As
far as I can tell, globalization began in earnest with the Japanese auto
industries in the early years of the 1980s. To understand what happened there,
we need, first of all, to highlight the differences between the manufacturing
requirements of a new industry, and those of a mature industry.
At
the start of the computer industry, all the parts and semi-finished components
were made in the United States. They were also assembled into a finished
product locally. As the industry began to mature, the assembly was done in
countries where labor was cheap. Later, the production and assembly of
semi-finished components followed suit. Now, computers and spin-offs are
designed and produced in whole or in part in several countries, but the
industry is still developing, and cannot be said to have reached full maturity.
The
auto industry, on the other hand, has been around for nearly a century and a
half, and can be considered a mature industry despite the innovations that were
added to it, such as self-parking and self-driving. What makes a car a car is
the fact that it is run by the internal combustion technology. The day might
come when every car on the planet will run by an electric motor, but the auto
industry will still be thought of as a mature industry.
Having
recovered from the shock of the 1973 sudden rise in the price of oil, the
American auto industry was again in a position to challenge its Japanese
counterpart by the early 1980s. It did so by designing and producing smaller
and more fuel-efficient cars. To respond to that challenge, the Japanese came
up with a slew of innovations, having to do mostly with the process of
manufacturing rather than product design.
The
first thing that the Japanese did was rely on their dominance of the small car
market, to devote their attention to producing high quality cars that left the
American novices in this market way behind. What helped the Japanese in this
regard was the introduction of the team-work concept, which replaced the
drudgery of the assembly-line. Later, the robotic revolution changed all that.
But what began the process of globalization in my view, was the failure of the
“just-in-time” concept.
To
be even more efficient, thus reduce the price of their cars, the Japanese
thought of saving money on the storage of the parts they bought from suppliers
and kept in warehouses till needed. The auto industries wanted the suppliers to
send the parts “just-in-time” so as to be taken directly to the production
floor and used right away. Unfortunately for the Japanese, the usual “force
majeure” and other delays caused the assembly line to shut down for hours or
even days for lack of parts.
Just-in-time
being a cure worse that the problem it was trying to alleviate, the Japanese
automakers thought up new ideas to reduce the cost of producing cars. One idea
was to produce the parts they needed in the countries where labor was cheaper
than in Japan. The idea produced good results and was taken up by other
companies in Japan and elsewhere. It expanded with the passage of time to the
global phenomenon we see today.
And
then, the COVID-19 materialized. A whole new debate is just beginning as to
what might happen or what should happen to globalization. Two pundits have
opposite views in this regard, and each has written an article to expand on
those views.
One
article came under the title: “COVID-19 pandemic reshapes global societies and
economies,” and the subtitle: “The world will not be the same.” It was written
by Brahma Chellaney, and published on March 26, 2020 in The Washington Times.
Chellaney
puts the blame for the rise of the pandemic squarely on the shoulders of the
Chinese leaders. He believes that the world and globalization have changed
forever. And he has ideas on how else they should change. He believes that
China should be ostracized and made to pay for the damage it has caused the
world. He ends his tirade against that country with this advice: “China cannot
have its cake and eat it too. It must fundamentally reform”.
As
to the other article, it came under the title: “Globalization here to stay, but
will need reform,” and the subtitle: “populist forces that see
once-in-a-lifetime chance for dramatic turn will find the genie is out of the
bottle.” It was written by Henry J. Barkey, and published on March 23, 2020 in
The Atlantic.
Here,
in condensed form, is how Barkey views the situation:
“There
is no doubt that this crisis is taking an enormous toll. Yet, precisely because
the shock has been great, when the coronavirus has been defeated the need to
restart the global economy will be urgent. No one will want to reinvent the
wheel. There will be a natural return to how things were. Companies and
institutions will go back to what they know best”.
Time
will be the final arbiter on this question. It’s because only time can tell
what will happen in the future. But two things are certain at this time. One is
that no country is self-sufficient in everything. The other is that the more
civilization advances, the larger the variety of products it will need to make,
and will make.
This
means that the immediate trend is for more jurisdictions around the globe
getting the chance to make new products to satisfy more of the world’s markets.