’Outsourcing’ is driven by the intense efforts of northern capitalists to increase the rate of exploitation of living labour; it is an increasingly favoured alternative to investment in new technology; and it has been a major countervailing force arresting the decline of profit rates in the imperialist heartlands. It has also transformed the global working class: in just three decades, the South’s industrial workforce has overtaken that of the ‘industrialised countries’ to now constitute 80% of the global total Outsourcing has made its presence powerfully felt in the unfolding of the crisis: despite years of huge deficits US interest rates stayed low, a crucial condition for continued growth, for the derivatives take-off, and a major stimulant of the ‘excessive’ leverage and risk-taking widely blamed for the crisis. They were kept low by China and other manufactures-exporting countries who, compelled by what Lawrence Summers called the ‘financial balance of terror’, returned their export earnings to the US government as loans at zero or negative real rate of interest.

It is clear that outsourcing is deeply implicated in the ’global imbalances’ that have fed financialisation. But its significance, and its symbiotic relation with financialisation, goes far beyond this. This paper contends that financialisation and outsourcing, the two fundamental transformations that define ‘neoliberal globalisation’, interact so powerfully that neither process can be understood separately from the other. Indeed, financialisation can no more be separated from outsourcing than exchange-value can be separated from use-value—no matter how much capitalists believe, thanks to these innovations, that they have finally succeeded in making this separation.

A wide ranging review of Marxist and radical analyses of the current crisis reveals that, with a few notable exceptions, this dimension of the crisis is almost completely absent from current conceptions. The paper draws on and extends my PhD research into global outsourcing to help fill this important gap and counter the tendency to see the crisis as financial rather than systemic.

purpose of this paper is to investigate whether the political instability has significant impacts on banking development and operational efficiencies of banks. The security of any country is affected not only by its own conflicts and instability; the neighboring countries, and geopolitical-relevant regional countries also affect them. According to the geographical scope, therefore, three types of political instability indicators, including political instability of individual country, political instability of neighboring countries, and political instability of regional countries, are used in this paper.
In addition, an array of indicators of banking developments, covering asset side, liability side, and combination of asset and liability of banks, are also constructed in this paper. Another four indicators are created to reflect the degree of operational efficiencies of banks, including fund utilization, asset allocation, and liability allocation efficiency.

The empirical results of 49 countries over the period of 1960-2004 show that the type of political instability of individual country and the type of political instability of neighboring countries not only decrease the balances of liabilities and assets of banks, but also create the problems of fund utilization, asset allocation, and liability inefficiency of banks. In contrast, political instability of regional countries increases the balances of liabilities and assets, and also increases all three types of operational efficiencies. No matter how they affect the balance sheet of banks and operational behaviors of banks, all types of political instabilities have essential impacts on banking development and operational efficiencies of banks.

Interestingly, all types of political instabilities consistently generate larger impacts on total liabilities than on total loans. It implies that bank liabilities are more sensitive to political instability. Furthermore, the results show that the impacts of all types of political instabilities on private loans are consistently larger, in the opposite direction, than on the public loans. Obviously, private loans are more sensitive to political instability than public loans. On the liability side, all types of political instability consistently generate larger impacts on total liabilities than on domestic deposits and foreign liability respectively.

Our results show that the negative impacts on bank development and operational efficiency by political instability of individual country and neighboring countries are come from the civil type political instability rather than international type. But the positive impacts on bank development and operational efficiency by political instability of regional countries are come from both civil and international types of political instabilities.

Furthermore, our results show that the negative impacts on bank development and operational efficiency by political instability of individual country and neighboring countries are more significant in developing countries rather than in developed countries. But the positive impacts on bank development and operational efficiency by political instability of regional countries are more significant in developed countries rather than in developing countries. The impacts of political instability on banking development and bank operations are generally different between developing and developed countries.