Corporate Giants Dwarf Many Nations

October 11, 1996|By R.C. Longworth, Tribune Staff Writer.

The global economic power of giant companies has grown to the point that they have become bigger than most of the countries where they do business, a new study reveals.

Mitsubishi is bigger than Indonesia, Ford is bigger than Turkey and Wal-Mart is bigger than Israel, said the report from the Institute for Policy Studies, a Washington-based liberal think tank.

In fact, more than half of the 100 biggest economies in the world are corporations, not nations.

Taken together, the world's 200 biggest companies control no less than 28 percent of the globe's economic activity.

These companies are the powerhouses of globalization, which is weaving together the economies of the world's nations. Sailing before this tide, these great firms are moving goods, money and jobs across national borders that become less important by the day.

The multinational companies have the power to go anywhere to make or buy anything to be sold anywhere else in the world. Big countries, like the U.S. and Japan, are trying to cope with this new economic reality. Other countries, as the study made clear, are too small to do anything but try to stay afloat.

For most of them, the might of the big companies challenges their sovereignty and their ability to run their own economies. The global firms, by their nature, can go where wages are lowest, can move their money to minimize their taxes and can wring concessions from governments eager to create jobs.

The study, entitled "The Top 200," was written by Sarah Anderson and John Cavanagh using statistics largely drawn from charts published by Forbes, the business magazine. It measured the companies' annual sales against the nations' gross domestic products.

The 21 biggest economies in the world still are countries, with the United States at the top, Japan second, Germany third and Sweden number 21. From then on, the companies take over.

Two giant Japanese trading companies, Mitsubishi and Mitsui, are the 22nd and 23rd biggest economic powers in the world. Both have annual sales of more than $180 billion, bigger than the gross domestic product of Indonesia, which is in 24th place.

General Motors Corp., with $168 billion in sales last year, ranked 26th, bigger than Denmark or Thailand. Ford Motor Co. was 31st, bigger than the four countries that come next--Hong Kong, Turkey, South Africa and Saudi Arabia.

Wal-Mart is 42nd. From its Arkansas base, the cut-rate retailer had $93.6 billion in sales last year, which gives it more economic clout than Poland, Ukraine, Portugal, Israel or Greece.

Most companies on the list do as much business abroad as they do in their home country. Despite recent expansion into Canada and Latin America, Wal-Mart is the largest world company doing most of its business in one nation.

Altogether, of the 100 biggest economies, 49 are countries and 51 are corporations.

Of the 10 biggest companies, five are Japanese, all trading companies that sell goods made by Japanese companies around the world and buy imports for the Japanese market. No other country except Korea has these big trading companies.

Most other global companies, like General Motors, do their own buying and selling.

The power of the big corporations is concentrated, vast and growing, according to the study. The top 200 had sales last year equivalent to 28.3 percent of the world's gross domestic product; in 1982, that percentage was 24.2 percent, it said.

The combined sales of the top 200 last year were $7.1 trillion, bigger than the American GDP and bigger than the combined GDP of 182 nations--all the world's nations except the nine biggest.

The survey's ranking actually understated the power of the largest Japanese companies by treating firms that belong to keiretsus, the Japanese industrial-banking-trading conglomerates, as separate entities.

For instance, Mitsubishi Trading Co. is the world's biggest company, Mitsubishi Motors is 48th, Mitsubishi Electric is 50th, Mitsubishi Heavy Industries is 71st and Mitsubishi Chemical is 177th.

Taken together, these five branches of the Mitsubishi empire had total sales of nearly $306 billion, which would rank their keiretsu as the world's 16th biggest economy--bigger than India, Argentina or Switzerland. Adding other Mitsubishi branches not listed in the top 200 would only raise this ranking.

The survey said that the top 200 is particularly powerful in five sectors--cars, banking, trading, retailing and electronics.

The top five auto companies--General Motors, Ford, Daimler-Benz, Toyota and Nissan--control 60 percent of all sales worldwide, it said.

The top five electronic firms--Hitachi, General Electric, Siemens, Toshiba and NEC--have more than half of all global sales. In airlines, aerospace, steel, oil, personal computers, chemicals and the media, the five biggest firms have more than 30 percent of global sales.

Exemplifying globalization's emphasis on efficiency and technology to tap markets, the top 200 may have big power, but they aren't necessarily big employers.

General Motors and Wal-Mart are the two biggest employers among American companies, with 745,000 and 675,000 employees respectively. But the big Japanese trading companies, despite their clout, are lean.

The biggest, Mitsubishi, has 13,900 employees, not many more than a midsize retailer like Starbucks.

Overall, the top 200, with 28 percent of the world's economy, employ barely one-third of 1 percent of the world's workers, the survey said.