World Power

Few countries can exert much power in the rest of the world. There are just five permanent members of the United Nations Security Council, the ones who can cast vetoes on important UN decisions. Or take the G7, a US-led political forum of rich countries that has, well, seven members. The concentration of global power is extreme, and it rests upon the different ways a country can have influence over how the world works.

Some of these ways are obvious, for example, using military power to force another country to submit. Many are not, especially those that are linked into the system that envelops the world economy. Five dimensions of international power can be used to gauge the status of countries.[1] These show not only how the US is far more prominent in the hierarchy than suggested by a simple measure of economic size, such as GDP. They also map the relative importance of other countries and throw new light on a major geopolitical issue today: the rise of China.

China rising

China was once seen mainly as an important supplier of cheap goods and a valuable dynamo for the world economy. Now the US looks upon China as the biggest threat to its global interests. Every year, many hundreds of pages on this topic are published for the US Congress, adding to a steady stream of material directed at US policymakers from think tanks and lobby groups.[2]

In 1990, China accounted for just 2% of the world's GDP. Since then, that share has doubled every decade and China will likely account for 18% in 2021.[3] This has worried the small group of countries that dominates the world’s key institutions, because quantitative changes can also bring about qualitative shifts. Will they be able to stay in charge as they had done, now that a country from outside the rich club has risen to the fore? That question is posed especially for the US. All those institutions – the United Nations, the IMF, the World Bank, the World Trade Organisation and others – have been shaped by it.[4] The first three also have headquarters in Washington DC or in New York.

Russia – formerly, the Soviet Union – is the traditional US political enemy. Yet, it is principally a military obstacle, notwithstanding the more recent US belief that it can influence Presidential elections through buying Facebook advertisements. China, by contrast, presents a much wider challenge to how the US sets the rules for the world, as seen when it ignores US-inspired sanctions against countries such as Iran. US political rhetoric and economic measures against China picked up with President Trump, and they have continued unabated with the new Biden administration. All the international meetings held by Biden and his officials since the start of the 2021 – at the G7, at NATO, in Europe and in Asia – have had a strong anti-China theme.

Measuring power

Power has many dimensions. Here are five aspects of economic and political power that are relevant for a country’s international influence.

Economic size is one measure of a country’s weight in the world, usually measured by its GDP. That GDP number is broadly related to the size of its domestic market, how many big corporations it has, and how important it is in international trade. The US is the world’s biggest economy, accounting for roughly 24% of world GDP. G7 countries – the US, Japan, Germany, the UK, France, Italy and Canada – together account for 45% of world GDP, despite having only 10% of the world’s population. GDP counts for more than people when it comes to power and influence.[5]

 

By 2020, China’s GDP was just under three-quarters of that for the US. Japan’s GDP was roughly a quarter the size of the US, Germany was at nearly a fifth, and the UK and France were each at roughly one-eighth. All countries have been affected by the Covid-19 pandemic, and it has had little effect on their relative positions. However, US sanctions will have curbed China’s growth to some extent in recent years.

A country’s foreign assets are another important measure of power. Such assets include the ownership of companies operating in other countries, together with holdings of financial securities, such as equities and bonds, and ownership of real estate.[6] These indicate how much control it has over resources in other countries, and the size of the assets is related to the potential revenues it can gain from them.[7]

At the end of 2020, the US had by far the highest stock of foreign assets, at roughly $22.7 trillion. Germany was next in line, but well below that with ‘only’ $6.3 trillion, and the Netherlands, the UK and France followed. China and Hong Kong’s foreign assets amounted to just under $5 trillion.

These asset ownership numbers, as much other published information, do not allow for the flows of finance between major countries and tax havens. Tax havens are registered as the owners of significant foreign assets in official data, yet most of their funds originally come from major country investors.[8] This should not have much effect on the top level calculations used here.[9]

International lending and borrowing by banks is a third measure. These data show how much a country is involved in channelling funds around the world, and are also linked to how far that country is a finance hub that can profit from international dealing. London is the largest centre for international banks. While it may be a surprise that London is bigger than Wall Street on this measure, that is because much US banking business is oriented towards the domestic US economy, not so much internationally.

Nevertheless, Brexit has had some impact on UK international banking. With the UK outside the single market for financial services in the EU, some banks have shifted their operations from the UK and into EU centres. France has gained most ground because of this, and jumped into second place just behind the UK by the end of 2020, moving ahead of the US, which was in third place (see the next chart).

How much a country’s currency is used in foreign exchange (FX) deals for trade and investment is another aspect of its economic status in the world. Directly or indirectly, this also adds to its global power. This is most evident for the US with the dollar, which is involved in 88% of all currency deals.

Most commodities and important industrial goods, including oil, metals, grains, technology, pharmaceutical and aerospace products, are priced for trade in terms of US dollars. The same is true for many investment and financial deals, helped by the US having the world’s largest stock and bond markets, with international private and official funds buying those securities. Even the China-led Asian Infrastructure Investment Bank conducts its business mainly in US dollars.

US power in this FX dimension relies on the fact that nearly all deals involving US dollars must be settled through the domestic US banking system. Images of drug dealers and criminals crossing borders with bags of cash may be good for the cinema, but they do not represent what really happens to international transfers of funds.

This means that if the US government doesn’t like you – whether you are an individual, a company or a country – then it can try to prevent you from doing currency deals, even if you are not based in the US. If a bank nevertheless does deal with you in dollars, or even in another currency, then the US can fine that bank and threaten to shut it out of the huge US market. The US government’s Treasury Department has a special agency for this purpose, appropriately named the Office of Foreign Assets Control.

Other countries with important currencies could try to exert power in the same way, but their currencies have far less international significance. For example, the euro’s share of world FX markets is just 32%,[10] with the Japanese yen half of that in third place and the UK’s pound sterling in fourth.[11] So far, China’s renminbi currency has remained very minor in terms of global trading, at around 4%.[12] This is based upon the relatively late inclusion of China in financial markets, together with many more government controls on the flow of capital than is the case for other major countries.

The amount of military spending is a simple gauge of how far a country can use force against another, or threaten to use it, and is the fifth measure of power used. The US is once again in the top rank here, and it also has military bases in over 50 countries. By contrast, China has bases in just three other countries (Djibouti, Myanmar and Tajikistan).

Even if much US military spending is, in reality, more of an indirect subsidy to the domestic US economy and corporations, or is on equipment with inflated prices, its total spending of a huge $778bn in 2020 still gave the US plenty of scope to project power. This sum was more than three times bigger than China’s and twelve times bigger than Russia’s. The US lead over other major countries in military spending has increased in the past two years.

Power outcomes

Each of the five factors has some limitations regarding its accuracy or coverage. But together they give a good summary of power and are available for a large number of countries. This measurement of global power is endorsed by how the results for the top 20 countries include the five permanent members of the UN Security Council, all of the G7, and most of the G20 countries.

A country may have a high score on one component and very little on another, but all except a few countries in the world have a negligible score on all of them. The US has an index score of 93.2, with China well below in second position at 37.7. Only six other countries have an index score above 10.0. More than 150 countries score less than 1.0. This picture of the extreme hierarchy of power is a challenge to anyone who uses the term ‘international community’!

 

Sources & notes: See the first chart for details.

This calculation of power depends upon individual country values and does not consider the effect of alliances between countries, or factors that are not as easy to quantify, such as cultural influence. If included, these would only add to the power of the US and generate a more towering image. Consider NATO, for example, which accepted that the ‘North Atlantic’ security region extended into Afghanistan, the first US target after September 2001. Or consider how US social media companies dominate the Internet, how the world’s youth wear baseball caps, like, backwards, and how even India’s massive film industry calls itself ‘Bollywood’.

What next?

The US is worried about the rise of China’s economy, although US power extends much further than a simple economic measure would suggest. A look at the power index for the major countries over the past two decades shows how China has also built some non-GDP dimensions of power, notably in military spending, international banking and the ownership of foreign investment assets.

 

Sources & notes: See the first chart for details.

In recent years, China dislodged the UK in number two spot on this ranking of world power. The UK is the world’s fifth largest economy, but has its status boosted by its role in international banking. That reflects its position in world finance, although the form that this takes is also changing with the rise of China and other Asian countries, and the relative decline of European economies.[13] The more that international business grows outside of the traditionally dominant group of countries, the less important are the rules that they impose for how the world economy must work.

The US sees the rise of China not just as unwelcome competition, especially in the technology sphere, but also as a serious future threat to its hegemonic status, one that must be dealt with today. Other countries closely linked to the US, and especially other Anglo members of the ‘5 Eyes’ spying network (UK, Australia, Canada, New Zealand) are in a similar position, because they have been an integral part of a system that has dominated the world since 1945. That is why the rise of China inevitably becomes a geopolitical issue.

Some countries in Europe, particularly Germany, have a different perspective. Politically they are pro-US, and they are also economically cautious about China. But they would also like to have an alternative to relying solely upon the US, or US permission, whether that is for technology, for energy, or for other vital supplies. They are right to be concerned that the US is inclined to unilateral policy moves that can go against European interests. That remains true under Biden, although his administration stepped back from its former hard stance against the completion of the Nord Stream 2 gas pipeline from Russia.

Not surprisingly, China has responded to the US policies over the past decade, and the risk that as a result of these policies it could be pushed to the edges of a world economy controlled by hostile countries.[14] A key part of its response has been to press ahead with the massive trade and investment programme begun in 2013: the ‘Belt and Road Initiative’. This involves more than 130 countries, mainly in Asia, Europe and Africa, but also extending into Latin America. Faced with US sanctions and political manoeuvres, China is building up a network over which the US and its allied powers have far less control.

These developments will foment divisions in the world that every country will have to deal with. In the next few years, we will live in interesting times as the established powers led by the US fight to maintain their domination.

 

Tony Norfield, 14 September 2021

  

APPENDIX

 

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[1] This article updates my analysis of September 2019, where I showed that the Index of Power had put China in #2 position. See here.  The Index calculation here adds a country’s foreign portfolio assets to its direct investment assets, to get a better measure of its total foreign assets. (Previously, I only counted FDI, but I have since found good data on portfolio assets.) It also makes some adjustments to eliminate possible double counting of intra-China relations between China and Hong Kong, which are treated as separate countries in all official data. See the Appendix to the article for more details.

[2] For example, the US-China Economic and Security Review Commission has issued annual reports since 2000. Its December 2020 report was nearly 600 pages: https://www.uscc.gov/annual-report/2020-annual-report-congress

[3] Sources for GDP and other data used are given in the Appendix to this article. The US share of the world economy has fallen from 30% in 1990 to 24% in 2021.

[4] The former institutions, or its predecessor, the GATT for the WTO, emerged from the post-1945 political realignment led by the US. The President of the World Bank is almost always a US citizen, while the Managing Director of the IMF is always a European. The WTO has had a more diverse list of Directors General. Decisions by each institution are rarely passed if the US disagrees, a result helped in the case of the IMF by a voting allocation that always enables the US to block any IMF action.

[5] GDP numbers can be calculated in various ways. Here, the nominal value of GDP in a single currency is used to compare countries.

[6] In standard official statistics, ownership of 10% or more of a company in another country is considered foreign direct investment. Ownership of less than 10% of the company’s equity is considered a foreign portfolio investment, as are holdings of foreign debt securities. These are all added together here to give the measure of a country’s total foreign assets.

[7] Large corporations, usually from rich countries, can also profit from their commercial domination of producers in other countries via so-called supply chains, for example, Apple’s relationship with its suppliers, or western fashion companies getting their products made in Asian countries. However, these relationships are difficult, if not impossible, to measure.

[8] One study shows, for example, how a nationality-based measure could greatly increase the registered US and other major country holdings of bonds and equities in particular countries. These holdings are under-estimated by the usual residency-based measures in official data, as the residency can also be a tax haven. See pages 44 and 48, especially, of: https://bfi.uchicago.edu/wp-content/uploads/BFI_WP_2019118_Revised.pdf

[9] This is because the data I use measure total outflows from a country, which should include the funds first sent to tax havens before being resent elsewhere. However, the ‘round tripping’ of funds to escape tax would not be counted properly. For example, if US investors sent funds to a company registered in the Cayman Islands for the purpose of investing back in US assets, that first flow would appear as a foreign asset of the US when it is not.

[10] The euro’s share of global FX markets is divided up among the 19 euro country members according to their relative GDPs. Germany has the biggest share of that, followed by France, Italy and Spain.

[11] Note that the total shares of all currencies add to 200% because there are two currencies in each foreign exchange deal.

[12] Less surprisingly, the separate Chinese currency of Hong Kong also has only a small role in world FX trading. Its currency value is tied very tightly to the US dollar’s.

[13] See Tony Norfield, The City: London and the Global Power of Finance, Chapter 9 and the Afterword to the paperback edition, Verso, 2017.

[14] For a discussion of these topics, see my articles ‘Racism & Imperial Anxiety: US vs Huawei’, 16 April 2019, here, and ‘China and US Power’, 14 July 2020, here, each one on EconomicsofImperialism.blogspot.com.

The UK’s Singapore-on-Thames Delusion

I will not spend much time on this topic because it is so ridiculous. But the notion that the UK can become a ‘Singapore-on-Thames’ seems to underlie some Brexit fantasies. Do these have any foundation?

First, here are some basic facts. The UK’s GDP is roughly 8 times bigger than Singapore’s; its population is more than 10 times bigger. Singapore used to be a British colony, and developed from being a key Asian trading hub for the East India Company. The UK is a declining imperialist power. It once had a go-between role for the US in Europe, and still remains a major backer of imperial oppression around the world, but now has its pretensions at diplomatic expertise seen as very irritating.

Singapore sling

In the field of finance, the UK was already a multiple of Singapore’s weight in the world economy before it finally left the European Union: 6 times bigger in international banking, 5 times bigger in FX trading and 30 times bigger in financial derivatives turnover. Whereas Singapore has a regional niche in global finance, the UK has been a leading global player.

It will be difficult, not to say impossible, to further extend the UK’s financial position outside the EU. Any belief that messing up links with the major trading bloc in Europe is a good economic decision – while remaining outside USMCA, RCEP and other trading blocs – would also need to undergo a sanity check.

Some reports have suggested that City of London financial companies contributed a great deal to the Vote Leave campaign in the 2016 UK Brexit referendum. Quite likely some did, though these seem mainly to have been hedge funds and so-called venture capitalists. By contrast, the overwhelming majority of City business, from banks, to life insurance companies, to pension funds and other asset managers, to legal and accounting firms, were clearly pro-Remain.

All City business has benefited from the existing UK tax laws developed over decades. But the hedge funds and so on would have been far less dependent upon EU-related business relationships, or will have dealt more directly with ‘offshore’ centres and Switzerland. That will account for the divided opinion. In the broader corporate arena, with one or two exceptions, businesses were pro-Remain, with only a section of small businesses being pro-Leave. Nevertheless, big companies did little to voice that opinion before the 2016 vote because they did not want to annoy half of their customers.

The end result was that, for reasons explained elsewhere on this blog (see here and here), despite capitalist opinion being greatly against it, the British working class helped enable Brexit, by 52% versus 48% in 2016. A more up-to-date measure of that political outlook can be seen in maps showing the large December 2019 Conservative election majority vote in England.

Where does this leave Singapore-on-Thames?

Singapore has exports that are some 90% bigger than its GDP, whereas UK exports are ‘only’ around 30% of GDP. So, onwards and upwards to Singapore-on-Thames? As you might expect, there are a few problems with this perspective.

Singapore is a small country and an entrepôt centre, with lots of re-exports. This produces a total exports number that is much higher than GDP because it is not based on the value-added measure that goes into a GDP calculation. In theory, the UK could also become an entrepôt centre, but the economic benefits of such a move are very limited.

More than that, any such move implies enforcing a low labour cost economic strategy. Evidently, that implies cutting labour costs. This is at the heart of capitalist economics, and has been explicitly embraced by Conservative pundits.

To use the UK political cliché, the EU would also be very clear in protesting against this kind of policy for being in breach of the ‘level playing field’ of fair competition between the UK and the EU post-Brexit. The EU was once grateful to the UK for proposing policies to cut labour costs, but now that is seen both as destabilising an already shaky EU economic system and as an unwelcome, aggressive trade policy from an ex-member of the club.

One could imagine some benefits of a Singapore-on-Thames – for example, free wifi and a good transport system, like in the real Singapore. But stupidity is its own reward, and the reality is going to be much harsher.

Tony Norfield, 20 January 2021

Index of Power Update, 2018-19: China #2

[Note added 14 September 2021: An update to the Index of Power, with some improvements to data, especially that of using total foreign investment assets, not just FDI, is published here.]

 

This is an update of the statistics for my Index of Power, using data for 2018-19 and discussing what a country’s ranking reflects. The major change is that China’s rank has shifted up and it has now taken the UK’s place at number 2 in the world. The US still remains in a commanding position, well ahead of the other major countries, but its lead has shrunk in the latest reading, especially versus China. Countries in positions four to ten, when the Index was last updated in early 2018, remain in the same rank positions with the new data.

The Index highlights the dramatic inequality of power in the world. In the top group, only China, the UK, Japan, France and Germany have an index value that is more than 20% of that for the US. Only 30 countries have a total index value that is more than 2% of the US number; the world’s remaining 170 or so countries count for even less.

Index of Power

Index evolution

I first constructed this Index in early 2012 and named it an ‘Index of Imperialism’. My objective was to use readily available data to gauge different dimensions of the international status of countries. Since then, I have changed the title of the Index and also some of the components, but the underlying logic is the same.

The title was changed to the ‘Index of Power’ because this seemed a better description of what it was measuring. It didn’t make much sense to call the lower ranking countries ‘imperialist’, but only little ones, or having an implicit assumption that the higher a country’s ranking, the more imperialist it was.

I had always pointed out that any description of a country as imperialist would have to depend upon first assessing its role in the world economy. Taking Luxembourg as an example, it is only a small cog in the world system (number 24 in the new Index), but it is an integral part of the European-based imperial machine and plays a particular role within it. The Index number, nevertheless, is meant to reflect relative positions of power in the world economy.

Which brings me to which aspects of political and economic power are covered. Largely they are based on economic data, and they are also biased in favour of those measures that reflect a country’s international reach. These do not directly measure political power, but it is evident, for example, that a bigger economy will tend to have more weight in its dealings with the rest of the world than a smaller one. I would have been happy to include some more directly political components, but could think of none that seemed relevant and easily measurable for a wide range of countries. That the top fifteen countries ranked by the Index include all the permanent voting members of the UN Security Council, and also the G10 members, confirms that there is a broad correlation of the components used with real-world political power.

The five original components of my Index in 2012 were: GDP, foreign direct investment assets, military spending, the importance of a country’s currency in central bank FX reserves and a country’s ownership of the major international banks. The first three – GDP, FDI and military spending – have stayed in all the later versions. But I found much better and more representative measures for the final two components during my later investigations, including data for more countries. For these latter two, I now use the global volume of trading in particular currencies and the value of international bank loans and deposits centred in different countries.

These revised Index components were fully discussed in my 2016 book, The City, Chapter 5, ‘The World Hierarchy’, including the rationale for the particular data items used and the limitations they had. Yet, people being what they are, some writers have still managed to misinterpret what I said, so I will again review the key points below. I will also note the small amendments to how I have dealt with data for China in the latest Index values (which, however, is not the reason for China’s rise to #2), and discuss how to interpret China’s position in the world economy.

Index construction

The five components of my Index of Power are:

GDP: GDP measured in nominal US dollars, using IMF data for 2018.

FDI: The stock of foreign direct investment assets, using UNCTAD data for end-2018.

FX: The volume of global transactions in a currency, with April 2019 as the base period, using the latest BIS survey of September 2019 (euro transactions are allocated among the 19 euro members).

Banks: The outstanding international loan assets and deposit liabilities of banks in a particular country, using data from the BIS for end-2018.

Military: the military spending of countries, measured in nominal US dollars, using data from SIPRI for 2018.

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Three data components – GDP, FDI and Military – are available for most countries in the world, although the data may be a little old or not available in some cases. The two other components are available only for a smaller group of countries – 57 for FX (including all euro members) and 47 for Banks – although it is very likely that the countries left out will have minimal readings.

Each of the components is weighted equally in the Index. The country with the largest component reading gets a score of 100 for that item, and other countries get a scaled down number. So, for example, if Country A has the biggest GDP, then it is 100, and country B, with a quarter of that GDP is 25. To complete the Index, components are added up for each country then divided by 5.

If a country is the biggest in all components, its final Index number will be 100. That is almost true for the US, which has a value of 92.4, with the biggest GDP, FDI, FX and Military, but coming second to the UK as a location for Banks (rather, international banking).

Below I discuss the limitations of the available data used for the index components.

GDP

One can always doubt whether an economic statistic really does measure what it claims to measure. Nevertheless, Gross Domestic Product (GDP) has the big advantage of being an easily available item of data for almost all countries. For my current purpose, one problem with GDP is that it overstates the value of output that accrues to a particular country when it has net payments of income to foreign investors, and understates that value when the country has net income from foreign investment. For example, Ireland’s GDP is overstated in this respect, because it has to make big payments to foreign investors – more is produced in the country than ends up staying there. By contrast, Norway’s GDP underestimates how much revenue Norway receives because it gets big net payments from its foreign investments. An alternative measure, GNP, includes that difference, but is much less easily or widely available.

In any case, it is worth pointing out that GNP and GDP do not allow for the way economic data count value produced. As John Smith pointed out, these measures are better understood as measuring value appropriated by a country, rather than value created in that country.

GDP does not measure a country’s international influence directly. But a country’s ‘weight’ in the world economy is an important factor in its potential influence, and GDP is one measure of that weight. It is also better to look at nominal GDP, not on a Purchasing Power Parity basis, as a truer measure of this global weight. You cannot buy anything on the world market with PPP dollars, which do not exist.

GDP’s value as a component of a power index can be seen in another way: one can look at GDP as measuring population multiplied by GDP per head of population. This allows for the fact that in the world economy people count only insofar as they also have incomes, and how much income!

In the case of China’s GDP, the number I have used is the GDP of China itself, plus that for Hong Kong and Macau, which are counted separately in official data. Macau is a new addition compared to the last Index calculation, but this increases China’s total index number by less than 0.1.

FDI

Foreign direct investment is one measure of a country’s foreign ownership of assets, and its ability to exploit others in the world economy. However, especially given the registration of FDI in tax havens, a problem is that not all of the ultimate country owners of these assets are identified. In the case of the Republic of Ireland and the British Virgin Islands, and also for some other countries, they would score relatively highly on this index measure, but little of the FDI recorded as coming from these locations is owned by their residents.[1] Also, FDI is distinguished from portfolio investment in official data. To count as FDI, the investment has to account for more than 10% of a foreign company’s assets; otherwise it is counted as ‘portfolio’ investment.

Portfolio investment in equities and bonds is huge, but data covering it is much more patchy than for FDI, and is even less likely to identify the ultimate country-based owners. A very high proportion of portfolio investment is done through global investment funds that also make use of tax havens.

Another weakness of FDI data is that it does not include the economic privileges in economic relationships that major companies in the rich countries have with their suppliers in poor countries, or others in their ‘supply chains’, privileges backed by their states in international trade and investment deals. This omission is difficult to rectify, but the FDI numbers are one measure of a country’s international reach, and so will likely be correlated also with such privileges. I use FDI data as a rough guide to a country’s ability to exploit labour and resources in other countries. Though it has obvious flaws, I have not found any better data with a wide international scope for this purpose.

Data for China raise a problem under this heading. Some of China’s FDI is into Hong Kong, and some of Hong Kong’s is into China, so just adding up the two figures would exaggerate the international reach (outside China/HK) of the FDI for all of China. Previously, I included only China’s FDI number and left out that for Hong Kong, thinking this would give a decent estimate of the number for China as a whole. After recently finding a report on the source and destination of the FDI stock, it turns out that it did. Using figures in that report for the FDI stock at end-2018, I am confident that the latest FDI index component for China as a whole is reasonably accurate.

FX

Every three years, the Bank for International Settlements conducts a survey of the trading in foreign exchange. It is the most comprehensive account of how far a country’s currency is used in international markets, something that I think is one important reflection of that country’s international influence. As discussed in The City, Chapter 7, ‘The Imperial Web’, there are certain market privileges that accrue to a country’s companies and governments if their currency is used widely in the world.

This updated Index of Power uses the latest BIS survey published on 16 September 2019, with a base month of April 2019 for counting the volume of trading. As in previous Index calculations, the US dollar is by far the dominant currency used worldwide, being involved in 88% of all transactions in 2019. By comparison, the euro, consisting of 19 countries, is involved in just 32% of all transactions. (Note that two currencies are involved in an FX deal, so the total shares add to 200% when counting all of them) The Index weight for the euro’s FX component is allocated among all euro members according to their relative GDPs.

In the latest 2019 survey, the market share of the Chinese renminbi (CNY) has remained at 4%, the same as in 2016. It remains the 8th most traded currency, up from 17th in 2010. Given that part of China’s territory is Hong Kong, which has its own currency the Hong Kong dollar (HKD), I have had to judge how to use data on its trading. For simplicity, I have just added up the two numbers for the CNY and HKD. This boosts the China ranking, since the HKD’s share of currency trading rose from 2% in 2016 to 4% in 2019. But this does little to exaggerate the figure for China as a whole. Not all CNY or HKD currency trading is in the CNY versus the HKD, and the FX component has only a small impact on China’s overall index number when divided by five.

Banks

International bank lending and borrowing based in a particular country is another measure of a country’s importance in the financial sphere. It does not include other bank activities, or the operations of other financial institutions, but the scale of such borrowing and lending is a reasonable proxy for a country’s international financial status. That conclusion would have to be questioned when a country is the base for large-scale international banking activity that is operated almost exclusively by foreign banks, since, usually for tax reasons, the country is favoured as a financial dealing hub.[2]

As noted before, this is the only index component in which the US falls short of the top position, coming in second behind the UK. That may well change in future with the impact of Brexit, if/when it goes ahead, on reducing the operations of banks based in the UK, especially with regard to the rest of Europe, an important part of their business. But it was true at the end of 2018. While banking activity in the US is much bigger than elsewhere, a large portion of it is oriented towards the domestic US economy, so does not count in this index calculation.

The China-Hong Kong relationship emerges again in how to deal with the data for international banking. Hong Kong has a slightly bigger international banking sector than China, having initially been developed as a regional commercial and finance hub for British imperialism well before the growth of mainland China’s banking business. I do not have enough information to judge how much of their ‘international’ dealing is between each other and how much is with external countries, and have taken the simple approach of using an average of the index score for China and Hong Kong as an estimate of the external number for China as a whole.[3]

Military

Big spending on the military does not necessarily mean that a country has military clout and an ability to intimidate other countries, but it usually does. Despite the record of exorbitant cost overruns in military projects, ships crashing into each other and missiles or missile defence systems that don’t work, the scale of such spending is a measure of military power, the most explicit political component of my Index of Power.

As before, the US is by far the biggest spender. China comes second, but with less than 40% of the US number. The only other countries with even around 10% of the US number are France, Russia, Saudi Arabia and India. On the latest SIPRI numbers, the UK was at 7.7%.

One might well argue that China can buy more firepower with $1bn than the US, given cheaper costs and probably less scope for armaments producers to milk the taxpayer. Also, while China is likely to be behind the US in overall technological capability, this may not be true in all areas. Many of the US advances could prove to be unworkable, or be as effective as the Boeing software ‘upgrade’ to its 737 Max jets.

US military power is also boosted beyond its own huge spending by how it encourages other capitalist countries to join in and follow its strategic aims, in particular with NATO. This acquiescence adds to the influence it can project by the large number of military bases it has all over the world,

China: Duck theory versus historical materialism

With China at number 2 in my global power ranking, the question arises as to whether it should be considered an imperialist country. My view is that it should not. Nevertheless, this is a big topic that I will deal with only summarily here, noting what should be taken into account when deciding how to characterise China.

Firstly, it is not so much the actions of a country that should define it as the dynamic of the economy and society that produces such actions. In turn, this will also depend upon the international situation and a country’s position in it as much as on the internal political system. The term ‘imperialist’ should apply only to those capitalist countries with a dominant position in the world that are, directly or indirectly, part of the system of oppression, control and violence that acts to keep that system in place.

China is not a fully-fledged capitalist country with politicians and companies joining in the carve up of the world. Its newly minted billionaires do not have free rein to do more or less what they like within China, and even its privileged bureaucrats could find themselves jailed, or dead, if they step too far out of line with what the ruling party thinks is best for the country.

Critics of China would seem to be able to point to many things to justify calling it imperialist. For example, there is China’s political oppression of the 11 million population of the Uighur ethnic group in its Xinjiang region; China’s many deals for raw material supplies from Latin America and Africa; big loans to corrupt politicians for infrastructure projects that might later be paid off by being switched into Chinese ownership of ports, etc; its attempt to control territorial waters in the South China Sea, including creating a number of islands, and its growing volume of foreign investment.

But this is only a ‘duck theory’, pointing to similar things that the classic imperialist countries have done, or are still doing, to conclude that China is the same as them. In some respects, China may ‘look like a duck’, ‘swim like a duck’, etc, but that does not mean it has duck DNA. In other words, the dynamic of China’s economic and political system is not that of an imperialist power.

Above all, the imperialist dynamic is based upon a country trying to boost capitalist profitability and being in a position to do so, especially through the control of foreign markets and areas of investment. By contrast, China’s policy since the founding of the People’s Republic in 1949 has been largely defensive, trying to develop without being dismembered by the major powers, as it had been throughout the previous century. Its objective is to find a means of surviving in a hostile world economy run by the major capitalist countries.

Initially, this had disastrous results, as with the ‘Great Leap Forward’ in 1958-62 and millions of deaths by famine. By the 1970s, however, China began a cautious engagement with the world economy. It aimed to limit the impact of market forces in special economic zones, restricted the influence and property rights of foreign businesses, held back the formation of a domestic capitalist class and tried to build the foundations of an industrial economy through state spending and investment plans. Despite many negatives, including lots of pollution and wasted resources, this proved to be successful. It brought hundreds of millions of people out of grinding poverty and ended up with China as a major producer, one that has even begun to be successful in areas of modern technology, such as 5G mobile communications – much to the alarm of the US!

This striking record does not endorse China’s often repressive, and sometimes politically stupid, government policies. But it should serve at least as a counter-weight to the critiques of rich country, liberal democracy enthusiasts who are so eager to find fault with China, but who pay little or no attention to the depredations of their own governments, and all too often act to echo the anxiety of their own ruling elites that China has out-competed them.

Conclusion

The Index of Power is a summary way of representing each country’s importance in the world economy and can be used to track changes in status over time. For the top 20 countries there had previously been minor changes in ranking. This time around, the major changes concern the advance of China and the slipping back of the UK. Such a development counts for more than it might at first appear to do, because it reflects the diminished influence of the Anglo-American system.

Both changes in status were fairly predictable, with economic growth and investment boosting China’s, while Brexit turmoil has helped lower the UK’s rank. That has not made it any easier for the US. While the US index value remains way ahead of all the others, it has shrunk in absolute terms, and particularly in relative terms with respect to China.

This move, under way for a number of years, has been reflected in an increasingly aggressive policy of the US government towards China. The US does not only have multiple military bases surrounding China, in Okinawa, Japan, South Korea and elsewhere (China has none around the US), it has also stepped up its more specifically economic offensive. A key US target here is China’s flagship telecoms and electronics company, Huawei, and its 5G technology, the latter an area in which US companies are well behind the competition. The US uses its influence over allies and other subordinates to encourage them to boycott Huawei on laughable security grounds.

China is also a problem for the US in other respects. For example, it has recently offered Iran, a longstanding bête noire of American imperialism, huge investments worth several hundred billions of dollars, in contradiction to US edicts. By incorporating Iran into its mega development project, the Belt and Road Initiative, China is not only ignoring US sanctions, it will also be dealing with Iran in non-US dollar currencies. This puts a further squeeze on US global influence and is another threat to its formerly unrivalled hegemony.

Tony Norfield, 17 September 2019

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[1] For this reason, Ireland is excluded from the graph shown of the top index countries. It would have come in at number 17. Among others, a number of US corporations have done ‘tax inversions’ to incorporate in Ireland and so reduce their tax bills.

[2] The Cayman Islands stand out here, and this territory has also been excluded from the Index of Power graph shown above.

[3] What to do with Macao, a special administrative region of China, is another conundrum, although a small one. I have excluded its data from the bank index calculation for China, although these are part of the BIS country report on banks’ foreign assets and liabilities. Were Macao properly included this would boost China’s total index number a little.

Imperialism by Numbers - Amendment

This is an update to the chart on the ‘Index of Imperialism’ published on this blog six months ago, on 1 May. The change made here is that I use another set of data to account for the international banks in major countries; otherwise the five factors in the ‘Imperialism index’ remain the same. To recap, these were made up from: nominal GDP, military spending, the stock of foreign direct investment, the size of international banks based in a particular country and the global use of that country’s currency in international foreign exchange reserves.

As noted previously, any set of data has its limitations. However, the earlier data I used for banks were based on a country’s ownership of the top 50 international banks and this only covered 14 countries. The new numbers are based on BIS data for the relative size of international assets and liabilities of banks operating in particular countries. They are not limited by the number of banks and cover 19 of the 20 countries in the chart. The BIS also gives figures for bank assets and liabilities by the nationality of the bank. However, these data are for only nine countries, so I did not use them (in any case, they show a similarly ranked pattern to the bank-location data that is used here).

With these new data for international banking, the rank and index value of some countries changes significantly, but in a way that I think better reflects power relations in the world economy. The US is no longer top in all categories; it falls into second place as a centre for international banking, behind the UK . But this still leaves the US as top power, with the UK a distant second. Germany moves up to position 3, China jumps to position 4, now ahead of Japan, and France falls to position 6 from position 3 that it had before. Italy, Switzerland and Canada fall back in their ranking; Netherlands moves up to position 7.

(The chart has now been changed from when first published, with corrected ISO codes for Canada, CA, and Belgium, BE)

Chart: The Imperial Pecking Order

Notes: The height of each bar is given by the country’s total index value, which is then broken down into the respective components. Countries are identified by their two-letter ISO code. Take care, because CH is Switzerland, not China (which is CN), and SA is Saudi Arabia, not South Africa (not shown, as it was ranked number 26).

I would reiterate that the position of an individual country can only properly be understood by looking at its relationship to the imperialist system as a whole, not simply by examining whether its index value is higher or lower than another’s. It would be foolish to say that a particular index number means a country is imperialist, while one that is a certain amount smaller shows that it is not. The index components summarise only particular dimensions of the system. Different measures would produce different results, and any index measure would have a problem grasping the dynamics of the system. However, the chart I use clearly indicates that a very small number of countries are head and shoulders, and elbows too, ahead of all the others in the world. Most other measures of international power would show similar results.

Tony Norfield, 1 November 2012

Stubborn Facts

Lenin was fond of the English saying: ‘Facts are stubborn things’. The accuracy of many so-called facts may be disputable, but it can be instructive to report on the facts published by official institutions of imperialism, ones that nevertheless throw a not very flattering light on today’s realities. This article is a complement to the ‘Imperialism by Numbers’ article I published on this blog on 1 May. It is also an update to, and an extension of, some data I reported in ‘What the “China Price” Really Means’, published on 4 June last year.

The first set of facts is shown in Chart 1. These are data that cover average hourly compensation costs, where ‘compensation’ means not only wages paid, but also the additional employer payments for social benefits such as unemployment insurance, medical insurance, and old-age pensions. The source is the US Bureau of Labor Statistics (BLS), which carried out this analysis to calculate for US corporations the total costs of employing workers in a range of different countries. The details show that it is not only wages paid that are higher in the richer countries; employee benefit costs are much higher too. Chart 1 gives index numbers based on 100 equalling $34.74, the BLS figure for the average hourly compensation paid to US manufacturing workers in 2010. Countries’ labour costs are shown as bigger or smaller bars, with the height of each bar proportional to the 100 level compensation cost in the US.

For China, average hourly compensation costs are estimated at $1.65. This was less than 5% of the costs of US manufacturing employees in the same year! Several years earlier, China’s figure was closer to 2% of US costs, but recent sharp wage rises in China have narrowed the gap a little. India and Sri Lanka have a still smaller ratio of US compensation costs, near 4% and 2%, respectively. Labour compensation costs are higher in the Philippines and Mexico, but Poland is the first country from the low end of the chart that has compensation costs that are more than 20% of the US level.

By contrast, the US, Canada, Japan and the rich Europeans tower above all the other countries shown in the chart. This group includes the so-called G7 countries, the major powers still running the world economy. Switzerland, Belgium, Germany and France have compensation levels more than 20% higher than in the US. One factor influencing the country ranking is the value of a national currency in the international market. However, the gap between the top ranked countries and the bottom ranked ones is so large that this currency factor has little influence on the overall distribution.

Surprisingly, the BLS’s data do not include any African country. Perhaps this is a problem of getting comparable statistics. For example, this is the reason that the BLS does not include figures for China and India in its standard country comparison reports, though it gives some information separately. However, Africa has also been a less important continent for US economic expansion overseas than elsewhere, and the BLS data focus far more on Europe, Asia and Latin America.

Chart 1:          Relative International Labour Costs in Manufacturing, 2010

                        (Hourly costs, US = 100 is $34.74, including non-wage compensation)

Sources and notes: US BLS. 2010 estimates based on 2007-08 BLS data are made by the author for China, India and Sri Lanka. Note that 2-letter ISO codes are used as country identifiers, and that CH refers to Switzerland, not China (which is CN).

Even the relatively minuscule labour costs for the poorer countries exaggerate the actual earnings of millions of workers. The Indian data are boosted by including only the so-called ‘formal sector’, that is the sector made up of generally larger, more organised companies that have some form of regulation and government supervision – including being included in statistical surveys! By contrast, the ‘informal sector’ is unorganised, on a much smaller scale and may include a family ‘business’ that consists of the parents, children and dependent relatives. This sector is not included in most data surveys, but it accounts for a large share of employment at much lower wages than in the formal sector. The BLS reports that 80% of India’s manufacturing employment is in the informal sector.

For China, the BLS calculations of hourly compensation do include estimates for the ‘informal sector’. In Chinese statistics this is listed under the heading of ‘town and village enterprises’ (TVEs), whereas the larger, more regulated, sector is under the heading of ‘urban enterprises’. The TVEs accounted for 70% of the total workforce, with 79.1 million workers employed in 2006; the urban enterprises sector employed the other 30%, or 33.5 million workers. Not surprisingly, in 2008 the average hourly compensation was just 82 cents in the TVEs compared to $2.38 in the urban companies.[1]

American and other foreign corporations will tend to set up in the formal sector, and will likely be paying the ‘higher’ wages. But they will still benefit from the mass of even cheaper labour from poor families who work for them indirectly, either by providing services for the larger companies, or by being what Marx called the ‘reserve army of labour’ for the formal sector. The divergence in labour costs for countries other than China, India and Sri Lanka may be less extreme. For example, South Korean costs are just below half the US figure. But there is still a very big gap.

If we look at the broader economy, rather than just manufacturing, the same picture of relative incomes holds. In fact, there is a 95% positive correlation between the figures for manufacturing compensation and for a country’s per capita GDP.[2]

Chart 2 gives a snapshot of global income inequality, based on a rough estimate of the Lorenz curve for 183 countries comprising 6.7 billion people.[3] World Bank average GDP per capita data for each country are used as the input. This method may understate global income inequality, because it assumes that everyone in country A gets the average per capita income for country A. Nevertheless, it has the advantage for our purposes of putting the different countries in focus.

Global average GDP per capita in 2011 was $9200. Of the 183 countries included in the data, 124 countries with a population of 5.0 billion (75% of the world total) had an average income below this, while 104 countries with a population of 4.8 billion had an average income below $5000 in that year.

Chart 2:          The Global Lorenz Curve, 2011 (based on GDP per capita)

Source and notes: World Bank. Data for average GDP per capita in 2011 for 183 countries is used as the basis for calculating the cumulative income distribution curve, the Lorenz curve.

If we take a common measure of inequality, the Gini coefficient, and calculate this from the data in Chart 2, the figure shows the expected high level of inequality: close to 66%. It would be more like 70% if the inequality of component country distributions were also allowed for. In that case, this measure of income inequality on a global scale is on the same level as that in the most unequal of countries for which Gini coefficient data are available: Namibia.

To give specific examples, in 2011 the GDP per capita of Switzerland was put at just over $70,000, while the US number was around $47,000, Germany was $43,000 and the UK was $39,000. Compared to these figures, China was close to $4000 and India to $1300. The data from the World Bank, the IMF, the CIA and other organisations have some differences, and the figures get revised, but the rankings and the income gaps are very similar from all sources.

The basic, and not surprising, fact is that the world economy is very unequal. When we look at the mechanisms that underpin this fact, we find that the inequality has much less to do with differences in labour productivity than with the way that some countries get privileges in the world economy at the expense of others.

Tony Norfield, 22 May 2012

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[1] See BLS Monthly Labor Review, April 2009. The data noted here are for 2006.

[2] Using the full set of BLS data for 34 countries’ compensation costs in 2010, I found there to be a 0.951 correlation coefficient with the respective countries’ per capita GDP in 2011 as reported by the IMF. This shows that the manufacturing wage/compensation is closely related to the broader economic income of the country. This is a sign that the richer, and usually imperialist, countries can afford to pay their production workers more. As the ‘China price’ article indicated, this has more to do with imperial power than being based on higher productivity.

[3] The Lorenz curve is closely associated with the ‘Gini coefficient’ of inequality mentioned later. It is a common, summary graphical measure of inequality. The 45-degree line indicates where 10% of the population gets 10% of the total income, 20% gets 20% of the total, etc. As such, it represents a line of equality of income in the population. The divergence of the Lorenz curve from this 45-degree line shows the extent of inequality. Wikipedia has a general explanation of this statistical measure and its relationship to the Gini coefficient.

Imperialism by Numbers

There are close to 7 billion people in the world, in some 200 countries. However, a very small minority of rich, powerful countries - or rather, the rich and powerful in these countries - run the world economy. The way in which this happens is the focus of my research and the subject of many articles on this blog. In this article, I present some statistics to highlight the stratification of the world economy between the small number of imperialist powers and the rest. I welcome any comments on this analysis.

Five features *

Lenin outlined five features of imperialism, from the decisive role of capitalist monopolies, to the development of ‘finance capital’ and the export of capital, to the territorial division of the world between the biggest capitalist powers.[1] Although the form of territorial division has changed, with the end of colonial empires, these features continue to describe the world economy. Here I set out five complementary statistics for examining imperialism today from data for 180 different countries.

The first is nominal GDP. This measure of economic output is the most widely used in official statistics, though it has a number of drawbacks, not least that it is a measure of value appropriated rather than value created.[2] However, it is an easy number to obtain for the size of economic output in a particular country. The degree to which it is exaggerated by value appropriated from elsewhere will also be an advantage if we are to use it as a measure of global economic power.[3] Of course, countries with a large GDP are not necessarily rich – they might have a large population with a very low average income. Nevertheless, a high GDP ranking indicates that the country has weight, and presumably some influence, in the world economy.

The second measure is the size of military spending by each country. This spending might be for internal repression rather than for external power projection, but it is notable that the five biggest spenders in the world are also permanent members of the UN Security Council, each with a veto power on UN decisions. In general, it looks like a good measure to use as an indicator of imperial status.

For the third measure, I use figures for the stock of foreign direct investment (FDI) owned by each country. These figures will not fully reflect a country’s external economic power. For example, they exclude privileges and benefits that may come from commercial and trading relationships that may have little to do with owning companies and property in other countries. Neither will the FDI numbers reflect the power, influence and revenues that come from owning foreign portfolio assets (equities and bonds). However, the FDI data can be used as one guide to how far a country is able to exploit workers in other countries.

The final measures are used to reflect the financial power of different countries. One is a country’s ownership of the top 50 international banks; the other is the importance of a country’s currency in central bank foreign exchange reserves. These measures are far from comprehensive, but they should give an indication of how far a country’s banks are important on the world stage and how far its currency is accepted internationally.[4] Probably the main dimension missing from these particular measures is how far a country is able to utilise the financial sector to appropriate value from the world economy when this does not necessarily come via its own banks, or from the use of its own currency.[5]

Each of the statistical measures I use for the index has problems, but they offer a simple way in which to sum up key features of a country’s economic and political position in the world. In order to standardise the data for comparison purposes, I have set the highest value under each heading at 100. This means that if, for example, one country has the highest GDP, then its value will be shown as 100. Other countries with smaller GDPs will be shown as a proportion of that number, as 30, for example.

The five measures used are given equal weights, and the total index is an average of the individual values. This summary index is a guide to a country’s status. Results for the different countries show dramatically different values, and there is a clear hierarchy between the small number of countries at the top and the remainder with index values far behind.

Table 1: The Imperialism Index

Notes and sources: Calculated from original IMF, SIPRI, UNCTAD data. GDP data were for 2011, military spending data for 2010, FDI stock for 2010, ‘top banks’ for 2009, central bank FX reserves for end-2011. Figures for China include Hong Kong. The total index is an unweighted average of the components.

Table 1 shows the results for the top 20 countries ranked by their total index value. The US stands out at the top of each component measure, with a total (average) score of 100. Next in line is the UK, at a mere 32 points. The UK ranks close to the US only in the significance of its banking sector, and it is a distant second in terms of FDI holdings. France is not far behind the UK, spending slightly more on the military and having a higher GDP, but it scores less on the other measures than the UK. Germany is ranked a bit lower than France. This latter relationship may be surprising, since the French economy is smaller than Germany’s and more central banks hold German securities than French. But France has a higher rank in terms of military spending, FDI and its international banking position. This correlates well with France (like the UK) being a more active promoter of war.

Japan ranks at a significant margin below Germany in these measures of imperial power, with an index value close to 23. While Japan is the second largest world economy in terms of nominal GDP, the prolonged stagnation in Japan’s economy has damaged its banks and reduced the scope for its corporations to invest abroad.

China is a significant member of the top group in this classification, ranking 6^th at just below 20 index points. Its GDP is half the size of that in the US, though ‘purchasing power parity’ measures put it much closer. Its military spending is the second largest in the world, though still less than 20% of that in the US. American strategists are nevertheless concerned because China can mobilise a lot of cheap manpower for the military, and the gap in hardware capability may not be as big as the sub-20% figure would suggest. The FDI figure for China mainly consists of investments from Hong Kong. These may also be invested in China, so this may incorrectly push the overall index value somewhat higher. However, the leverage that Hong Kong gives China in commerce and finance should not be underestimated. Even though China has a position neither in the measure of top banks, nor in that for central bank holdings of its currency, these factors are bound to change in the next few years. China is slowly developing its financial system, the CNY is being used more in international trade relationships and Chinese banks are bound to play a bigger role in international finance.

Below China, it is a significant drop before the next group of countries, each with index values of less than 12. These countries do not count for much individually on these measures, but they can gain some influence by being part of the European Union (or euro) group of countries, or by being a major banker and foreign investor (Switzerland), or by being politically close to the US (Canada and Australia).

Of the so-called BRIC countries, China has already been placed. Russia, Brazil and India each rank much lower, though each has its own particular advantages in the global system (Russia’s being military). Saudi Arabia is perhaps a surprising element in the top 20 countries, but that is how these numbers work out. The close links of the Saudi royal family with US imperialism mean that it is hard to see this country as an independent player. Its position in the table is due to its military spending that reflects the subsidies it offers to defence contractors in imperialist countries, though it has also played an active role undermining protests in the Middle East, especially in Bahrain.

The following chart shows the same data and illustrates clearly the imperial pecking order. The UK, France, Germany and Japan each has an index value of less than one-third that of the US, but they are each several times bigger than countries further down the scale. Remember that this chart only shows the ‘top 20’ countries. The 20^th member, South Korea, has an index value of just 2.1, a fiftieth of the US value and less than a tenth of any of the major European powers or Japan. But further down the list (not shown) are more than 100 countries with an index value of less than 0.1, ones that would be mistaken for the x axis in the chart!

Chart 1: The Imperial Pecking Order

Notes: The height of each bar is given by the country’s total index value, which is then broken down into the respective components. Countries are identified by their two-letter ISO code. Take care, because CH is Switzerland, not China (which is CN), and SA is Saudi Arabia, not South Africa (this country is not shown, as it was ranked number 26). The countries are listed in the same order as in Table 1.

(This chart has been corrected. When originally published, the ISO codes for Canada and Belgium were entered incorrectly)

 

Conclusion

The significance of the US in the world economy is not news to anybody; neither is the fact of inequalities in wealth, power and influence between different countries. However, these statistics highlight the divergence in a striking manner. Although the figures are for recent years, in most cases the leading imperialist countries have been in their positions for decades. This is certainly the case for the US and the UK. They did not win their leading role by winning a popularity contest, but by moulding the world in their own interests, using their economic power and the threat or use of violence.

One final point on the index of imperialism presented here. The position of an individual country can only properly be understood by looking at its relationship to the imperialist system as a whole, not simply by examining whether its index value is higher or lower than another’s. It would be foolish to say that a particular index number means a country is imperialist, while one that is a certain amount smaller shows that it is not. The index components summarise only particular dimensions of the system. Different measures would produce different results, and any index measure would have a problem grasping the dynamics of the system.

Tony Norfield, 1 May 2012

Note on 3 December 2018: I have made some amendments to this index calculation and also updated the results to account for new data. The most recent picture is shown here.

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[1] See Imperialism, the Highest Stage of Capitalism, Chapter 7 ‘Imperialism as a special stage of capitalism’. Available on http://www.marxists.org/archive/lenin/works/1916/imp-hsc/index.htm

[2] See John Smith’s analysis, noted in ‘Imperialism and the Law of Value’, on this blog, 3 December 2011.

[3] GNP would be a better number, since this also includes net property income from abroad. However, GNP data are less readily available.

[4] In the case of the euro, I have divided the latest figures for total central bank reserve holdings of euros into components reflecting the proportions of Deutsche marks, French francs, etc, held in 1998.

[5] I am thinking about Britain here! See ‘The Economics of British Imperialism’, 22 May 2011, on this blog.