Globalization’s Old “Race to the Bottom” Finds Unlikely Winners

Globalization has oft been described as a race to the bottom, but as with any race, there is much jockeying for position. The nations in the lead may surprise some corporations and nations, suggests a report from the Boston Consulting Group. China is not necessarily the big winner as demonstrated by expanded auto production in the United Kingdom, and Mexico is emerging as an alternative manufacturing center even as its workers earn more than Chinese counterparts. Brazil, China, Czech Republic, Poland and Russia are described under pressure; Australia, Belgium, France, Italy, Sweden and Switzerland are losing ground; India, Indonesia, Netherlands and the United Kingdom are holding steading; and rising stars include Mexico and the United States. Labor costs and exchange rates are but two of a complex range of factors in locating factory sites. “On balance, much of the gains have also come at the expense of American wages,” writes Kenneth Rapoza for Forbes. “But besides stagnant wage growth, sustained productivity gains, a steady dollar, and energy-cost advantages have made life easier for American manufacturing.” – YaleGlobal