Reconstituting Local Manufacturing

Topics: Economics, Manufacturing, Industry Pages: 5 (1171 words) Published: March 20, 2015
Is it possible to reconstitute local manufacturing and local food markets, or has Globalization ultimately made this impossible?

The global economy and marketplace have impacted local industry and local manufacturing harshly. With consumers having choices from international companies able to import their products, a common market pool for the whole world, it has become more difficult for the local merchants to thrive. Also, many Western companies have established themselves in developing countries, such as McDonalds and Starbucks, with over 31,000 and 18,000 locations operating worldwide respectively. While the influx of multi national corporations has created economic opportunities for many in the communities that they operate within. However, with this prosperity has come the evaporation of local industries. What are some of the factors that could help or inhibit the reconstitution of local manufacturing and local food markets.

One enormous problem could be the price of doing business and the amount of capital it takes to operate in these markets. These international companies have vast reserves of capital to fund their operations in various countries, even buying up local enterprises to reduce their competition. These corporations also spend an enormous amount of cash on advertising. Thus they are able to extend their brand recognition into their new destinations. This is the formula that has also worked well in American cities. Companies are able to buy out their competition with less expensive production costs or less overhead. These companies can operate on a smaller margin than the local merchants, who do not have the benefit of mass produced overseas inventory. (Kantor, 2002).

On a political scale, globalization has had an effect on the policies put into place by local entities that have an impact on the local manufacturing and food market. Through the increased surge in international competition, national policies that are aimed at preserving the structure of local communities and upholding social equality have dwindled and been phased out. Looking to nurture economic growth, many local governments invite foreign investments (Held & McGrew, 2012). While these foreign investors infuse currency into the local economies, the toll they take on the local markets, may not be worth the tradeoff. Could the local governments be taking or mismanaging the funds? Perhaps the cash infusion could be put to better use to help stabilize or revitalize the local manufacturing and markets. The case could also be made that the concessions that the local governments make to entice international companies into their country make it difficult for or at the least do not address the local manufacturing companies and their concerns. Because of the problems caused for the local manufacturing and food markets, wages and income for the local population also suffers, which influences their purchasing power. This creates a circular effect because without purchasing power the local community cannot support more local manufacturing. This is certainly a way in which globalization has hindered local manufacturing and will make it difficult to reconstitute it in the future.

Some of the ideals championed by those who favor globalization will naturally work against the reconstitution of local manufacturing and food markets. For example, the principle of economic advantage commonly referred to as the iron law, demands that the best of the countries that initiate competitive strategies is deemed to outdo other competitors from the market. Put simply, if a particular foreign country grows a particular local product more efficiently, then there would be no need to grow the product locally (Davis, 2012). This would force the importation of the product from a foreign country which would obviously hamper the ability of local establishments to be able to compete in that market. In fact, some experts think that because of globalization, in the...

References: Kantor Paul, (2002). Cities in the International Marketplace: The Political Economy of Urban Development in North America and Western Europe. Princeton University Press
Hartmann, Thom, (2010). Globalization Is Killing The Globe: Return to Local Economies. Retrieved from http://www.huffingtonpost.com/thom-hartmann/globalization-is-killing_b_454091.html
Held, D. & McGrew, A. (2012) Globalization Theory: Approaches and Controversies. (2012), Cambridge.
Davis, C. L.(2012). Why Adjudicate? Enforcing Trade Rules in the WTO. Princeton: Princeton University Press. Retrieved January 30, 2015, from Project MUSE database.
Obstfeld, Maurice (2000). The Global Capital Market: Benefactor or Menace? The Journal of Economic Perspectives
, Vol. 12, No. 4., pp. 9-30.
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