Related to my previous post on foreign debt payments, here's an article from the NY Times (via 3quarksdaily), on how the poorer countries subsidize their richer counterparts. It reports that "According to the United Nations, in 2006 the net transfer of capital from poorer countries to rich ones was $784 billion, up from $229 billion in 2002." The article goes on to explain that reverse foreign aid happens through the following:
1. Investment in US Treasury Bills
2. Honoring international intellectual property agreements.
3. Tax holidays for foreign investors
4. Brain drain (e.g. OFW doctors and nurses)
5. Subsidies to First World agriculture
6. Environmental damage due to global warming.
...and how above phenomenon is a burden to the third world countries like ours.
#1 above seems more relevant to China and the US Budget Deficit, and less relevant to us (unless this eventually leads to a dollar crisis). On #2, i mentioned over at mlq3 that:
"While the focus of the law has been on the pirates, the greater danger lies with the corporations (and their allies in government), who, as agents of Empire, seek to close off the intellectual frontier through strict interpretation and aggressive enforcement of intellectual property laws, in the name of profits. Among scientific and medical communities where open collaboration and information sharing is the key to new discoveries and innovation, restrictive intellectual property laws and practices are emerging as a real threat." (This led into further discussion in that comments section with DJB on this matter.)
On #3, i don't have the article on hand now so i may be mistaken, but i seem to remember that Mar Roxas saying something about giving too much tax holidays to foreign investors. #4 is a known, much discussed issue related to the OFW phenomenon. #5 is a key point of contention when it comes to WTO-related negotiations and #6 is an unfortunate reality that has a lot to do with geography.
A comment in that same post in 3quarksdaily also links to Brad Setser's web blog, who has an article on a more benign (to the third world), but related phenomena they call reverse globalization which is a situation where "Emerging markets will be buying companies – not just bonds – in the developed world.". The participants in this are the rapidly developing and relatively capital-rich developing countries like China and the Gulf States.