By: Thomas L. Friedman
Chapter 9: The Virgin of Guadalupe
The Virgin of Guadalupe is the patron saint of Mexico, and like any other figure, little statues of it have been produced for many years. Typically, Mexico would simply produce these statuettes, as it is known as a low-wage manufacturing, but recently, China has taken over this responsibility, amongst many others, because it can produce and ship them more cheaply than the native countries can even make them. This recent trend reflects the general trend of the flattening of the world, and Mexico is certainly feeling that happen to them.
For many decades, Mexico had been exporting products to areas such as the United States because of its low-wage manufacturing capabilities. Until recent years, it had even been the number two importer to the United States, behind Canada. China took that role though, in 2003, even though the creation of the North American Free Trade Agreement (NAFTA) gave it an advantage when dealing with the U.S., Mexico’s exports have steadily been declining since 2001, the first time in two decades. To makes things even worse for Mexico, some Chinese companies are starting to replace the native companies in Mexico.
Egypt is facing a very similar situation as well. During the month of Ramadan, as it has been custom for centuries, schoolchildren carry around colorful lanterns called fawanis. Typically, these lanterns were manufactured in Cairo by low-wage workshops but that was until China took over the market with its plastic, battery-powered lights. Many locals feel that the Chinese are interfering with tradition because the fawanis are a local Egyptian item, but many others actually prefer the Chinese made lanterns because they are actually safer, and can even be made to play a few Ramadan theme songs.
For a country to survive in the ever-flattening world, it needs to take a step back and look at itself and start doing some serious speculations. With the introduction of China as such an efficient high-quality manufacturer in both high and low wage items, many developed and developing countries will be greatly affected. For a country to effectively change to benefit itself, it needs to focus on 4 main categories. First, it needs a proper infrastructure, from roads to communication options. Second, it needs an education system that will train its citizens to compete in this diverse global market. Third, a country needs the right governance so that certain laws, fiscal policy, and bureaucrats help develop the country instead of hinder it. And finally, the country needs maintain the right environment to attract workers and promote entrepreneurship that can help further develop the country.
Around the late 1970’s many countries started to incorporate these values through a process called “reform wholesale.” Countries such as China, Russia, and India leaned towards export-oriented, free-market strategies by their leaders. The leaders took the initiative without its citizen’s acceptance because they believed that more open and competitive markets are the best way for a nation to move out of poverty. China has seen a high rate of success with this method, by moving approximately 163 million people out of extreme poverty in about 10 years. On the other hand, in 1990, North Korea, who has not attempted the idea of “reform wholesale”, steadily saw their GDP shrink while other countries saw their GDP grow. In areas where globalization is slow to take hold, such as Sub-Saharan Africa, the amount of people in extreme poverty has actually raised about 63 million people from 1990 to 2001.
While every country has its own strengths and weaknesses for development, every country needs to partake in reform retail in one way or another. The concept of reform retail assumes that you have already have concluded reform wholesale, and further upgrades the four components. The idea is to make sure that the native people have the tools and...