Passage 2
The global economy is becoming more integrated than ever before. A half-century of emphasis on free trade by major industrial countries has resulted in the freer flow of goods, services, and capital among nations. As a result, companies both large and small now view the world, rather than a single country, as their marketplace. Also, companies have dispersed their manufacturing, marketing, and research facilities to those locations around the globe where cost and skill conditions are most favorable. This trend is now so pervasive in industries such as automobiles, aerospace, and electronics that it is becoming increasingly irrelevant to talk about “American products” or “Japanese products”.
Consider what happens when an American consumer buys a car. The engine is produced in France, the storage battery in Japan, the seat belt in Austria, and the body is assembled in Germany. Is it a “German product”? Obviously not — but neither is it a “French product”, a “Japanese product”, or an “Austrian product”. Like an increasing number of the products we buy today, it is an international product.
The increasing integration of the global economy has had many consequences. First, the volume of world trade grows at a faster rate than the volume of world output.
Second, foreign direct investment is playing an ever increasing role in the global economy as companies of all sizes invest in overseas operations.
A third consequence is that imports are penetrating deeper into the world’s largest economies. The growth of imports is a natural by-product of the growth of world trade and the trend toward the manufacture of component parts, or even entire products, overseas before shipping them back home for final sale.
Finally, the growth of world trade, foreign direct investment, and imports implies that companies around the globe are finding their home markets under attack from foreign competitors. This is true in Japan, where Kodak has taken market share in the photographic film industry away from Fuji and in the United States, where Japanese auto makers have captured market share from GM, Ford and Chrysler.
49.With the increasing integration of the global economy, it’s harder to tell whether a certain product is made in a single country.