Wal-Mart and the world

One of the principal claims of globalisation critics is that the international factories supplying products to companies such as Wal-Mart drive down the wages and standards of living in their low-income host countries. If this were so, then it should be evident in the economic data. Where there is significant manufacture of products for American and Western European markets, gross domestic product growth per capita should be falling.

A review of the five low-income Asian nations with strong export growth indicates the opposite, say Richard Vedder and Wendell Cox, the authors of the new book, "The Wal-Mart Revolution." From 1999 to 2005, world real gross domestic product (GDP) per capita in those countries rose an average of 19 per cent. By comparison:

China increased the value of its exports 229 per cent while per-capita real GDP rose 53 per cent.

Indonesia increased the value of its exports 49 per cent while per-capita real GDP rose 10 per cent.

India increased the value of its exports 79 per cent while per-capita real GDP rose 56 per cent.

Bangladesh increased the value of its exports 57 per cent while per-capita real GDP rose 22 per cent.

Vietnam increased the value of its exports 139 per cent while per-capita real GDP rose 29 per cent.

Each of the export-driven nations has experienced greater economic growth in income – significantly above the world rate. The factories provide jobs and income that would not exist if the big-box stores weren't selling their products. China, India, Indonesia and their people would be worse off without them. Moreover, the countries that import their products, such as the United States, have been better off as well, say Vedder and Cox.

Source: Richard Vedder and Wendell Cox, The Wal-Mart Revolution: How big-Box Stores Benefit Consumers, Workers and the Economy, American Enterprise Institute, February 8, 2007.

For more information: http://www.aei.org/books/bookID.867/book_detail.asp

For more on International Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=26

FMF Policy Bulletin/ 11 April 2007