How will the west compete economically in a globalised world?
I have always believed that all the modern empires dominated economics through population size and manufacturing, gaining essentially a monopoly on manufacturing goods. From the US to Britain etc.
Reading the book "Rougue Economics" I came to wonder how the west is going to maintain their own economic competiveness. The book describes how the fall of Communism led to the breaking down of barriers between west and communist (and communist ally nations specifically India) which opened up economic relations whcih led to the advent of 'Çheap Labour',. Up until then economics of the West was essentially focused on trade between Europe, Nth America and was a rather closed system where ideologically different nations did not associate economically (communist and capitalist, theocracy - democarcy). 2 billion people (China and India) effectively entered the workforce who were willing to work for drastically less pay than their western middle class (who used to perform the labour tasks the new labourers do now) therefore forcing the unions of Middle classes of European and North American nations to accept lower wages to remain competive or risk their jobs being outsourced.
As capitalism essentially attempts to operate from where ever they can achieve the highest capital return for the least investment we see business' AND jobs moving internationally - predominantly east - therefore bringing affluence to the east and balancing the affluence of east and west.
But now, the Eastern countries with education investment have industrialised and are now educating more higher skilled people per year than any western nation. Now not only do the eastern nations have the manufacturing power through numbers and factories but also the tertiary trained population to be independant from the West.
This is all good for the world and especially raising standards of living for people around the world but how can the west hope to compete economically when goods can be made on mass scale at cheaper prices than the west and now services (or higher educated services; which was once the monopoly/main domain of the west) can be offered to. How do you compete with such huge countries?
The only solution I see is innovation, nano-technology and/or robotic technolgy can make manufacturing more economically competive than labor of the east. Creations like the internet can create new economic markets aswell and if anyone knows how to make money out of new creations/discoveries its Americans
. But I see this as a rather flimsy fall back, whereby a western nation places all its hopes on being economically competive on their scientists, especially when eastern countries have significantly higher numbers of scientists.
The book explains that eventually labour wage disparity between east and west will equalise as the individuals of India and China become more affluent and the economies fully modernise but this is at least 50-100yrs, especially if you consider setbacks in political initiatives to defeat poverty in India and China.
But in terms of sheer numbers how do you compete in manufacturing tradable goods and services? What will the economies of the West be like in 30-50yrs, what will be their main exports, money making practices?