The Recomposition of the International Division of Labour

Abstract

The trend towards the financialisation of investment was accompanied by its transnationalisation. Strikingly, between the 1980s and 2007, all Foreign Direct Investment (FDI) indicators selected for Table 9.1 demonstrate much greater growth rates than those of the world gross domestic product (GDP). It was only in the crisis year 2007/2008 that the world GDP continued to grow while all other indicators were reduced. More particularly, the annual growth rates of FDI inflows oscillated between 20 and 50 per cent between the 1980s and 2007. The FDI-inward stock expanded from $790 billion in 1982 to $15,660 billion in 2007, by factor 20. The sales of foreign affiliates rose by factor 12 from $2,530 billion in 1982 to $31,763 billion in 2007. During the same period, the sales, gross product and total assets of foreign affiliates increased constantly. Employment by foreign affiliates also grew by factor 4. However, the employment growth rate in transnational corporations was slower than that of the FDI stock and than that of the gross product of foreign affiliates. This indicates a transition from employment-extensive towards capital- and knowledge-intensive work processes. The increase in FDI up to 2007, according to UNCTAD (2007, p. 4), was a reflection of the increase in corporate profits and stock prices, which increased the value of cross-border Mergers and Acquisitions (M&As).