Let us try to understand the phenomenon of FDI in the historical prospective. We can trace the roots of modern FDI in East India Company of Britain and its French, Spanish and Dutch counterparts, some two hundred years ago. Equipped with their newfound power of coal and oil, producing steel and steam engine, building ships, these task forces sailed across the globe. What started as a simple trade of spices, silk and tea etc ended up with full force of Imperial rule over hundred or so previously sovereign/autonomous nations.
Most
of these nations went through decades of bloody struggles to regain their
political freedom. Majority of these ‘Free’ nations are still finding it
difficult to cut the imperial strings from Political, Economic, Educational and
other fields of influence.
The
Mega Corporations of the past and present Empires are keen to revisit the path
treaded by their predecessors for the very similar reasons. This time selling
military and consumer items and buying resources and farm produce. Using their
Mega-Profits to buy future rights of coal, oil gas and even ground water is not
uncommon.
There
are some strong objective factors in the present Socio-Economic relations and
mode of production that will assist in the introduction of FDI in all
developing countries (Emerging Economies). Due to the abundance of cheap fossil
fuels, mechanized and chemical based agricultural model have made it possible to
produce surplus food in the last few decades.
Hundreds
of year old established mode of transportation, trade and distribution was not
capable to handle this sudden change and hence disappeared very fast. In the
wake of Green Revolution, village as a self-sufficient unit ceased to exist
after thousands of years. Super stores that rely on national and international
trade have replaced the ancient barter system.
One
can observe the outcome of this model in the countries with advanced economies.
Mega corporations in the food industry eat small farmers, small traders, medium
farmers/traders and eventually large farmers (in that order). In the end only
large traders are left in the game along with their contract producers. It is
not just a coincidence that presently there are more than 42 million American
citizens on Food Stamps. Thousands of farmers committing suicide every year in
traditional agrarian country like India are also a proof that there is
something fundamentally wrong with the present model.
On
the other hand, there is one factor beyond the control of any government or
political party, which will ensure the death of international trade and the retail
business built on top of it. That factor is the exhaustion of cheap fossil fuel
reservoirs in the very near future. Without cheap oil, The Green Revolution,
its mechanized, chemical intensive farming model will collapse. So will the
surplus produce and trade and retail associated with it.
Despite the obvious
dangers to the populace of emerging economies, there is a real possibility that
their respective governments will support and promote these foreign direct
investments. We must not underestimate the economic power of these Mega
Corporations, their capability to buy the elected governments or its decision
makers. Mostly through monetary corruption but sometimes through intellectual
means where eminent Economists, trained and educated by their select
Universities hold senior government positions, actually believe in executing
these policies.
I hope it raises few
questions in the readers mind unless you are a PhD or Noble Prize winner in Economics.
