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Dear Prof. Thoma, Thanks for being alive.
Toggle Commented May 27, 2012 on On Moving to Forbes, or Not at Economist's View
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Tim Duy is a superb source, Thank you.
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Creating synergies within industries create positive externalities. Having developed apt suppliers for car manufacturing for example, creates sinergies within the car manufacturing industry, and then steel and other metals, electronics, computers, software and so on. When a country or an economic region has an "anchor" key industry derived from certain competitive advantage it is positioned to develop productivity growth in related industries as well, if it succeds a certain point, other industries that supplement it are likely to follow. If this productiviy growth reaches an even higher plateau, it can succeed into other more complex industries like aviation for example. Asia is becoming the manufucturing center of the world and that means that someone who worked 10 years making motors can then go to cars, and then maybe to airplanes with incremental trainings,(given that the other relevant industries are also experiencing enought productivity growth), while Latin America really cant create aviation without first developing real know how in these others industries. Which is why before America surpassed Europe there was Ford, and before Japan was taken seriously there was Toyota and Sony, and relevant industries are placed rather closer, like Detroit, in order to obtain the mass benefit from the sinergies of interindustry productivity. I would say Latin Americas "anchor industry" has not been able to create synergies with the relevant industries. Why? Maybe relative costs were way better in Asia for the starter industries, or local potential host countries markets were bigger in economics term, or, these countries were more export minded. In a geopolitical sense, maybe there was a higher war threat, if so it becomes more urgent to provide crucial knowledge or conditions like industry knowhow and access of local markets as long as the costs in the balance of trade and productivity drains are trought of being smaller than the gains in efficiency and strenghtening vital allies.
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Sep 28, 2010