Blog: Another BRIC in the wall
Dave Leggett | 13 January 2006
Driving home from the office last night I found myself in the mood for cranial stimulation and decided to give Mick Jagger, Roger Daltry and Paul Weller a night off. I switched the radio on to a talk station and something suitable popped up on how the world economy is being reshaped by emerging markets/economies (especially BRICs - Brazil, Russia, India, China). It was nothing new exactly, but it was interesting to hear the views of such luminaries as Jim O'Neil, the economist at Goldman Sachs who coined that BRICs term, Clyde Prestowitz (Reagan administration veteran and author of Three Billion New Capitalists) and C.K. Prahalad.
The picture painted of the next few decades should be sounding a warning to governments and policy makers in the West. If we simply cede the manufacture of black goods, white goods and car making to emerging economies because it's cheap (and as consumers we all love low prices), what will we - or future generations - actually do? Will Europe become principally a tourist destination for future wealth generators in Asia? That was one scenario painted for 2050 by which time emerging markets will have done quite a bit of emerging, even if not yet fully emerged (and Chinese cities will never be like urban America or Europe - possibly much more like Japanese cities though).
Click below for more details and to actually listen to the programme (worth it if you have the time - you can be hip and modern and download it also). One of the participants seemed to think that the French will have to face up to the idea eventually that they have to give up car manufacturing in France because it can take place cheaper elsewhere. If the market is flooded with $30 DVD players, who wants to carry on paying $100 for locally made product? Countries, like companies, have their competitive edges - or not - too.
The economic globalisation genie is out of the bottle, perhaps. But one thing that wasn't touched on was that with economic progress people start to demand higher wages, better conditions (and, often, more political freedoms - tricky one for China that) and get them - see South Korea, Taiwan. The relativities - say on manufacturing, labour costs - could start to shift the other way at some point. Also, growing spare capacity in Western labour markets (unemployment) would eventually make Western workers cheaper.
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