Mapping the World's Changing Industrial Landscape

DONALD HEPBURN, fellow of International Economics at Chatham House traces the changes in the world’s industrial landscape over the past 25 years and states that globalization, lower trade barriers, transport costs and a surge in international capital flows were a powerful enabler of transformation of the industrial landscape. He states that manufacturing shifted from industrialized to developing countries with developing countries increasing their share from 20% in 1995 to 28% in 2008 while industry’s share of world value added fell from 35% in 1985 to 27% in 2008 driven by fragmentation of the operations followed by outsourcing
In his Chatham House article, "Mapping the World's Changing Industrial Landscape", he states that that while demand drivers such as demographic factors such as urbanization, ageing, income growth and elasticity, and changing tastes had the potential to transform large swathes of industries such as consumer durables, automobiles, aviation, and health services; supply drivers such as availability of skilled labour, capital, infrastructure and supportive business environment could determine growth of industries and services within the developing countries. He cautions that the shift of industry to developing countries could be slowed by increased transport costs, changes in exchange rates and a backlash against globalization in developed countries if growth proved elusive and unemployment stayed high.

India-China-Africa triangle

CALESTOUS JUMA, professor at Harvard University advocates a reconstruction of Africa’s relations with the rest of the world through its long-term economic objectives of adding value to natural resources, expanding manufacturing and reinvestment of revenues in infrastructure and technical training.

In his op-ed in Kenya’s The Nation, “Africa’s solution to Asian interests”, he states that a foreign policy that focused relationships with China and India on economic issues such as infrastructure, skills transfer and market access would ensure Africa developed enough to become a global economic actor. in the wake of significant expansion of the Sino-African and Indo-African bilateral economic relationship.

He concludes with a call for tripartite consultations to create a transparent platform for economic diplomacy and diminish perceptions of Sino-Indian competition in Africa, in the wake of a significant and parallel expansion of Sino-African and Indo-African economic relationship.

Geo-economics redux

Mark Thirlwell, director at the Lowy Institute avers that the current international environment marked by an increasingly dense entanglement of issues related to international economics, national security and foreign policy lends itself to a return to the idea of geo-economics with key issues around multi-polarity, pax mercatoria, globalisation, state capitalism, resource scarcity, risks arising from the global financial crisis. In a Lowy Institute Perspectives article, "The return to geo-economics: Globalisation and national security", he concludes that this could lead to two potential consequences: an improved quality of analysis with inputs from economics, foreign policy and security while these would be tempered by underlying assumption of zero-sum outcomes.