"Bloomberg Intelligence" listed 50 companies with a "blockbuster potential to watch during 2017 ("Bloomberg Business Week", October 2016-January 06, 2017, 92-103). Measured in terms of "revenue growth, margins, market share, debt, and other factors," they include eight in the consumer goods sector, four in each of apparel and Internet/e-commerce/software/ cable industries, three in each of pharmaceuticals, various types of insurance (life, reinsurance, and so forth), automobiles, banks, mining, and department stores, and two in each of agriculture, chemicals, and food/drug/ tobacco. Others simply had a single entry.
Several observations about the state of the global economy can be derived from them. In turn, they predict where the markets are, what is being produced, and how they interconnect to fuel the global economy. Four of those observations detain us here: (a) the enormous role the consumer plays in upholding the economy; (b) faster growth of service-sector products than of the manufacturing; (c) the critical role of low-wage industries in keeping the global economy integrated; and (d) the continued importance of the agricultural sector in an increasingly service-sector economy. How they integrate could be the crux in the unfolding economic environment.
First of all, at no time has the consumer been as much of a king globally as right now in the 21st Century. Hitherto this was a cliché most relevant within the then developed countries, fuelled by a key asymmetrical trade pattern: primary products exported from least developed countries (LDCs) to developed countries, with merely final consumer goods returning to LDC elites (only they had the purchasing power to buy then). Yet, with the development strides in emerging/frontier markets across Africa, Asia, and Latin America, the consumer is now part of a global movement to not just enter the consumption market, but, as we will find out below, to also consume increasingly high-end products. This was steadily triggered by China's entry into the global market, which boosted commodity markets for many in the LDC group, but also the neo-liberal advent, which forced many developed countries to send their increasingly costly manufacturing industries off-shore.
If all of the above mean consumer incomes have risen, then the presence of companies like J.C. Penney, Proctor & Gamble, and Walmart, for example, on that Bloomberg list both confirms the obvious, and also reveals how this high-end consumption pattern is being internationalised. In other words, in spite of a protectionist Donald J. Trump platform, globalisation is bursting at the seams for those interested. Since many consumer products carry a US trademark, a crucial conference between expansion-minded business executives and restriction-minded policymakers can only become a 2017 priority in order to stave a global economic collapse. No Trump policy can ignore this and simultaneously expand US growth, a policy-approach European and Japanese leaders must also heed: as the average age in these increases, consumption will far outstrip production without immigration to keep the tractors and machines both oiled and operational.
Such a dialogue may be more crucial with the second issue raised. A faster service-sector growth than in manufacture not only means the growth of some aspects of the Fourth Industrial Revolution, but also that, since this revolution demands high applications of intelligence, we are clearly (a) shifting beyond assembly-line production, mostly in developed countries now but inevitable in the near future in less developed countries too, meaning that life beyond commodity-splurges and low-wage dependence must be explored from right now; and (b) urging a rapprochement between low-tech Trump supporters and the high-tech Silicon Valley workforce (which had gone overwhelmingly for Hillary R. Clinton, with teasing comments of California even seceding from the United States because of this enormous gulf between the two groups), again, another divider whose costs must be minimised so the benefits of economic growth can be consummated by as many as possible.
As noted, four of the 50 companies had Internet/e-commerce/software/ cable expertise and markets. There were also biotechnological and semi-conductor businesses listed (one of each) that depend on those Fourth Industrial Revolution industries, not to mention yet other sectors also connecting handsomely with the service sector drivers: banks, medical devices, and even the pharmaceutical. Although three companies belong to the automobile industry in the manufacturing sector, the widespread shift into the services sector means that the Big Three US automobile and 7-odd big oil corporations hitherto dominating the upper echelons of all company listings, must increasingly seek off-shore operations, while sun-rise counterparts change the economic landscape.
True the manufacturing sector has been transforming, with the low-wage production entering the equation, and thereby distinguishing high-tech and high-wage production: for example, engineering the computer component of an automobile, as distinguished from manufacturing the physical body of the automobile. This distinction began in fits and starts with the "maquiladora" industry (officially, the Mexico-US Border Industrialisation Programme) from as early as 1965, for instance, formalising the global production networks which riddle the planet today. They must be allowed to run their own course without governmental intervention.
This is the third observation. It speaks to an integrated global market in the same way as the economic developmental argument (that is, shifting from primary products, such as agricultural or commodity-based to manufacturing, eventually to services of sorts): economically the "whole" (global network) counts more than the "parts" (countries), though politically, the reverse is a stubborn reality, as the Brexit vote, EU meltdown, and Trump's ascendancy proves. Note how all these reversals have anchors in developed countries at a time when emerging countries open, albeit grudgingly, far more of their vested industries and interests than ever before. The long-term consequences of both trends could mean a shockingly different international political economy.
Today that shift is evident in the textiles industry, which has become more globally diversified than even the automobile industry (which is not surprising: textiles is a lower-hanging fruit, automobiles a higher-hanging). Forward linkages have established themselves here too: ready-made garments (RMGs) may be uplifting countries like Bangladesh, Myanmar, Pakistan, and Vietnam, but the fashion industry, mostly in the developed countries, depend upon them. It is only a matter of time for the fashion industry to shift east and south, given the degrees of market expansion, style cultivation, and product standardisation underway. No wonder the apparel industry is still as game-changing a force as it was three centuries ago in Lancashire, England, or South Carolina in the United States a century ago.
This observation holds regardless of hard economic times: it survived the 2007-10 Great Recession very robustly, and according to "Bloomberg Intelligence," is poised to do just as well in 2017. That makes sense: any economic improvement is better news for the apparel industry (consumers can purchase that extra apparel they had been eyeing all year long), but it is the best news for the fashion industry, since the stronger the economy, the larger the sales and anticipated new consumers.
Finally, the fourth observation is about how agriculture remains as if a bedrock of any kind of an economy: a traditional one, where it is dominant; a manufacturing society, from which its production expands due to new innovations; and even in a service-sector economy for the same reason. We should not forget how farm mechanisation from about a century ago fuelled the manufacturing revolution in many countries (characterised no less by profound urban migration that remains just as intense, though far more extensive, today). This progression chain is still in motion: from the mechanical breakthroughs (like the tractor) one century ago to biotechnology, now sparking a vast social transformation (through genetically-modified food, dietary calibrations, and necessarily bridging the urban-rural gap through scientific integration and a spatial rebalancing). Without an adequate food supply, no society, no matter how industrialised or computer-savvy, can survive.
If these are not imperatives enough reasons for the mindset to return to the same countryside previously abandoned to facilitate the industrial revolution, then there are environmental and ecological urgencies pushing us in that direction. One will notice how the UN Millennial Developmental Goals (MDGs) and UN Sustainable Developmental Goals (SDGs) do not distinguish between country and city, nor too between farming, industrialising, or servicing. The "net effect" of all of the sector-specific goals is gradually rising to the forefront, demanding more attention, but with a different approach.
All four observations move in that same "net effect" direction. From the first we begin to relinquish the differences between producers and consumers, since, for the latter, as the climb-up the industrial staircase continues (from low-tech to hi-tech), it is possible to be both conspicuously. From the second we similarly abandon the manufacture-services barriers: as the latter increasingly demands even more qualitative production than previously, the former remains the rhyme and reason why the latter grows. From the third the net effect is less production-based as the former two implications, but more geographically driven: not all societies have identical production and consumption capacities, but to reconcile them, the playground must expand geographically so all countries get on board. Note how this is also dispensing such traditional labels as "developed" and "developing" countries for such others as "advanced" and "emerging" countries. The differences are not at all that far apart, but appeal to the sensitivities of the social climbers. Regardless, both have given meaning to a term we loosely brandish: globalisation. Finally, the fourth alerts us that technological progress in any one direction is most meaningful if a loop is retained back to the starting pointy, in this case agriculture and the countryside, as the society scales new frontiers in whatever direction. It is a move we have unwittingly and carelessly made since the very first industrial revolution, but which demands more care and finesse as resources evaporate, tastes take a scrupulous turn, and limits keep getting broken.
Dr. Imtiaz A. Hussain is Professor & Head of the newly-built Department of Global Studies & Governance at Independent University, Bangladesh.
[email protected]
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