Discussion in 'Americas' started by Vinod2070, Apr 20, 2009.
A good article that shows that irrespective of the hype about China, its still the USA that is the economic powerhouse of the world.
Obviously the relative balance of power is shifting gradually but it will take some time before China or any other country can reach where USA is already.
I have been to this Beoing plant. Absolutely fabuluos, and worth the cost of the tickets. Unfotunately they do not allow cameras, but whatever I saw is multiple times better than the photo here.
Well the author of the article in the first post is only partly right. The US can be said to be the leading manufacturer only in $ terms. In $ terms, it may far outsell the Chinese. But in tonnage terms, Chinese exports probably dwarf those of the US.
What do you mean by tonnage terms?.
In terms of weight. "Tonnes" of material exported. To put it simply, the chinese may manufacture and export a thousand coffee cups, but in value terms, they're less than half that of a professional software like Microstation.
Eventually, chinese will end up polluting their country with their low-end stuff manufacturing while the US will manufacture high-end stuff without environmentally polluting itself. But in the end US comes out winner while China will end up providing more jobs to its citizens but at low wages.
Not really. Every country at some time was an industrial economy, based on manufacturing. Dickens' writings during industrial Britain are famous. The difference here is that the US has now evolved into a post industrial, service based economy. China still hasn't reached that stage (and it will be many years before it does).
The logical course of economic development is from an agrarian society to a manufacturing, and then a service based economy. India is considered an exception-because the state monopolized many industries, private enterprise stifled, and we remained an agrarian economy till the 1990s. After the 1990s, the service sector took off in a big way because of the large pool of educated English speaking Indians and the rapidly evolving software sector. Manufacturing took off only in the late 1990s and early 2000s after government finally took steps to stimulate that sector.
That is why in India we have a situation where the service sector accounts for a larger portion of the GDP than does manufacturing, which is anomalous for any developing country. A developing country, by definition, has millions of poor, illiterate citizens who need to be utilized efficiently to develop the country, and that can be done only through large scale, low cost manufacturing. China has succeeded fabulously in that regard. In fact, that is the reason many economists early did not think that India's economic boom was sustainable in the long term because the service sector could only employ 100 million educated Indians, and by themselves, they certainly could not transform India. What was needed was to employ the 500 million strong rural workforce in jobs that will not only gainfully employ them by liberating them from their dependence on the monsoon as farmers, but also transform India from an agriculture based economy to one that produces and exports (and thus, reduces imports of) engineering goods, textiles, chemicals, automotive parts etc that earn a lot more in terms of hard currency than do crops.
That's why India needs to start developing its manufacturing sector. The MMS government had recognised this fact, and in the past few years, through incentives and tax breaks, they have managed to set up a strong, but nascent automotive manufacturing industry in India. But reforms have to go much farther-red tape needs to be reduced, labour laws need to be changed, and most of all, the government needs to make sure that incidents like the one in WB where the Tatas had write off hundreds of millions of dollars in investment and shift their Nano plant don't happen again.
That is the whole point of value addition and moving up the value chain.
Its not tonnage of material produced that matters but the value addition and that requires a skilled manpower that USA has more than any other country.
You can just take the example that one watch has more value than a tonne of iron ore (that's what I read long time back). So while India exported millions of tonnes or iron ore, Japan exported us back a few watches is return.
Eventually China will alos have to move up the value chain.
Definitely. But as the standard of living rises in China, the cost of labour will go up, and those companies will find manufacturing in China less attractive. Then maybe they move to other countries like India, Bangladesh etc. At that time, China will also slowly evolve into a service sector based economy.
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