Sun, Sep 21, 2014 - Page 9 News List

With manufacturing returning to US, is globalization in retreat?

By Eduardo Porter  /  NY Times News Service

“Workers may have the opportunity to gain back lost shares of output in the decades ahead,” the Center for Economic and Policy Research’s Dean Baker said this year in a short essay that also argued that no other nation would be able to duplicate China’s successes.

Still, Richard Baldwin of the Graduate Institute of International and Development Studies in Geneva says that the convergence in incomes driven by the fast industrialization of China and some other countries like Brazil and India is unlikely to stop soon. In 1988, the share of world income held by the seven richest nations peaked at two-thirds. By 2010 it was down to half. It is, Baldwin proposes, “likely to continue to sag for decades.”

MIXED FEELINGS

Evidence that globalization might be going into reverse is hard to find in the data. Global foreign direct investment flows remain substantially below the record US$2 trillion of 2007. However, last year they rebounded 9 percent, to US$1.45 trillion, according to UN data. More than half went to developing countries and China received US$124 billion, nearly a record and roughly 50 percent more than six years ago.

Even if the US draws a larger share of global manufacturing, lots of high-wage jobs are unlikely to follow.

Jan Svejnar of the Center on Global Economic Governance at Columbia’s School of International and Public Affairs is optimistic about US prospects.

“The most promising emerging market in the world is the United States,” he told me.

Yet any new manufacturing that develops here will be capital-intensive, he added, relying on far fewer factory workers than in the past.

For all the hope that cheap and abundant US energy or rising Chinese labor costs might drive a wave of reshoring, it is not happening yet.

James Rice and Francesco Stefanelli at the Center for Transportation and Logistics of the Massachusetts Institute of Technology looked carefully at about 50 US companies — including Apple Inc and General Electric Co — that have announced they are bringing jobs home. Most have yet to make any move.

“We don’t think that’s really what’s happening,” Rice told me.

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