NEW Book: 'Why Investment Matters: The Political Economy of International
Investments'
by Kavaljit Singh
available for download at http://www.thecornerhouse.org.uk
What is investment? The website of the World Bank, the world's largest
international development lender, defines it as:
'Money spent now in order to make the economy grow and have more money --
or goods and services -- later.'
But in fact investment is much more than an apolitical process of
mysteriously making money 'grow'. It is about using money so that it defines
who gets access to what is bought with that money; it defines what is done
with what gets bought. It determines who accumulates wealth at whose
expense -- and who benefits as a result.
Investment thus has profound implications for public services, determining
not only whether schools, hospitals and water supply services get built, but
also who gets schooled, who gets medical care, and who gets to enjoy piped
water.
When money flows in and out of countries at the stroke of a computer
keyboard, people who have never heard of bonds or derivatives, stocks or
shares investors are profoundly affected. The traders are probably unaware
of the consequences of their actions on the lives and livelihoods of
shanty-dwellers, aspirant middle class householders or workers on the other
side of the globe, on environments destroyed, factories lost, savings wiped
out or prospects shattered.
If the buying and selling of assets for profit is not to undermine the
public good, the public has to define that good. The public has to frame the
policies and laws that will hold investors to account when their actions
undermine the public good. In sum, the struggle is to democratize
investment.
Over the last two decades, however, many of the mechanisms developed to
assert the public's right to ensure that the wealth generated by citizens
benefits the collective good have been dismantled. Under the direction of
the International Monetary Fund, 'free market' policies imposed across the
globe have de regulated controls on investment and re-regulated markets (and
subsidies) for the benfit of private, for-profit investors. In the process,
decision-making has increasingly moved from public scrutiny and
accountability.
To influence the investment process, the public needs to know how investment
works, who are the main players and major trends. In this 178-page book,
economist Kavljit Singh explains the central role that transnational
corporations have in investment. He sets out in clear and accessible
language how investment patterns have changed in the past 20 or so years.
He debunks some of the myths surrounding investment flows. Foreign direct
investment (FDI), for instance, is not an automatic route to economic
growth. In fact, it can lead to an outflow of capital rather than an inflow.
In the Democratic Republic of Congo, Mali and Nigeria, profit remittances
going out of the country are higher than FDI inflows. The South has in fact
become a net exporter of capital to the North, particularly to the United
States, a country that now relies on China and other developing countries to
finance its huge deficits. The book outlines the growing backlash against
foreign investments in many Latin American countries, Russia, Thailand,
Korea and India.
With clear examples and ample data, Kavaljit maps out investment flows,
trends and regulatory frameworks -- and ways in which investors evade
regulation. The rise of private equity funds is one example.
He suggests ways in which the vast sums of money sloshing around the global
financial system can be brought back under the democractic control of
citizens and governments.
We hope this book will help to increase the effectiveness of such collective
action by informing citizens and movements and their allies in government
and the financial community of key issues and by identifying areas where
policies and practices can and should be changed.
Listen to a podcast interview with the author, Kavaljit Singh:
http://www.fern.org/media/documents/document_3927_3931.mp3
