NCPA - National Center for Policy Analysis

WAL-MART AND THE WORLD

April 2, 2007

One of the principal claims of globalization 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 percent.  By comparison:

  • China increased the value of its exports 229 percent while per-capita real GDP rose 53 percent.
  • Indonesia increased the value of its exports 49 percent while per-capita real GDP rose 10 percent.
  • India increased the value of its exports 79 percent while per-capita real GDP rose 56 percent.
  • Bangladesh increased the value of its exports 57 percent while per-capita real GDP rose 22 percent.
  • Vietnam increased the value of its exports 139 percent while per-capita real GDP rose 29 percent.

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/book/867

 

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