Global Growth in Manufacturing and Trade Requires Investment by Emerging Nations

The challenge for mature nations is to remain innovative and competitive, using their strong bases of higher education and advanced technologies to create products and services that the developing world will want to purchase in large quantities. Many leading U.S. and European manufacturers, such as GE and Siemens, already have strong efforts in this regard.

Although they will certainly evolve and adapt, India, Indonesia, the Philippines and similar offshore work centers will remain moderate-cost, highly competitive providers of services and manufacturing for the near future. Nonetheless, local costs in these countries (especially wages) are rising—eventually, they will rise substantially. At the same time, as their economies grow, their business structures and middle classes will grow as well, and they will offer lucrative markets for exported intellectual property, technologies, certain manufactured goods and high-level services created in the U.S., Europe, Japan and elsewhere. In particular, these emerging nations can be spectacular markets for major brands of consumer goods. While the brands (Gillette, Apple, Starbucks, Nestle, Kleenex, etc.) will be American or European, much of the manufacturing may be done in local markets such as Guangzhou, Mumbai, Jakarta and Manila.

India is investing almost $2 trillion in infrastructure projects between 2019 and 2025, with 22% coming from the private sector according to Invest India. Projects include roads, railways, energy, irrigation and housing and urban development. India’s Ministry of Road Transport and Highways reported approximately 90,000 miles of national highways as of March 2023, up from only 49,000 miles 10 years earlier.

Meanwhile, these developing nations face immense challenges prerequisite to substantial future growth, including the need to:

= Greatly enhance infrastructure such as roads, highways, railways, airports and electricity networks

= Extend and improve public education systems, particularly into the villages

= Control pollution and clean up existing environmental damage

= Provide access to basic health care services

= Create a social safety net that includes unemployment insurance, pension plans and retraining for laid off workers

= Foster a healthy level of local consumer demand while evolving from economies highly dependent on exports, to economies with vibrant domestic markets

= Provide greater economic opportunities to residents in rural areas

= Enhance energy efficiency

= Promote property rights and rule-of-law while combatting graft and corruption

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Global Growth in Manufacturing and Trade Requires Investment by Emerging Nations, Business and Industry Trends Analysis

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