indirectly test the propositions of the synthetic theory: world-system position and foreign direct investment penetration (Dixon and Boswell 1996; Alderson and Nielson 1999; Beer and Boswell 2002).    In addition to FDI penetration, two additional controls are used – foreign direct investment rate (the ratio of inward FDI flow to inward FDI stocks) and domestic investment (gross capital formation).    World-system position is based on an updated measure of Snyder and Kick (1979) in Bollen (1983) and Bollen and Appold (1993). FDI data are from UNCTAD FDI Online Database (UNCTAD 2009).

 

Methodology

Time-series, cross-sectional data renders ordinary least squares (OLS) regression inefficient because of autocorrelation.    All of the models included in the analysis utilize panel data, where observations are measured at multiple time points, which violate a key assumption of OLS – errors with no serial correlation (Hamilton 1992).  In order to address the panel structure of the data, we utilized generalized least squared random effect (REM) regression estimators for all of the models.    REM models incorporate a unit-specific error term, which is allowed to vary.  In contrast to REM models, fixed effect models (FEM) holds the unit-specific error constant.      Hausman tests for each full model (Hausman 1978) were used to compare the coefficients of REM and FEM estimations.    The only model showing no significant difference between FEM and REM estimation was the employment model.  All three productivity models showed significant difference between the different estimations. [4]  In order to adjust to the influence of time invariant effects, we included regional dummy variables in order to capture a significant proportion of fixed effects.  

            To determine the effect of serial correlation on the efficiency of the productivity model covariates, the productivity full models were estimated using Prais-Winsten (PW) regression (Prais and Winsten 1950).  Prais-Winsten regression estimates a linear model that is corrected for serially correlated residuals.   The estimations of the PW models only differed in magnitude, where both significance and direction were consistent between random-effects models and PW models, except for the FDI controls in the service and agriculture models.   According to the results of the PW models, in the service model, both domestic investment and FDI are significant and, in the agriculture model, domestic investment is significant.

In estimating the REM models, we used Huber-White standard errors (White 1980) in order to adjust for heteroscedastiscity and spatial auto-correlation present in both datasets.   Both models contain highly unbalanced panels, therefore, we assumed the presence of spatial auto-correlation.  Due to unbalanced panels, we are unable to perform any diagnostic tests confirming the presence of spatial auto correlation.

 

Results

[Insert Table 3]

Table 3 reports the results of the REMs for foreign affiliate employment.  Model 1 includes the baseline model estimations for employment.   The positive, significant association between manufacturing sector development (share of GDP from manufacturing) and foreign affiliate employment is expected.  Highly developed manufacturing sectors should attract foreign companies.  Further, OECD members are expected to have significantly more foreign affiliate employment in US, German, and Japanese firms than non-OECD members.   Lastly, the degree of regulation of a national economy is negatively associated with foreign affiliate employment.  Based on the Economic Freedom Index (Heritage Foundation 2008), a one-point increase in the index for a country is associated with a 3% increase in foreign affiliate employment.    . 

Model 2 introduces logged inward foreign direct investment from the United States, Germany, and Japan.   In line with our hypothesis, foreign capital has a significant, positive association with foreign affiliate employment.  For a 1% increase in FDI per worker from US, Germany, and Japan, foreign affiliate employment in US, German, and Japanese firms increases by about 8.5%.   Our interpretation of this relationship is that flows of foreign capital are indeed accompanied by the integration of labor into vertical circuits of transnational corporate production and operation on a global scale. 

 

[Insert Figure 1]

 

Model 3 tests world-system position controlling for the baseline model.    The insignificance of world-system position is an unexpected result.   Neither the core or non-core account for a significant proportion of foreign affiliate manufacturing employment, which is interpreted as a relatively equal inter-zonal distribution of transnational employment. However, by introducing world-system position to the model, OECD membership no longer has any significance, which means the significance of membership in the OECD is contingent on being in the core.  Figure 1 shows the time trends in foreign affiliate employment for core, semiperiphery, and periphery countries from 2001 to 2007.   The apparent trend in core, semi-peripheral, and peripheral employment is a growing divergence between world-system zones.  Starting in 2001, the gap was significantly smaller compared to 2007.  In the short time-span, peripheral employment has rapidly grown, however, the difference appears to be insignificant when controlling for manufacturing sector development and geographic region.

Model 4 tests the extent of cross-border regulation, controlling for the baseline model.   Consistent with the theory, restriction has a statistically significant association with manufacturing employment.    The degree of economic international/global regulation is a main attraction for US, German, and Japanese manufacturing firms.   States with less regulation of trade and capital flows are significantly more likely to attract corporations producing at the global scale because of the reduction administrative costs and institutional similarities between home and affiliate countries.

The KOF globalization index has been criticized for being an invalid measure of globalization (Caselli 2008).   However, the justification for including the measure in our model is the need for a multiple indicator measure of economic restrictions and flows indicative of a transnational economy controlled by global capital.   In light of the robustness of foreign direct investment, FDI capital flows and restrictions on capital, in general, are shaping the contours of the world-economy; property acquisition, in all varieties on a global scale, is becoming the mechanism causing transnational class formation.

Model 5 includes economic globalization, world-system position, and logged FDI, controlling for the baseline variables.  Examination of the regression coefficients reveals that the central parameters for predicting cross-national variation in foreign affiliate manufacturing employment in US, Japanese, and German firms are: manufacturing share; economic regulation; economic globalization; and foreign direct investment from US, Japanese, and German investors.   The insignificance of world-system demonstrates some validity to the claim about the changing geography of economic production.   However, the significance of Asia, when compared to Europe, does suggest a regional dimension to the global distribution of foreign affiliate employment, where, Asia employs less manufacturing workers in US, German, and Japanese multinationals than Europe. 

 

[Insert Table 4]

 

            Table 4 reports the results of the agriculture productivity models. Model 1 provides estimates for the baseline model.  Five of the eight parameters specified in the model are statistically significant. The negative coefficient for Asia and Africa indicates that unaccounted for mechanisms are causing regional variation in agriculture productivity, where Asian and African agriculture labor produced 155% and 159% less value than European agriculture labor.    As predicted in conventional human capital theories, secondary enrollment is positively associated with agriculture labor productivity.  An unexpected finding is the negative association with logged trade openness and labor productivity.    

Including foreign direct investment penetration, secondary education is no longer significant, while logged trade openness, Asia, and Africa are significant.   Model 2 estimates FDI penetration, controlling for the baseline model, foreign direct investment rate, and domestic investment.   According to the model, a 1% increase in FDI penetration results in a 4% increase in agricultural labor productivity.   

Model 3 tests the effect of world-system position on agriculture labor productivity.  Controlling for the baseline model, agriculture workers in core countries generate 2 percent more value than workers in non-core countries.   Further, the introduction of core into model renders logged trade openness insignificant.   In addition to trade openness, the introduction of world-system position reduces the magnitude of being located in Africa.   Since the majority of African countries are contained in the periphery of the world-system, this result is expected.

Model 4 estimates the full model for agriculture labor productivity.    Controlling for the baseline model, both world-system position and foreign direct investment penetration remain significant.   Since both variables are significant in the same model, additional mechanisms to foreign direct investment penetration are central for explaining core-periphery differences in labor productivity.   The most robust parameter across all of the models has been urbanization, which consistently has a positive association with agriculture labor productivity.   A high concentration of national populations in urban centers necessitates a greater productive capacity in the agriculture sector.   

 

[Insert Table 5]

 

Table 5 provides the results of the industrial productivity model.   Industrial production, compared to agricultural production, requires a high amount of capital inputs, thus, cross-national variation is expected to indicate a higher level of capital-intensive production.   Model 1 provides limited empirical support to this argument with the baseline model.   Both secondary educational enrollment and urbanization have positive association with industrial labor productivity.    Additionally, compared to Europe, Latin American countries, where most economies are reliant on labor-intensive production, produce 71% less value in industry than European countries. 

Models 2 through 4 in Table 5 estimates the same models specified for agriculture labor productivity.   The only major differences are the lack of regional significance and the robustness of secondary school enrollment.   Both world-systems position and foreign direct investment penetration remain significant for predicting cross-national variation in industrial labor productivity.   The capital and production differential between the core and periphery is one of the central explanations for a lack of regional significance.   Similar to agriculture labor productivity, urbanization is a significant predictor.    Another important difference between Model 1 and Model 4-5 is the significant decrease in magnitude of the regional variables.  The spatial differential of industrial labor productivity seems to be, at least partially, the result of core-periphery differentiation.  

 

[Insert Table 6]

 

Table 6 gives the results of REMs for service labor productivity.   The growth of the service economy has been a central theme in the development of a new international division of labor and the expansion of manufacturing into the periphery.    Model 1 shows the highly uneven regional distribution of the global service sector, where service workers in Europe produce 100% more value than African workers; nearly 111% more value than Latin American workers; and about 85% and 101% more than Oceana and Asian workers.   The only insignificant region is North America, which should be expected based on the heavy concentration of professional services in the EU and US economies.    Consistent with agriculture and service models, education and urbanization are positively associated with service labor productivity.  

Models 2 through 4 estimate the same models for previous productivity models for service productivity.    Compared to industrial productivity, geography is a significant predictor, controlling for world-system position and other variables, for service labor productivity.   Regional differentiation in productivity demonstrates a clear regional dimension in the formation of the global economy, especially for the service sector.   Both parameters specified by the synthetic model are positively associated with service labor productivity, controlling for the baseline model.    Compared to other sectors, the service sector exhibits the highest difference between core-periphery, where the core labor produces 92% more value than periphery labor in the global service sector.  

Overall, the REMs for foreign affiliate employment and sector labor productivity present a clear picture of the formation of the transnational working class and the durable inequalities between world-system zones.   The insignificance of world-system status for predicting foreign affiliate manufacturing employment indicates a substantial growth in inter-zonal capital-labor relations through globalizing processes, like offshoring and outsourcing with third-party contractors, rather than ‘in-house’ foreign affiliates.    World-system accounts of TNC operation (Bornschier and Chase-Dunn 1985) understand TNC – periphery relations as core exploitation of peripheral economies in the pursuit of cheap labor and greater surplus extraction.  However, in our empirical analysis, we found no disproportional concentration of employment in the periphery.  On average, US, German, and Japanese firms employ a greater share of periphery labor than semiperiphery or core, but the difference is insignificance.   Mean periphery employment in foreign affiliates is about 300,000, while mean core employment is about 200,000.   Given the sample, this difference is not substantial, especially considering the amount of unaccounted for employment in US, German, and Japanese parent companies.    The main argument to extract from the employment model is the growth in inter-zonal linkages in transnational circuits of production through vertical structures of transnational corporations are not absolutely determined by the core-periphery hierarchy, rather, other forces are contributing to the growth of transnational corporate employment.   

The significance of world-system position for labor productivity in all major sectors provides some empirical basis for the endurance of international production differentials.    The transition toward a globalized production system is not associated with a convergence in value-adding capability of labor in all regions of the world.  Both geography and political-economic geography are relevant for accounting for production difference.   In the service sector, the international difference is very pronounced and significant explanations for cross-national variation in productivity.   The central point is, while inter-zonal capital-labor relations grow, producing a primordial objective global class structure, there is a lack of convergence in production, which indicates the persistence of an international division of labor associated with greater productivity capacities and valuation unevenly distributed in the world-economy.

 

Discussion and Conclusion

 

[Insert Figure 2]

 

Our analysis provides preliminary support for our theoretical claims regarding the intersection of persistent international inequality and the emergence of the transnational working class.    The inter-zonal convergence in TNC manufacturing employment provides partial support to the claim of an emergent global production system.    Figure 2 shows trends in US TNC manufacturing employment from 1998 to 2008 for core, periphery, and semiperiphery countries.   In line with the findings of our regression analysis, over the last decade, there appears to be, since 2004, a substantial convergence in total US TNC manufacturing employment between core and peripheral countries.    The intensified incorporation of the periphery into the circuitry of global production represents both the outcome of the US regime of accumulation (c.f. Arrighi 1994, Ch.4) and the rise of a global division of labor (Robinson 2004).   The insignificance of world-system position in predicting manufacturing employment in US, German, and Japanese TNC foreign affiliates indicates the possibility of a transition toward new global inequalities that reflect social rather than territorial or zonal ‘cartographies’ (Robinson 2002).    However, in the context of a growing divergence in labor productivity – even while transnational capital-labor relations are transcending the core-periphery hierarchy of the world-economy – the valorization of labor is highly differentiated along core-periphery lines in all sectors, and thus indicates the continued relevance of previous world-systemic structuration.  In essence, the general empirical findings of our analysis provide evidentiary validity to claims concerning the emergence of transnational working classes through the interactions with various forms of transnational capital within globalized commodity circuits.  However, they appear to be articulated through the core-periphery hierarchy.

A central disagreement in the world-historical and global capital discussion is the periodization of the current phase of globalization, more specifically, whether contemporary transnational transformations represent an epochal shift in capitalism (Burbach and Robinson 1999).    According to our analysis, even if the emergence phase of capitalist accumulation is a qualitative change, structural constants from previous periods, like the core-periphery hierarchy (Chase-Dunn 1989), are enduring the initial wave of transformations.    From the perspective of actually emerging transnational class formations, the institutionalization of global capital-labor relations – via transnational actors like the TNCs – must conform and react to established relations of international inequality characterized by core-periphery hierarchy.

Applying the world-historical framework of systemic cycles of accumulation (Arrighi 1994) to contemporary transformations, we argue that the emergence of transnational social bodies is indicative of the formation of a new regime of accumulation.    However, this transnational regime of accumulation, while following the continuity and patterns of systemic cycles, is a unique rupture in the structural basis of the world-system.   The possibility of fundamental changes in the composition and persistence in the international division of labor requires more rigorous empirical investigation.

 

[Insert Figure 3]

 

The most robust mechanism identified by our synthetic theory and empirically established across both sets of analyses has been the flow of foreign direct investment.    In the transnational phase of capitalist accumulation, the spatial scope of capital has transcended the discrete boundaries of national economies.   Figure 3 shows the bivariate relationship between inward foreign direct investment from Japanese, US, and Germany investors and foreign affiliate manufacturing employment in US, German, and Japanese multinational corporations.   The capital-labor linkages developed by US, German, and Japanese investors and corporations, in general, illustrate the dialectical formation of transnational capitalist classes (Robinson 2010).    The growth of capital-labor relations in the contemporary phase of globalization is representative of previous moments of global class formation, however, the intensity of formation and the independence of the formation from core-periphery structuration, indicates the emergence of a new system of global inequality.

            As evidenced by the significant effect of economic restrictions on foreign affiliate employment, the growth of transnational capital-labor relations, through vertical production regimes (transnational corporations), is associated with the emergence of institutional reconfiguration toward transnational state policies.    In the formation of the TCC and TWC, national political institutions, as indicated by capital and trade flow restrictions, are experiencing an institutional isomorphism toward the deregulation of transnational capitalist activity.   We interpret this process as the emergence of a primordial transnational state, directed by the interest of transnational capital.   In an era of increasing restrictions on migration, the deregulation of capital and trade flow seems indicative of a shift in political interest from safeguarding national labor to privileging transnational capital.    An institutional convergence of deregulation suggests the possibility of TNS formation as a political tool of the TCC.

 

[Insert Figure 4 and Figure 5]

 

While manufacturing labor exhibits less stratification along core-periphery dimensions, the question is: ‘does this hold for all sectors?’  Figures 4 and 5 display time trends in US TNC employment for two sub-sectors: computer and electronic product manufacturing, and professional services.   In computer and electronic manufacturing, since 2002, peripheral employment in US TNCs has substantially increased relative to core and semi-peripheral employment.    The medium to high capital-intensity of computer and electronic manufacturing requires a substantial investment in capital, skills, and monitoring in national economies traditionally associated with labor-intensive production.  In professional services, however, there is substantial difference between core and non-core employment.   While US TNC professional service employment is growing in the semiperiphery, the vast difference between core and semiperiphery remains, with a limited probability of convergence.   Accordingly, it appears the core is specializing in the coordination of global production, while the periphery is specializing in manufacturing products of declining value (Arrighi and Drangel 1986).   Thus, while objective transnational working class(es) are forming, there is a high degree of fragmentation within that class along core-periphery dimensions.  

In addition to building capitalist class relations, generally through circuit-related linkages and firm-level engagements, foreign direct investment penetration has preserved the vast production differentials between world-systems zones.   Figure 4 shows the bivariate relationship between FDI penetration and sector labor productivity.    The disarticulation of national economies by foreign capital is associated with a growth in labor productivity in all major sectors.   As labor becomes more engaged in global production circuits, labor productivity increases at a substantial rate.   From our theoretical perspective, the increasing valorization by transnational labor is indicative of the formation of a new regime of accumulation and a new phase of material expansion (Arrighi 1994).  Further, while productivity grows with the diffusion of foreign capital, the capital-labor linkages created by transnational actors have resulted in incongruence between transnational workers, augmenting class structures along core-periphery dimensions. 

 The endurance of the core-periphery hierarchy of the world-economy is exhibited in the productivity differences between core, semiperiphery, and periphery labor.     On average, in all major sectors, core labor productivity is over 70% greater than semiperiphery and periphery labor productivity.   This substantial gap in labor productivity is suggestive of the persistent unevenness of economic development between world-system zones.   Even with the dispersion of production to the global South, comparative industrial productive capacity of labor is highly stratified between the global North and South, which is reflected in differences in working conditions, protections, and labor organization efficacy.   Across major sectors, the divergence in productivity, especially in the service sector, suggests a restructuring of an international division of labor, where the core specializes in professional service, logistics, and other governance-oriented and supportive activities in global commodity chains and, where the periphery specializes in production of low to medium value commodities.   In the next phase of capitalist accumulation, the international division of labor appears to be consistent, however, from a class-based perspective, the objective capital-labor relations of capitalist production seem more global in scale.  

The long-term transformations of the world-economy by transnational capital have yet to be determined, but in the short-run, transnational capital has so far made little to no progress in producing a convergence in labor productivity.   While, objectively, labor inputs in manufacturing have multiplied across world-system zones, other production inputs related to other sectors remained concentrated within world-system zones.    The preservation of production differentials thus contextualizes our discussion of the emergence of transnational capitalist classes by embedding global class formation in structural constants, like the core-periphery hierarchy.      

            Future research regarding transnational class formation and the attendant social structures that emerge from TNCs activities relative to the persistent attributes of the world-system hinges on the availability of data that is thus far sparse.  Ideally, firm level research that assesses the linkages between the direct actors, the workers implicated in the TNCs and the capitalists who exploit them, and geographic/ structural conditions would be undertaken in order to provide a level of precision not available at the nation-state level.  While we have demonstrated support for a synthetic approach to global sociology, a finer-grained investigation of the attributes of the global class structure determined by transnational processes and the core-periphery hierarchy is necessary in order to better understand the novelty and tradition of the present moment of capitalist globalization.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Appendix

 

Table 2.  Summary Statistics

Variable

N

Mean

SD

Min

Max

Total Foreign Affiliate  Employment

378

.012

.013

0

.081

Total Outward FDI

378

.002

.015

-.011

.231

Manufacturing

371

19.151

6.005

3.215

35.008

Total Labor Force

378

.475

.086

0

.637

Economic Restrictions Index

364

77.482

15.709

26.328

97.614

Economic Freedom Index

373

66.909

9.836

43.502

89.968

Secondary Education Enrollment

349

97.258

19.865

38.091

161.781

Agriculture Labor Productivity

252

16108.55

23149.14

185.62

211995.6

Industrial Labor Productivity

252

24872.86

28910.

638.249

225592.

Service Labor Productivity

252

21511.82

23555.48

883.654

175337.5

Secondary Education Enrollment

252

78.736

27.408

17.038

161.781

Trade Openness

252

72.923

46.852

14.991

384.963

Gross Capital Formation

252

22.888

5.704

10.22

44.413

Foreign Direct Investment Penetration

252

15.278

89.914

0

1128.122

Urban Population

252

63.394

18.65

8.5

100

Foreign Direct Investment Rate

252

15.284

15.819

-19.378

100

 

 

 

 

 

Table 3.  Random-Effects Regressions of Foreign Affiliate Manufacturing Employment in US, German, and Japanese Multinational Corporations.

Variable

Model 1

Model 2

Model 3

Model 4

Model 5

Manufacturing

.054***

.048***

.043***

.048***

.036***

 

(.012)

(.01)

(.009)

(.011)

(.008)

OECD Membership

1.417***

1.298***

.826

1.351***

.596

 

(.282)

(.267)

(.496)

(.278)

(.521)

Oceanaa

-.305

-.156

-.391

-.134

-.286

 

(.242)

(.212)

(.287)

(.226)

(.300)

North Americaa

-.074

-.057

-.029

.068

.081

 

(.48)

(.433)

(.464)

(.489)

(.478)

Latin Americaa

.123

.105

-.468

.263

-.424

 

(.377)

(.412)

(.537)

(.408)

(.586)

Africaa

-.787

-.898

-1.617

-.547

-1.580

 

(1.216)

(1.172)

(1.281)

(1.071)

(1.200)

Asiaa

-1.065

-.997*

-1.396**

-.958

-1.233**

 

(.541)

(.516)

(.443)

(.540)

(.422)

Total Labor Force

.111

-1.588

-2.097

-.058

-2.964

 

(2.173)

(1.534)

(1.823)

(1.978)

(1.724)

Secondary Education

-.0004

-.001

-.001

-.002

-.001

 

(.003)

(.003)

(.002)

(.002)

(.002)

Economic Freedom

.031*

.025**

.015*

.019*

.015**

 

(.014)

(.010)

(.006)

(.010)

(.005)

Loge Total Outward FDI

.

.085**

.

.

.036**

 

.

(.036)

.

.

(.012)

Coreb

.

.

.209

.

.157

 

.

.

(.258)

.

(.248)

Restrictions

.

.

.

.012***

.011**

 

.

.

.

(.004)

(.004)

Constant

-8.845***

-6.671***

-6.195***

-8.687***

-5.821***

 

(1.865)

(1.111)

(1.058)

(1.712)

(1.085)

Note: N=225.  FDI= foreign direct investment.    Huber-White standard errors are in parentheses. 

* p<.05; ** p<.01; ***p<.001

a: Comparison Group – Europe

b: Comparison Group – Semiperiphery and Periphery

 

 

 

 

 

Table 4.   Random-Effects Regressions of Agriculture Labor Productivity.  

Variable

Model 1

Model 2

Model 3

Model 4

Secondary Education Enrollment

.004

.003

.003

.002

 

(.004)

(.004)

(.004)

(.004)

Urbanization

.032***

.031***

.028***

.028***

 

(.007)

(.007)

(.008)

(.007)

Loge Trade Openness

-.449*

-.535**

-.420*

-.456*

 

(.193)

(.203)

(.192)

(.200)

Asiaa

-1.554***

-1.587***

-1.220***

-1.258***

 

(.289)

(.301)

(.309)

(.296)

Africaa

-1.199**

-1.285**

-.847

-.934*

 

(.461)

(.466)

(.485)

(.491)

Latin Americaa

-.583

-.559

-.128

-.123

 

(.347)

(.357)

(.373)

(.383)

North Americaa

-.581

-.570

-.655

-.643

 

(.608)

(.543)

(.392)

(.346)

Oceanaa

-.854

-.849

-.732

-.726

 

(.484)

(.491)

(.416)

(.424)

Loge FDI Penetration

 

.044*

 

.040*

 

 

(.023)

 

(.022)

Loge Gross Capital Formation

 

-.009

 

-.023

 

 

(.201)

 

(.201)

FDI Rate

 

-.003

 

-.002

 

 

(.004)

 

(.004)

Coreb

 

 

.933***

.898***

 

 

 

(.269)

(.277)

1990

.372***

.361***

.410***

.394***

 

(.101)

(.105)

(.099)

(.104)

Constant

8.76***

9.214***

8.259***

8.720***

 

(.911)

(1.066)

(.915)

(1.068)

Note: N=246.   Huber-White standard errors in parentheses.   FDI = foreign direct investment.

*p<.05; **p<.01; ***p<.001

a:  Comparison Group – Europe

b:  Comparison Group – Semiperiphery and Periphery

 

 

 

 

 

Table 5.  Random-Effects Regressions on Industrial Labor Productivity.

Variable

Model 1

Model 2

Model 3

Model 4

Secondary Education Enrollment

.009***

.008**

.009**

.007**

 

(.003)

(.003)

(.003)

(.003)

Urbanization

.025***

.023***

.021***

.020***

 

(.006)

(.006)

(.006)

(.006)

Loge Trade Openness

.103

-.015

.155

.039

 

(.128)

(.125)

(.112)

(.110)

Asiaa

-.662*

-.756*

-.305

-.432

 

(.321)

(.321)

(.306)

(.314)

Africaa

-.707*

-.873**

-.321

-.521

 

(.237)

(.333)

(.327)

(.344)

Latin Americaa

-.710**

-.711**

-.243

-.299

 

(.237)

(.229)

(.263)

(.257)

North Americaa

.069

.019

-0.247

-.061

 

(.379)

(.255)

(.173)

(.139)

Oceanaa

-.203

-.223

-.066

-.097

 

(.211)

(.213)

(.248)

(.236)

Loge FDI Penetration

 

.070***

 

.066***

 

 

(.016)

 

(.016)

Loge Gross Capital Formation

 

-.026

 

-.036

 

 

(.132)

 

(.132)

FDI Rate

 

-.003

 

-.002

 

 

(.002)

 

(.002)

Coreb

 

 

.958***

.845***

 

 

 

(.224)

(.234)

1990

.411***

.388***

.437***

.410***

 

(.072)

(.072)

(.072)

(.072)

Constant

6.753***

7.771***

6.305***

7.341***

 

(.605)

(.648)

(.540)

(.611)

Note: N=246.   Huber-White standard errors in parentheses.   FDI = foreign direct investment.

*p<.05; **p<.01; ***p<.001

a:  Comparison Group – Europe

b:  Comparison Group – Semiperiphery and Periphery

 

 

 

 

 

 

Table 6.  Random-Effects Regression on Service Labor Productivity.

Variable

Model 1

Model 2

Model 3

Model 4

Secondary Education Enrollment

.010***

.009***

.010***

.008***

 

(.003)

(.002)

(.003)

(.002)

Urbanization

.020***

.019***

.016**

.016**

 

(.006)

(.006)

(.006)

(.006)

Loge Trade Openness

-.005

-.069

.064

-.006

 

(.135)

(.142)

(.121)

(.131)

Asiaa

-1.015***

-1.075***

-.666*

-.745*

 

(.305)

(.302)

(.298)

(.300)

Africaa

-1.000***

-1.093***

-.627*

-.738*

 

(.293)

(.307)

(.305)

(.318)

Latin Americaa

-1.111***

-1.040***

-.653*

-.615*

 

(.232)

(.231)

(.261)

(.259)

North Americaa

-.141

-.119

-.215

-.193

 

(.286)

(.189)

(.187)

(.191)

Oceanaa

-.824**

-.853**

-.687**

-.724**

 

(.314)

(.312)

(.261)

(.255)

Loge FDI Penetration

 

.060***

 

.056***

 

 

(.017)

 

(.015)

Loge Gross Capital Formation

 

.215

 

.208

 

 

(.119)

 

(.121)

FDI Rate

 

-.004*

 

-.004

 

 

(.002)

 

(.002)

Coreb

 

 

.922***

.862***

 

 

 

(.216)

(.231)

1990

.414***

.394***

.437***

.417***

 

(.071)

(.074)

(.071)

(.074)

Constant

7.550***

7.490***

7.048***

7.021***

 

(.600)

(.784)

(.571)

(.766)

Note: N=246.   Huber-White standard errors in parentheses.   FDI = foreign direct investment.

*p<.05; **p<.01; ***p<.001

a:  Comparison Group – Europe

b:  Comparison Group – Semiperiphery and Periphery

 

 

 

Figure 1. Manufacturing Employment in Foreign Affiliates, 2001-2007

 

                                Figure 2.  Manufacturing Employment in US TNCs, 1998 to 2008

 

 

 

 

Figure 3.  Manufacturing Employment and FDI from Parent Country (US, Germany, and Japan)

Figure 4.  US TNC Manufacturing Employment (in thousands) in Computer and Electronic Products Sector, 1998-2008.

Figure 5.  US TNC Service Employment (in thousands) in Professional Service Sector, 1998-2008.

 

 

Table 1.  Description of Variables

Variable

Transformations

IV/DV/C

Hypothesis

Description

Source

Total Foreign Affiliate Employment

Loge(Y)

DV

.

Total Employment in Japanese, German, and US Foreign Affiliates divided by total labor force.

OECD (2010)

Core

.

IV

+

Binary variable indicating core status in the world-system

Snyder and Kick (1979) Updated

Total Outward Foreign Direct Investment Flow

Loge(X)

IV

+

Total outward FDI flows (in $US millions) from US, Japanese, and German investors divided by national labor force.

OECD (2010)

Manufacturing Share of GDP

.

C

+

Percentage of GDP from Manufacturing Sector

World Bank (2008)

Secondary Education Enrollment

.

C

+

Gross percentage of population enrolled in secondary education

World Bank(2008)

Total Labor Force (% of Population)

.

C

+

Total Labor Force as % of total population

World Bank (2008)

Economic Freedom Index

.

C

+

Multi-dimensional index measuring the degree of economic regulation

Heritage Foundation

KOF Economic Globalization Index-Restrictions

.

IV

+

Multi-dimensional index measuring the degree of regulation for capital and trade flows.  Higher values indicate less regulation.

Dreher (2006)

OECD Membership

.

C

+

Binary Variable indicating OECD membership

N/A

UN Region

.

C

-

Series of binary variables indicating location of country according to UN Regions

N/A

Agriculture Labor Productivity

Loge(Y)

DV

.

Total value added by agriculture per agricultural worker (current $US)

World Bank (2008)

Industrial Labor Productivity

Loge(Y)

DV

.

Total value added in industry per industrial worker (Current $US)

World Bank (2008)

Service Labor Productivity

Loge(Y)

DV

.

Total value added in service per service worker (current $US)

World Bank (2008)

Urbanization

.

C

+

Urban Residency as a percent of total population

World Bank (2008)

Trade Openness

Loge(X)

C

+

Total exports plus imports as a percentage of GDP

World Bank (2008)

FDI Penetration

Loge(X)

IV

-

Ratio of Inward FDI Stock to GDP (Current $US)

UNCTAD (2009)

Domestic Investment

Loge(X)

C

+

Gross Capital Formation as Percentage of GDP

World Bank (2008)

FDI Rate

.

C

.

FDI Flow/FDI Stock * 100 (Current $US)

UNCTAD (2009)

 

 

 



[1] “Disarticulation thus consists of the juxtaposition of economic sectors with radically different levels of development and productivity. The developed sector, typically producing for export, utilizes modern and highly productive techniques, monopolizes available capital, and is the source of dynamism within the economy. Underdeveloped sectors utilize traditional and labor intensive techniques and typically are not export-driven” (Stokes and Anderson 1990, P. 66).

[2] See Table 2 for summary statistics.

[3] VIF = 3.12; Bivariate correlation coefficients: .7 and .68. 

[4] The estimated parameters for the productivity models are biased because of unit-specific heterogeneity.  Fixed-effects models were estimated for labor productivity models.    There was no difference in significance or direction of parameters for all models, except for secondary education enrollment in the agriculture labor productivity model.  Further, the parameter exhibiting the highest difference between REM and FEM estimations was logged trade openness.   For agriculture labor productivity, FDI penetration differs by -.031 between REM and FEM.  For industrial labor productivity, FDI penetration differs by -.019 between models.  And for service labor productivity, FDI penetration differs by -.02. 



[i] Working draft manuscript.   Please direct all correspondence to Anthony Roberts, Department of Sociology, University of California, Riverside 2116 Watkins Hall, Riverside, CA. 92521.  anthony.roberts@ucr.edu.