Clyde Prestowitz in Foreign Policy on the downside of globalization:The Japanese tsunami and the Thai flooding have not only caused enormous human tragedies, but have also underlined the fragility of the global supply chain and the risks attached to it. In the wake of the events in Japan, auto and electronics production was substantially reduced not only in Japan but also in the U.S. and Europe as well because critical parts that were made only or mostly in Japan could not be obtained. Now the Thai flooding is again shutting down production not only in Thailand but in other economies like those of Taiwan, Japan, and Singapore that rely on a few key factories in Thailand for their supplies. For example, Thailand is the world's second largest supplier of magnetic hard drives after China. With that production now expected to fall by 30 percent, computer makers like Taiwan's Acer and Korea's Samsung will be hard hit.The Taipei Times reported on this situation a few days ago.
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The most critical thing is food supply globalization. It's good to have supplement sources of supply or diversified supply sources. Hope the Government has a good handle on this. Could also be a good time to lose some weight.
ReplyDeleteGeorge
I would like to comment on the subject of globalization from a different perspective. Currently what might seem to be a down side is due to the growing sources of production labor. While these labor sources do not have so much buying power to also contribute increased sales, this creates supply greater than demand. If the labor source size cannot grow with the market size, then the economy will fluctuate in it's growth. Theoretically, the economy growth has to stop if the population of consumers do not increase. If growth increases too fast, like the source of labor increased too fast, then there will be certain periods at which the economy will stagnate and fluctuate. The ideal situation for the world to have a globally controlled gradual growth, this really takes planning and coordination on a global scale. The more technology oriented business, the more critical understanding of this is necessary.
ReplyDeleteNow let's look at what happens in these regions of growing labor. They experience the nice high tech stuff, they can't afford the original, so they will look for ways to buy it in a way they can afford. This is bad and good. From a legal perspective, they may be doing what seems illegal, from a market perspective, if they do not go through this period, this labor force cannot grow to become a new market because they did not grow up using the technology. We have seen this happen in Japan, Taiwan, China, and it will happen in other places. The good side is that not only do these labor sources become consumers, they gradually become sources of innovators. But this also creates a challenge as to what will the advanced countries do? Well, hopefully they will become creative enough to think of more things. Possibly a more diversified source of product styles.
George