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Giacomo Balli

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Effects of Globalization on Italy (Jan 2004)

The dark side of the globalization  

The initial phase  

The long cycle of the world economic expansion initiated in the second half of the 80s seemed not to have end. The Soviet block had collapsed and therefore alternative economic and ideological systems disappeared from the free market. They had opened new and vast markets, with the privatization of the government enterprises and the liberalization of the flows of capital and the commercial exchanges, the creation of new integrated economic areas (in Europe, in the North America, in the Asian east south), powerful persons' constitution structures (the WTO) of regulation of the commercial liberalization. The development of the computer science and the networks of telecommunication, reached the critical threshold of diffusion, it had transformed the formalities of job, and organization, activated a new economic sector, and permeated the daily life

These trials promised the emancipation, though troubled, of vast areas of the world. China and other Asian countries - Korea, Indonesia, Malaysia, and Thailand - experienced rhythms of economic growth never seen before and they attracted immense flows of capitals.

With the development of the economy of knowledge, based on research and technology, the basis of a separation were set between economic growth and consumption of raw materials, and energy and the Convention of Kyoto, with the international accord on the reduction of the gases it shuts for opposing the most serious planetary environmental threat, it seemed to mark the start of a world environmental government.

The new era, the era of the globalization, could be framed in the image of Walter Wriston, past president of Citicorp, the most powerful American financial institution: "A world united together in a unique electronic market that moves at the speed of light."

The second phase  

Then the dramatic economic crises of 1997 and 1998 have come, with the explosion of the financial markets and the economic recession of the Asian tigers, followed by the crisis of Russia and some Latin American countries, and by the stagnation of Japan. In December 1999 the unexpected confrontation in Seattle occurred, that brought to the suspension of the meeting of the WTO and it signaled cracks in the international consent. From the second half of 2000 the irresistible ascent of the stocks stopped and the capitalizations of the technological and Internet shares collapsed. That year ended with the new Bush presidency that tuned up to the most ambitious international environmental agreement, the Kyoto Convention


Before Bin Laden, before the dramatic events of September 11, the dark side of the globalization had been illuminated already.

With the globalization of the markets also a social globalization took place, via local actions of environmental guardianship, of defense of the rights of the minorities, of boycotting of the underage job, of more equitable and healthier commerces


These movements have shown political and economic alternatives. The criticism to a system of commercial exchanges that has impoverished the agriculturists of the poorest countries, the rebirth of forms of syndical organization is settled to, it has sustained the development of cooperative systems, and it has produced new channels of marketing.

Multinational enterprises have had to respond to the criticisms and the boycotting due to their environmental and social politics, by abandoning some projects, or introducing new codes of behavior in respect to the underage labor or to the rights of the ethnic minorities


In the past two decades it has become necessary to find new balances between public functions and private functions, between state and market, recognizing both the limits (the failures) of the state, and the limits (the failures) of the market. The recognition of the limits of the monopolistic governmental management of some economic activities (energy and telecommunications), with their privatization and liberalization, has allowed more efficient and competitive services. The recognition of the limits of the market in the management of the environmental resources, with the use of normative and economic tools from the state, has allowed a drastical decreasement of polluting issues.

Monbiot documents the influence of the multinationals in the political life and in the administration of Great Britain, the control of key-ministries, the manipulation of the politics and decisions and the induced structural corruption. The sizes and the effects in the long term of this phenomenon, which are not only pertaining to the United States and Great Britain, are decisive


In front of the most dramatic crises as those of 1997 - 1998, the developed countries and the International Monetary Fund have not hesitated to sacrifice some countries and millions of poor men in order to guarantee the strong affairs. The management of the international tools of government - from the WTO to the IMF to the agreement on the intellectual ownership, to the convention of Kyoto - has been subordinate to the achievement of these affairs. For all the developing countries and above all for those areas characterized by an increasing poverty and by economic crisis, aids to the development have systematically been reduced in the last decade. Even in front of the AIDS genocide and despite that Africa is less than 1% of the world market of the medicines, for at least four years the pharmaceutical multinationals and the developed countries have defended the rights of patent preventing the access to cures to these countries and determining, in full awareness, around ten million of deaths.

The Globalization of the markets  

What we commonly call “globalization” it is the process of international integration of the economic activity (flows of commodities, of services, of finance, of work force), in partnership to a world integration of the information and the communication (telecommunications, computer networks), of the personal exchanges (migrations, market of the job, tourism), of the institutions of government (the European union, accords of free exchange as Naphtha and Asean, conventions and international structures as the WTO)


The interaction among these trials, accelerated by the dissolution of the ideological and political-economic alternatives, has determined beginning from the years '80 a new phase of the economy and the world politics. Markets and enterprises - in first place the enterprises transnational - they have been the protagonists of this new phase, with the support of liberal politics that has determined - in wider way in the various states, but with a homogeneous sign on world staircase - the progressive withdrawal of the public intervention from the economic activities (liberalization and privatization of the energetic markets, of the telecommunications, of the transports) and from the social functions (health, foresight, education).

World commerce  

The principal sign of the global economy has been the acceleration, unprecedented for its quantitative dimension, of the world commerce. For how much the rate of growth recorded in preceding years has been elevated however, big double way in comparison to the growth of the gross inside product, is in the years '90 that the progression of the world commerce (particularly of the industrial products) him separates from the growth of the production and the income. Between 1990 and 2000, while the production is grown of 27% and the 25% world income, the volume of the exports is nearly doubled (+96%) and in value it is grown of 80%.

The development of the commerce has interested the agricultural products, mining, industrial, and the services. But not equally


Growth is assembled, particularly, on the industrial good and on the services (in first place you transport global, tourism, financial services), that represent today few less than the 20% of the world commerce. In the years '90, to forehead of a growth of the 22% of the agricultural production, a growth of the 54% of the volume of the agricultural exports has been you, while for the industrial products to forehead of a growth of the 30% of the volume of the production, the commerce is increased of 210% in volume and of 94% in value.

Because of the internationalization of the production and the globalization of the markets - especially in the rich areas – it has changed radically the quality of the world commerce.

The international commerce has become less and less I exchange him/it among different products - first subjects against industrial products - and more and more an exchange among analogous typologies of commodities and inside the same system of enterprises


As and more than in the production, in the international commerce during the last two decades new national actors have emerged. The Triad - USA, Europe and Japan - it dominates largely the exchanges, but during the years '90 an increasing weight in the world economy you/they have also assumed other Asian countries, in first place China, Taiwan and Korea (whose total quota on the world export has passed by 1980 the 2,8% to 1990 the 5,8% to 2000 the 9%). On the complex of the world commerce, the quota of the countries of the European Union is reduced - to whose inside I am strongly however increased the exchanges - and, among these, also in Italy.

But great areas of the world stay to the borders of the globalization. With the fall of the prices of the oil the weight of the Arabic states is halved, Africa drastically reduces the real value of the exports, the role of the ex east Europe contracts him.


The expansion of the international commerce and the processes of globalization are hauled by the societies transnational and from the construction of a world system of production of the commodities, favored by the reduction of the costs of transport, communication, and coordination.

The diffusion of the multinational enterprises has suffered a drastic acceleration at the end of the years '80 and has followed a rhythm well more express of the growth of the income and the commerce.

Altogether, according to UNCTAD (World Investment Report 2001), they count him over 60.000 enterprises multinationals with ca. 800.000 foreign branches. Inside this vast universe, a narrow nucleus of enterprises dominates indeed the markets. The 100 greater enterprises multinationals assemble more than 16% of the total billing.

Between 1990 and 2000 the property value of the foreign branches has quadrupled and the value of their sales is tripled. In the same period the world GDP is grown (in nominal terms) of 50% and the 63% exports value.

The multinational enterprises check the production and the world commerce. In 2000, the value of the exports realized from the foreign branches of the multinationals the 10% of the world gross product and the 50% of the value of the world exports was worth (while in 1990 few was worth more than 25% of it). Around a bystander of the world commerce it happens under the form of commerce among various branches of a same group. Besides, they indirectly influence also the international commerce, through a wide net of relationships of supply and subcontract with other enterprises.

The only 200 greater enterprises multinationals have a total billing (filial foreign and country of origin) equivalent to the 27,5% of the world gross Product. The value combined of the billings of these 200 enterprises is superior to the world gross product to the clean one of the 10 greater national economies. The Institute for Policy Studies (2000) has shown that if we put together the billings of the enterprises and the gross inside product of the nations, among the 100 greater world economies we count 51 enterprises multinationals and 49 been national.

The strong growth of the foreign direct investments is an indicator of the globalization of the economy and the increasing weight practiced by the societies transnational. In 2000 the foreign direct investments have amounted to 1.270 million dollars (more than the gross inside product of Italy), to 1990 202 million forehead.

Between 1985 and the 2000 remarkable flows of investments you/they have involved a greater number of countries.

In the 2000 investments for 10 million dollars reach 50 different countries (24 of which I/you/they are developing countries), while in 1985 an analogous flow reached only 17 countries (7 of which developing).

These investments, that above all toward the third world they are characterized by a strong volatility and instability, they still stay however very assembled and important areas of the world - in first place Africa - they are excluded by this trial.

After the 1997 and 1998 financial crises, the expansion of the investments is interrupted in the developing countries, in the Asian east and in Latin America. In 2000 the flow of foreign investments has returned to focus himself/herself/themselves inside the Triad of the developed world (Europe, Japan, North America) that today it absorbs around him 80% of the total one of the flows. The developing countries have lost six points percentages in 1999, going down to the 21% of the total one of the flows and they are still declined in 2000, reaching the lowest value of the years '90.

The quota of foreign investments attracted in 2000 by the developing countries results even lower in comparison to their quota of the world export and to their quota on the total one of the inside investments.

Besides the foreign direct investments are constituted for over 90% from fusions and acquisitions (it is considered such the purchase of over the 10% of the actions). At least in the brief term this flow of investments is not directed therefore to the creation of new productive abilities, but to the control of existing enterprises - for instance in the process of privatization of the energetic services and the telecommunications - and to the creation of concentrations of oligopolies.

The processes of globalization in Italy  

Italy is not a key actor of the globalization. Neither under the economic profile, neither under that technological - still less, as known, under that political - military.

In absolute terms, during the last decade, the economic integration of Italy is grown.

But in relative terms, that is comparative to the performances of the other countries, the rate of globalization of the country is grown a great deal to an inferior rhythm.

The economico-financial integration

In the world commerce the quota of the Italian exports, grown also during the last decade (91-2000) in nominal value from 210.000 million to 500.000 billions(+ 240%), it has regressed, in way more accelerated in comparison to the average of the European union passing from 1990 the 5,1% to 2000 the 3,5%.

The Italian exports strongly stay sensitive to the rate of change and with the entry in the European one it has lost enamel the ability of export in Europe, also recovering (following the bending of the European coin) on the extra markets UE.

The quota of the European union on the total one of the Italian exports has passed, between 1991 and 2000, from 63% to 54% (with an enough constant decreasing trend), while it is being grown with constancy the quota of northern America (from 8% to the 11%), of the countries of center-oriental Europe (from 4% to the 8%), of Latin America (from 2% to 4%).

The structure of the exports has not suffered changes of particular relief. The quotas held by the various sectors are maintained constant within the whole decade, with an elevated quota of export of metal mechanic products (19%, with a positive sale), of means of transport (12%, with a negative sale) and of textile products (10%, with a positive sale).

The specialization of Italy, almost unique case among the European countries, strongly stays anchored to manufacturing products to low or middle technological content - in the whole sector of the fashion Italy is by now the only advanced country with a remarkable production -, with a low quota exceptionally (and down falling in the long period) of export of products to high technology, equal to the 8% on the total one of the manufacturing exports, to forehead of the 30% of the United Kingdom, of the 23% of France and the 17% of Germany.

One of the indicators key some globalization of the economy is constituted by the flow of foreign investments in entrance and in exit. Among the developed countries, Italy introduces one of the lowest flows of investments, both in entrance (acquisitions or shares from the foreign countries in Italy) both in exit (acquisitions or shares from Italy to the foreign countries). The flow of foreign investments in entrance has been in 2000 equal to 11,4 million dollars (+ 67% on 99) against the 3,3 middle of the first halves the years '90. For comparison, two countries can be considered that in the first halves the years '90 had a value analogous of foreign investments (between 3,3 and 3,4 million dollars): Germany and Sweden. In 2000 Germany had attracted 176.000 million (an exceptional value for some acquisitions, was 55.000 in 1999) and Sweden 21.000 million. Even if in growth as absolute value, the quota captured from Italy on the total one of the investments has dramatically gone down, also already departing from modest levels, to the 1,8% of the flows of the European union (4,3% in 1990) and to the 0,9% of the world flows (him 1,8% in 1990).

The stock of the foreign investments in entrance, between 1990 and 1999  has been passed since 5,3% to the 9,4% of the GDP (in the UE it has been passed since 11,1 to 22,2) and the investments in exit have passed since 5,2 to 15,8% (in the UE from 12,2 to 29,6%). in comparison to the gross fixed capital, these flows represent in Italy 3,1%, while in the UE they represent 27,7%.

According to the index of internationalization of the economy elaborated by the UNCTAD, based on the relationship among the quota foreign investments in entrance and the relative quota of the economy of the country in terms of gross inside product, occupation and exports (where a value equal to 1 means that the country  it proportionally captures foreign investments to the really weight in the world economy, while inferior values to 1 point out an underdimensionment), Italy has suffered a strong regression during the last decade, passing from an index of 1,1 to an index of 0,5 and setting himself/herself/itself to the fund of the world classification. The Italian case is a unique case among the developed countries, if Japan and Korea are excluded, where specific politics that have had the tendency to limit the entry of foreign capitals are.

This increasing marginality in the flow of the investments reflects him in the scarce international dimension of the Italian multinational enterprises. Le they are 806, the lowest level among all the European countries, to compare with the 857 of Spain and the 1100 of Portugal. Only 2,4% of the total one of the based multinational enterprises in the European Union it has the mother house in Italy.

Probably these indicators underestimate the real international penetration of the Italian enterprises, on which it burdens a dimensional limit (and a low presence of society of capital contendibili) that it doesn't stimulate the constitution of society transnational. Recent studies show a strong appeal to the creation in the third countries of a net of autonomous, but subordinate enterprises that constitute an original version (to smaller appointment of capitals) of the transnationalisation. At the same time, it is not had to forget that a strong presence of a fabric of small and undertook averages it doesn't constitute a particularity anymore solo Italian in the European context. The quota of small and undertook averages (with less than 250 employees) it is analogous entirely in Spain, Portugal and Greece.

Decline and resumption of the innovation in Italy  

Also in 1999 a structural weakness of the ability of technological innovation of Italy is reinstated (one of the principal components of the industrial innovation), also with some signal of progress. The questions of brevet deposited result in growth, also showily staying inferior to those of the big part of the developed countries if you calculate on the population or on the work force (37 brevets every 100.000 workers, against the 81 of France, the 104 of Great Britain, the 180 of Germany). it reimburses her for the research and development, after the recorded depression between 1991 and 1995 it has marked some resumption in 1999 and in 2000, with an increase in real terms respectively of 7,5% and of the 3,6% of the expense to the clean one of the university sector, that is equal to a 0,1% raising on the GDP, returning to the 1993 levels.

In 1999 and 2000 it has continued, at accelerated rhythms, the alphabetization computer science of the population, with a consistent diffusion of the accesses to Internet and of the possession of personal computer, even though well under the European average (less than the half the accesses to Internet, between the half and the 2/3 the possession of personal computer).

Altogether, however, a serious delay maintains him in the technological endowment and in the innovative ability of the country that reflects him in first place in a balance of the technological payments that shows derisive collections (him 8% of those of Great Britain, the 25% of those of Holland), a low volume of exchanges, and a strong deficit. The industrial specialization to middle-low intensity of technology, in increasing competition with the developing countries, it is reinstated. But, unlike the preceding decades, during the years '90 the competitiveness of Italy is progressively weakened and in the whole decade inferior rates of growth to the European average are recorded. The lower part recorded rates of economic growth in this decade from Italy - that still in 2000  has had an inferior growth to the European average - they seem to confirm that it reimburses her to her real for research and development in Italy it is to the lowest levels among all the developed countries now, with an incidence on the 1,1% GDP, against an average 2,2% OCSE and an average European of 1,9% in comparison to the other European countries Italy is not only characterized by a lower level of the public expense (0,5% of the GDP against an average of the 0,7%), but above all from an expense a lot of redoubt of the private sector (0,6% of the GDP against an average European of 1,2%). The relationships between public contribution and private contribution to the research and development in Italia are reversed in comparison to the European average (and of all the single states, with the exception of Greece and Portugal): the 51% of the expense are public, 44% are of the enterprises (the rest is of other national and foreign sources), while to European level the public relationship - undertaken it is of 37 to 54.

Also the most recent growth of the expense has been hauled by the public sector (+10%) rather than from the enterprises (+3%).

From the structural point of view, the industrial R&S is assembled in the segment of the great enterprises (the 75% of the expense for R&S are sustained by firms with at least 500 employees) and in reality in a small nucleus of great enterprises: the 30 greater enterprises absorb 31% of the total expense.

The expense for search traditionally assembles him in the sectors to taller technological content (primary chemistry, electronic equipments for telecommunications, the auto and aerospace sector), that altogether represent around the 70% of the expense for search of the enterprises in Italy.

Under the profile of the employees Italy is, after Portugal, the country with the lowest incidence of busy personnel in the research and development on the work force, him 0,8%. Excluding the Universities, the employees in Italy result in the last years in contraction (-0,2% in 1996, - 0,5% in 1997, - 0,6% in 1998), in countertendency in comparison to the greater part of the European countries.


B. Monbiot, “Captive State: the Corporate Takeover of Britain”

L. Edwards, “Globalization of the Economy: The Impact on Politics, Family, and Society”

Published: Sun, 04 Nov 2012 11:02:44 +0000