Examining the Impact of Globalisation: The Case of Domestic Manufacturers

Abstract

Globalisation is a complex phenomenon that has social, cultural and economic connotations. What are its impacts on domestic manufacturers? Read our case study. What are its impacts on domestic manufacturers? Read our case study. This dissertation focusses on the economic connotations of globalisation, that is, the greater trade inter-relations and the movement of goods and services in the international market. The dissertation discusses the impact of globalisation on domestic manufacturers and finds that the impact of globalisation varies as between developed and developing countries in the world. With respect to developed countries, there is a higher incidence of deindustrialisation, even negative deindustrialisation. However, developed countries also able to take advantage of the cheaper labour from the developing countries in order to keep their products cost- effective. At the same time, the manufactures of developed countries find bigger markets across the world, due to the free trade relations that are prevalent as between many countries in the world today. The developing countries too, benefit from greater accessibility of more markets around the world. However, the increased competitiveness has led to the developing countries’ manufactures facing stiff completion in home markets, where the consumer appeal is more tilted towards non local goods. Therefore, there are benefits as well as disadvantages of globalisation for the domestic manufacturers.

Introduction

Globalisation as a term is sometimes hard to define (Kellner, 1998) . There are many themes that are involved in globalisation, ranging from social themes to economic themes and from material themes to subjective themes. Globalisation has led to a spawning of much literature across many disciplines and therefore, the thematic variations of the term are witnessed. For this reason, it is difficult to precisely explain the term globalisation and it remains one the most difficult terms to explain properly.

This dissertation relates to impact of globalisation on domestic manufacturers. As such, the dissertation relates to the globalisation from an economics point of view. Being such, it is easier to find the context within which the term globalisation will be understood for the purpose of this dissertation. Globalisation is therefore seen in the context of how it allows international trade, opening of international markets, greater competitiveness amongst manufacturers around the world. In other words, globalisation posits interchanges and interactions between manufacturers and traders from around the world and this would imply some impact on the manufacturers. This impact could be positive or negative, as there are areas that would lead to gain for domestic manufacturers and other areas which would impact the domestic manufacturers negatively. This leads to the following research question: “What are the impacts of globalisation on domestic manufacturers?” Here, the dissertation will have to consider domestic manufacturers from a generalised perspective because this dissertation does not involve a case study. Rather, in order to contextualise domestic manufacturers for the purpose of this research, the dissertation differentiates between domestic manufacturers in the developed and developing countries. At the outset it must be clarified that understanding the impacts of globalisation is in itself fraught with some difficulties. As one writer points out:

“Globalisation is a multi-faceted phenomenon, and each facet may have different effects on employment, varying by country, time, industry, policies and the like. It comes as a part of large array of economic, technical, social, legal and policy changes, each with interactions and feedbacks, making is difficult to separate the effects of globalisation” (Lall, 2002, p. 2) .

Therefore, the research has been conducted with the understanding of this particular complexity of studying globalisation and its impacts on manufacturing sectors.

The aim of the study is to conduct a library research into the effects of globalisation on the 4 domestic manufacturers. As such, the methodology involved in this research is a literature review. At this point, it is pertinent to discuss the research methodology that will be adopted in this research.

This literature review will be conducted with the use of descriptive research design. Being a literature review, research will be conducted on the basis of secondary resources like books, articles in journals and databases. Descriptive research is a useful method of obtaining information, without having to test or verify the information (Monsen & Horn, 2008, p. 5) . Once a well- focused research question is devised, descriptive research can be used to answer it (Monsen & Horn, 2008, p. 5) . The descriptive research methodology is useful because it would allow the researcher to gather information about the prevailing conditions regarding globalisation and its impact on the domestic manufacturers (Sevilla, et al., 2007, p. 94) .

This research seeks to understand the impact of globalisation on domestic manufacturers. In that sense, it does also involve a case study. A case study is defined as an in-depth inquiry into a topic or phenomenon within its real-life setting (Yin, 2009) . Any object of study can be termed as a case study (Vaus & Vaus, 2001, p. 220) . This may involve the study of an individual or even a situation. Descriptive research can gain from case studies because description can highlight certain important aspects of the case (Vaus & Vaus, 2001) . In fact, case studies are used in most types of research and researchers. Case studies may be used for descriptive and explanatory purposes in addition to its exploratory purposes (Yin, 2009) .

As an extended literature review, this work involves secondary research methods. The research strategy involved will include searching for papers both manually as well as electronically. Journals in both print as well as electronic formats will be referred to. Databases will also be used for the purpose of generating information that can become subject matter of this extended literature review.

The structure of the dissertation takes into consideration the various themes that are involved in the topic. Considering this, the dissertation will first discuss the meaning of globalisation in order to set the context within which the dissertation is set. Then, the dissertation will discuss the relationship between globalisation and economy. Here, the dissertation focusses on giving some background of the general questions that are raised with respect to globalisation and its interrelation with economic processes. Next, the dissertation discusses the impact of globalisation on the manufacturers of developing and developed nations. With respect to developed nations, the dissertation focusses on deindustrialisation as an impact of globalisation and how it impacts domestic manufacturers and workers. With respect to the developing nations, the dissertation focusses on the larger discourse of GATT and WTO as well. Finally, the dissertation concludes the main findings in the conclusion section.

Globalisation: Meaning and contexts

Globalisation as a term and a phenomenon, is difficult to define. It is used in so many different contexts and by so many different people, that it becomes hard to find a definition that can hold universal values of globalisation or the universally acceptable characteristics of globalisation in a single definition (Kellner, 1998) . It is however, necessary to define globalisation or to give it some context for the purpose of this essay, so as to explain the terms within which this work can be organised.

Before considering the meaning of globalisation for the context of this essay, it is pertinent to consider the general conceptualisations of globalisation. Globalisation has been defined in an influential way as the ‘local happenings are shaped by events occurring many miles away and vice versa’ (Giddens, 1990, p. 64) . Globalisation is also defined as ‘the compression of time and space’, in a way that shows the significance of the lessening distances between places and people (Harvey, 1989) . In that sense, globalisation can also be seen or understood as a social process that appears to transform the social conditions of present nationality to globalism (Steger, 2013, p. 9) . Globalisation has also been understood to be a one-sided western phenomenon, considering the seminal works of Fukuyama and Huntington (Zhou, 2013) . From a purely Western point of view, globalisation has meant for a large part the dominance of the capitalist economic system (Kellner, 1998).

Clearly, there are different aspects that become relevant for defining globalisation. It can be defined in the material and spatial contexts and may also be defined in a social and subjective sense. For the purpose of this essay, globalisation is to be seen in the context of the ordering and structuring of trade and commercial relations. One definition that can have relevance here is:

“The globalisation of industry is reflected in the evolving pattern of cross-border business activities involving international investment, transnational production and related trade, technology transfer and sourcing and complex cross-border networking for product development, production, sourcing and marketing” (OECD, 2001, p. 13) .

The definition is not a definition of globalisation, rather it is a definition of industrial globalisation. It may be relevant to the research which is focused on impacts of globalisation upon the domestic manufacturers. However, this definition is more focused on globalisation as it involves international investment and cross border networking. Therefore, it is more focused on the complementing forces of globalisation, which sees greater sourcing, rather than competing forces of globalisation, which lead to deindustrialisation. Indeed, th complementing forces of globalisation have been used by many writers who have linked globalisation and economy. Therefore, globalisation can also be defined in its economic characteristics.

“Economic globalization refers to the increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies. It reflects the continuing expansion and mutual integration of market frontiers, and is an irreversible trend for the economic development in the whole world at the turn of the millennium. The rapid growing significance of information in all types of productive activities and marketization are the two major driving forces for economic globalization” (Shangquan, 2000) .

The above-mentioned definition is more appropriate for the dissertation. It takes into account the prevalent globalisation as it exists in its economic context. Here, globalisation refers to an increasing interdependent relationships as seen between world economies, both big and small. This interdependence is in the area of trade, capital and technology transfer. Availability of markets around the world and the accessibility of the markets for manufacturers from around the world, are essential factors of economic globalisation. This definition is very different from the ones that dealt with social themes. Undoubtedly economists see globalisation from a different perspective. For economists, globalisation is seen from the perspective of increased trade and commercial relations and how these have a macro economic impact on different sectors. Here, the case of domestic manufacturers can be fitted. Here it is pertinent to recall the words of another economist who raised and answered the question of economic globalisation as follows:

“What do economists mean by ‘globalization’? First and foremost: integration through international trade of markets in goods and services, as reflected in a variety of possible measures. These include direct measures of barriers, e.g., tariffs and transport costs; quantity-related measures of the result, i.e., trade volumes; and price-related measures of the result, i.e., the law of one price and other evidence of arbitrage. Next, financial integration through international trade in assets, again as reflected in a variety of possible criteria: direct measures of barriers, e.g., capital controls and transactions costs; quantity-related measures of the result, i.e., gross and net capital flows, portfolio shares, or consumption sharing; and price-related measures of the result, i.e., interest rate parity conditions and other evidence of arbitrage. Further down the list are foreign direct investment, increased trade in intermediate products (especially within multinational corporations), international outsourcing of services, and international movement of persons. Finally, some truly comprehensive definitions of globalization would include the international spread of ideas, from consumer tastes (Coke and the Simpsons, sushi and manga, etc.) to intellectual ideas (technological patents, management principles, democracy, environmental activism, the Washington Consensus, accounting standards, inflation targeting among Central Banks, etc.)” (Frankel, 2006) .

This is a rather large definition and it is important to break it down into components in order to understand how this definition can be used within the present dissertation. The first part of the definition speaks about integration through international trade of markets of goods and services. This is already discussed above. The rest of the definition goes on to define the related areas such as barriers to international trade, macro-economic considerations, etc. Then there are those who argue that globalisation has led to greater Americanisation in different regions of the world (Barber, 2010) . This is not agreed to by some others. The seminal work by Appadurai is based on the central premise that the world has become more interactive and so the construction of identity in the 21 st century does not depend anymore on Americanisation, but depends on transnational construction of landscapes that are imaginary (Appadurai, 2006, p. 587) . Globalisation had meant for many countries, that there would be restructuring of existing enterprises. This is particularly true for communist or socialist regimes. In China, this was not the case. Stiglizt (2015) writes that China prioritised competition, new enterprises and jobs, over privatisation and restructuring existing enterprises. China understood that social stability could only be sustained if massive unemployment was avoided (Stiglitz, 2015) . This points at a significant variation in approach that China has taken as compared with many other countries. Therefore, as globalisation offers a number of opportunities for trade and manufacture, these opportunities have to be seized by the country and its enterprises with just the right combination of elements that go on to make a successful industrial economy. This includes, law and policy as well, although these are not discussed here.

Photo: Chinese workers doing quality check of Drives that will be shipped to different locations worldwide. As clarified in an earlier section, there are many concepts of globalisation, however, in the context of this dissertation, globalisation is seen from its economic perspective, that is, the relationships of trade and commerce that make economies interdependent on each other and see a greater movement of goods and services. Globalisation has led to conflicts between the global north and south over labour standards, because these labour standards are also at the heart of a greater discourse on the impact of globalisation on domestic workers. In part, the debate is political in nature because the global north has always demanded more regulatory norms for workers in the south in order to bind the manufacturers to a stricter standard of minimum wages and other related aspects of worker rights that are provided in the global north. On the other hand, globalisation has seen a greater export capacity from developing nations, which are demanding more concessional trade arrangements from the developed countries. These concessions range for lowered tariff for export while maintaining a higher tariff for import. This is on the basis of the evident difference between the economic capacities of the global south and the north, the history of colonisation and its impact on the global south.

Globalisation and deindustrialisation – Impact on domestic manufacturers of the developed countries

Deindustrialisation is seen to be a phenomenon that is related to a contracted employment and output in the given economy. For some writers, there is a direct relationship between globalisation and deindustrialisation. One study points at the relationship between the two in context of developed and developing countries (Rodrik, 2016) . The study finds that countries are running out of industrialization opportunities at faster rates. However, the trends of deindustrialisation are seen to be different in developed and developing countries. So whereas, Asian manufactures and exporters have been largely insulated from those trends, Latin American countries have been unable to insulate themselves. On the other hand, developed countries show the most indicators of deindustrialisation, with incidence of considerable employment loss (particularly applicable to low-skill type of employment) (Rodrik, 2016) . At the same time, the developed countries show high manufacturing output shares at constant prices. The study concludes that these changes may be attributed to globalization and labor-saving technological progress in manufacturing (Rodrik, 2016) .

This means that as far as the developed nations are concerned, the trends do demonstrate a higher employment loss, while maintaining a strong and consistent output. In other words, the manufacturing in the developed countries is not actually done in the country itself, but may be carried out in off shore locations, where there is ample cheap labour, making the final output cost competitive. In other words, the impact of globalisation in a negative sense may be greater on the labour in such developed world, and not really on the manufacturing sector. The higher rates of unemployment, in that case, may not be the appropriate indicator of the manufacturing sector’s successes.

The UK happens to be one of the first countries to have manifested actual symptoms of 11 deindustrialisation (Michie, 2014, p. 357) . This is also ironic to some extent because Great Britain is the home of industrial revolution and the country which sparked similar industrial processes in other parts of the world. Indeed one author points out:

“Great Britain was the first industrialiser and it became the technological leader in the world economy. It was the exemplar for other countries. Manufacturing became the main engine of accelerating economic growth in the nineteenth century. Manufacturing production technologies spread to other countries. A global race for industrialisation had begun” (Szirmai, 2012) .

As such, deindustrialisation became a particular cause for concern in the policy debates in the 1970s to 1990s, a period which saw the contraction of output and manufacturing sector (Michie, 2014, p. 357) . In recent times, the deindustrialisation debate has been raised in a number of countries around the world, which raises an interest in this phenomenon and how this impacts the domestic manufacturers. One writer uses the case study of Japan to question the negative deindustrialisation being witnessed in Japan since 2011 (Yamashita, n.d.) . Another study raises a similar concern for Malaysia and finds that since 2000, there is a noted deindustrialisation trend to be seen here (Rasiah, 2011) .

Above all, it is interesting to note that much of the deindustrialisation discourse also centres around issues of globalisation. Not all studies paint globalisation is a negative light with respect to deindustrialisation and impact on domestic manufacturers. For example, in one study related to Belgium, the researcher found that globalisation has led to increased intra-firm trade in multinational networks and this has in turn positively impacted the domestic manufacturers as they rely on this multinational network for international sourcing (Coucke, 2007) . The study also points out:

“Sourcing is stimulated by exploiting lower production costs in a foreign country relative to the country of origin. Especially during the last decade, with the opening up of the Eastern European and the Chinese market, the global economy has created huge potentials for gains from such trade” (Coucke, 2007, p. 14) .

Nevertheless, deindustrialisation has been an important concern of the developed countries, especially in Europe, where increased trade interaction with the global south has led to a decided impact on the domestic manufacturers. In the 1990s, this led to the concerns of increased deindustrialisation of the developed economies. Also 12 this has led to the asking of the question if increased trade with the global south had an adverse impact on the workers of the manufacturing sector in the developed economies (Segar, 1997) . During the 1990s, there were three important labour market developments that had an impact on the heightened fear of losing manufacturing to the less developed countries in the world. The first factor was the substantial increase in the wage disparities between skilled and unskilled workers in the UK and North America. The second was the high levels of unemployment in most of the European economies. Third factor was high levels of contraction in relative and absolute manufacturing employment across the developed economies of the Organisation for Economic Cooperation and Development (OECD).

In the UK, deindustrialisation has been an important aspect of the ‘Thatcher era’ and it came to be a striking feature of the UK labour market in the decades between the 1970s to 1990s (Gregory & Greenhalgh, 1997, p. 62) . Between the period of 1979 to 1990, there was an accelerated loss of employment as a consequence of deindustrialisation. It is pertinent to understand the manner in which deindustrialisation came to be effected in the UK because there are a number of theories as to how this deindustrialisation came to be. One writer from that era has shared the following reasons for the absolute and relative loss of employment in the UK manufacturing industry (Green, 1989) . First, deindustrialisation is attributed to what is termed as ‘real deindustrialisation’, in which, there was a loss of market share due to import penetration by Asian and European manufacturers. Second, ‘notional deindustrialisation’, which led to corporate restructuring and contracting out of services to specialist providers. Finally, deindustrialisation of employment and not the output, which refers to the technical progress in manufacturing leading to more use of machinery or labour saving processes (Green, 1989) .

Clearly, these are all different reasons for the same phenomenon. Therefore, it is important to understand the context in which each of these phenomenon can be fitted into a discussion of deindustrialisation and its significance in the larger discourse on globalisation and its impact on domestic manufacturers. Not all of these factors mentioned above relate to globalisation and even to real deindustrialisation. For example, use of labour saving techniques is a method by which people have lost their jobs, but not a method which has a direct relation to manufacturing failure or success as a whole.

The essential point of discussion here could be the concept of ‘negative deindustrialisation’, which refers to industrial failure or loss of markets.

Impact of globalisation on domestic manufacturers in the developing economies

The impact of globalisation on domestic manufacturers in the developing economies is discussed at length in this section. First, it is important to understand that the term ‘developing’ with respect to economies encompasses a wide range of countries that are diverse and different in their economic capacities. Therefore, generalisation for the purpose of understanding the impact of globalisation on domestic manufacturers must be seen in the context of all these countries belonging to a category of nations that can be described as developing.

There is no doubt that industrialisation has been seen as a growing phenomenon in many developing countries of the world. This itself may be attributed to globalisation, which allowed the transfer of ideas, technology and know-how from the developed nations to the developing nations. At the same time, industrialisation has been important for manufacturing and consequently manufacturing has led to greater opportunities for export, greater employment avenues for the national populations and more economic development of these nations. In other words, it may be said that manufacturing has been important for the growth of developing countries (Szirmai, 2012) .

In the context of globalisation and its impact on the domestic manufacturers, it is important to note that as far as developing countries are concerned, globalisation offers some advantages that can be used towards generating more business and employment opportunities for people. However, how a country and its domestic manufacturers benefit from these advantages, will be an experience particular to that country. In other words,

“The external forces of globalisation – shrinking economic distance, mobile resources and the like – only provide opportunities for employment generation. Whether a poor country seizes these opportunities or not depends on its ability to mount policies geared to competitiveness; these policies are often at sharp variance with the liberalisation associated with globalisation (i.e. the removal of the government from international trade, investment and technology flows). Given this missing link, it is fruitless to search for a general causal relationship between globalisation and employment” (Lall, 2002, p. 7) .

This means that each developing country will not exhibit the same indicators of advantages as the other one. There may be distinct advantages in a country that enables it to seize the opportunities that economic globalisation has to offer to it. In other words, globalisation is one factor that denotes advantages to the manufacturing community of a given country. There may be other factors, such as population quality, technological prowess and economic and political make up of a country that may be determinant of the ability of the country to seize the particular advantages that may be offered by globalisation. Therefore, free markets by themselves may not lead to ability of a state to capitalise on opportunities offered by globalisation. Here an example of China is pertinent. China is not a liberal economy. It is not a democracy. Therefore, the usual markers of a capitalist neo liberal industrial economy is not to be seen in China. However, China has managed to take the advantages of globalisation at the tide and has become one of the most fast developing manufacturing nations of the world. (Guthrie, 2012) asks an important question as to the global and local processes that have been employed over three or more decades, to bring China to the point where it stands today - as a superpower. Like Stiglizt (2015), Guthrie too identifies a gradual shift in Chinese policy towards liberalization. Predominantly, Guthrie (2012) credits globalisation and its local application in China. At the same time, China also evidences certain drawbacks related to globalisation. Wu (2016) sees globalisation as a double edged sword for Chinese workers. He argues that while globalisation has brought more opportunities for the Chinese employees, allowing them to earn in foreign currency and has reduced unemployment in China, it has also put them in a vulnerable and marginalised position when they work overseas (Wu, 2016, p. 138) . Specifically, Wu shows the incomplete establishment and regulation of overseas workers’ market, which is to blame for the problems faced. Thus Wu attempts to show the darker side of globalisation for overseas workers who may experience isolation, vulnerability and marginalization in their work environment in foreign countries.

Free markets and greater accessibility to markets in developed countries have definitely opened new doors for manufacturers in the developing countries of the world. One advantage of globalisation for the developing countries and their domestic manufacturers is that globalisation has increased the level of competitiveness in the manufacturing sector. Lall (2002) puts the advantages to developing countries in the face of increasing globalisation as follows:

“The shrinking of economic distance affects the context for industrial development. In particular, the ‘natural protection’ that countries enjoyed in the pastis sharply reduced: international competition now appears far more quickly and intensely. Together with trade liberalisation, this forces industries to reach competitive ‘best practice’ frontiers very rapidly. At the same time, it opens up new opportunities. With well-known exceptions like agriculture, markets in developed countries are more open than before and developing country exporters can reach these markets more efficiently. It also allows developing countries to import foreign products, services and technologies more readily and cheaply and consumers to collect information at very low cost. There are mixed implications for employment: larger exports can promote it where countries have the wherewithal to compete in export markets, while intensified competition in domestic markets can lower it unless local enterprises build competitive capabilities quickly” (Lall, 2002, p. 11) .

There are mixed advantages and disadvantages in this situation. On one hand, the developing countries have the advantage of accessibility to markets around the world. This helps the manufacturers of the developing countries as these manufacturers have more markets where they can supply their products to. On the other hand, domestic manufacturers also face greater competition from manufacturers of the developed countries as imports are also easier into the domestic market. This means that the domestic manufacturers of developing countries have to compete with the manufacturers of the developed countries. The latter may have more technological prowess and therefore, the competition at times may be tilted in favour of the manufacturers from the developed countries.

Studies into consumer behaviour show that consumers may at times prefer foreign goods, especially those that are manufactured in the developed countries. In a study conducted into consumer behaviour (Batra, et al., 2000) , found that in developing countries in particular, there was a greater respect for products manufactured in Western nations. This could be attributed to a variety of reasons, that differed as between developing countries. One important factor here that is responsible for a greater appreciation of products from the Western nations, is the greater need or individual desire to be a part of the larger global consumer community and the desire to be a part of the imagined existence of the people living in other countries, especially developed countries (Appadurai, 2006) . Another factor that may be important here is the opening up of the hitherto closed economies, such as India. When these economies were closed, import of foreign goods was expensive and therefore, the possession of such goods was a status symbol or luxury. With the opening of the economies in different parts of the world, these foreign goods are now easily accessible and interestingly, these goods do not seem to lose their charm or status symbolism by becoming more accessible (Batra, et al., 2000) . To a greater extent, the products made in Western nations signify status and quality in developing countries and therefore, consumers have a higher regard for these products (Batra, et al., 2000) . Due to these salient differences, there is a conscious branding of local and non-local products in the minds of the consumers of the developing countries. This puts the domestic manufacturers of the developing countries at a decided disadvantage as they are required to compete with the products from Western manufacturers in their own markets, making the competition quite hard at times for the domestic manufacturers.

Here, a discussion on the General Agreement on Tariff and Trade (GATT) and the World Trade Organisation (WTO) is pertinent. GATT is a post-war trade agreement that envisaged governance of trade, competition, employment and economic development (Gowa, 2015) . It is generally believed that GATT and its successor WTO have actually led to the secular increase in global trade that was begun to be witnessed after the end of the Second World War (Gowa, 2015, p. 25) . International trade and freeing of world markets has been achieved through a long process of regulation and realignment of tariff policies of states to allow for a fairer system of tariffs as applied vis a vis the nations. At times, countries may have bilateral arrangements for agreeing upon set tariff rates (1935 US Canadian Trade Accord), or at times such an agreement may be a regional agreement (the European Economic Community). GATT and WTO had a wider reach as multilateral arrangements. Despite the so called secular credentials of GATT and then WTO, these arrangements have come under some criticism from the developing countries who view the current tariff arrangements as unfair and disadvantageous to their domestic manufacturers.

The strong views of developing nations and their demands for greater concessions in international trade (with regard to barriers) stem from the fact, that the developing countries feel that their concerns have been neglected in the trade negotiations for a long time. Moreover, some developing countries had colonial history and even after becoming independent, these countries had bilateral trade agreements with their former colonisers. One writer attests to this:

“Developing country issues were not high on the agenda for GATT negotiations before 1986. Temperate agriculture was effectively excluded; many tropical agricultural products had special arrangements or long-term trading arrangements; clothing and textiles were under the Multi-Fibre Arrangement, MFA (and its predecessors), from the 1950s; and many developing countries had special trading relationships with the colonial powers, later the ex-colonial powers, which gave them better than the MFN treatment offered by GATT and thus no incentive to participate in GATT negotiations” (Page, 2002, p. 12) .

Despite the accessibility of developed countries’ markets to the developing countries’ manufacturers, it is not always easy to enter these markets or make a place for themselves. This is however, not to say that developing countries’ manufacturers do not have a strong presence in the international markets. In fact, developing countries’ manufactures are a significant source of exports and increasingly so since the post war period (Abreu & Fritsch, 2016, p. 112) . In between the period of 1960s to 1984, the share of developing nations in the global supply of manufacturing exports, rose to 13.4 percent, showing a three-fold gain in manufacturing exports (Abreu & Fritsch, 2016, p. 113) . The major areas of growth were derived from steel and iron industry, clothing and engineering products. It is generally supposed that part of the growth of the developing countries manufacturing export growth can be attributed to the greater accessibility that the domestic manufacturers had to markets in the OECD (Abreu & Fritsch, 2016) . Here, the factors of declining tariff rates and the new post war period consensus on end of protectionism, are also seen to be important to understand the growth of the manufacturing sector. Hence, it can be said that the lowered tariff rates due to the application of GATT and later WTO, has also worked to the advantage of domestic manufacturers of the developing countries, as it has given them greater accessibility to the markets of the developed world. The developing countries have been late comers to the industrial growth. However, it is also noteworthy that there are certain advantages to coming into industrialisation at a later point in time (Gerschenkron, 1962) . As one author writes: “latecomers profit from the availability of modern technologies developed in the leading industrial economies, without bearing all the risks and costs involved in research and development. Gerschenkron reasoned that technological developments had increased the scale of industrial production. This required a larger scale of resource mobilisation than before. Therefore, late industrialisation either would not take place or would be very dynamic. If the conditions were right and economic growth took off in a late developing country, it would take the form of a growth spurt” (Szirmai, 2012) . The domestic manufacturers in the developing countries, such as India and China, definitely demonstrate the growth spurt that is mentioned here.

Conclusion

Globalisation offers both advantages as well as disadvantages to the domestic manufacturers around the world. However, the structure of these benefits and advantages varies as between the manufacturers of the developed countries and manufacturers of the developing countries. In the developed countries, globalisation has created better linkages with the markets of the developing countries for their manufactures. This is also beneficial for them because goods manufactured in the developed countries are usually something of a status symbol in the minds of the consumers of the developing countries. At the same time, the manufacturers of the developed countries gain from the better networking and sourcing from the developing countries. Not only that the manufacturers find cheap labour in the developing countries and therefore are able to maximise their advantages by producing cost-effective products.

The manufacturers of the developing countries benefit from globalisation, as it gives them access to markets around the world, so that the manufacturers become a part of the international chain of supply of goods and exports. The drawback of globalisation for the manufacturers is that they have to compete with the foreign manufacturers in the domestic market. As the non-local products are much in demand in the local markets, the domestic manufacturer as at a disadvantage. However, on the whole globalisation has proved to be beneficial to the domestic manufacturers of both the developed as well as the developing nations.

Bibliography