Productive

stamp fabrication factory 1853 Paris

Photo Credit: Brown University Library

Growing up, I never found it appealing to work in a factory.  But now that I know its significance, I see the “beauty” of manufacturing.  Unfortunately, it took me around 15 years to understand the relevance of manufacturing, ever since I studied Economics in the Philippines in junior year of high school.

The book that we used in class was Guide to Economics for Filipinos by Bernardo M. Villegas.  I cannot blame the author of that book for being influenced by Roman Catholicism, since the Philippines is a Catholic country as well — 80%.  And I do understand the benefit of population growth for manpower resources which my teacher explained in a down-to-earth manner.  But here’s what I don’t get: Filipinos were perfectly fine with letting our population explode but we waited around 30 years to pursue manufacturing?

Moscow Print Shop A. Zhdanov

Photo Credit: RIA Novosti archive, image #721272 / Boris Kavashkin / CC-BY-SA 3.0

Did we really want to reduce poverty?

Did we really have to wait for China to see the economic effects of pursuing manufacturing?

Made in China

Well, many developing countries are now finally pursuing manufacturing, taking advantage of currently low labor costs.

I also want to bring up Ghana‘s current economic growth because I want to shake off people’s image of Africa as a backward continent:

The economy of Ghana, has a diverse and rich resource base with a primary manufacturing and exportation of digital technology goods combined with automotive and ship construction and exportation, as well as exportation of diverse and rich resource hydrocarbons, industrial minerals among many others makes Ghana attain one of the highest GDP per capita in Africa.  Ghana is one of the top–ten fastest growing economies in the world, and the fastest growing economy in Africa.

The Ghanaian domestic economy in 2012 revolved around services, which accounts for 50% of GDP and employs 28% of the work force.  Growing output towards economic industrialization has made Ghana remain one of the more economically sound countries in all of Africa…

Manufacturing

Ghana’s industrial base is relatively advanced. Import-substitution industries include electronics manufacturing; car manufacturing; textiles; steel; tires; photovoltaics (pv) and solar panels; crude oil and gas refining; finished goods; flour milling; food production; beverages; tobacco; simple consumer goods; and electric car, truck, and bus assembly, while toiletries are currently imported.

Economy of GhanaPhoto Credit: EnzoRivos

Ghana: Vision 2020 and Industrialization

Ghana intends to achieve its goals of accelerated economic growth, improved quality of life for all Ghanaian citizens, by reduced poverty through, higher privateinvestment, rapid and aggressive industrialization, as well as direct and aggressive poverty-alleviation efforts.  These plans have been forcefully reiterated in the 1995 Ghana government report, Ghana: Vision 2020.  Nationalization of state-owned enterprises continues, with about two-thirds of 300 parastatal enterprises owned by the Government of Ghana.  Other reforms adopted under the government’s structural adjustment program include the elimination of exchange rate controls and the lifting of virtually all restrictions on imports.  The establishment of an interbank foreign exchange market has greatly expanded access to foreign exchange.

The medium-term macroeconomic program of Ghana forecast assumes political stability, successful economic stabilization, and the implementation of a policy agenda for private sector growth, and aggressive public spending on social services, infrastructure, and industrialization.  The ninth Consultative Group Meeting for Ghana ended 5 November 1997 after deliberations in Paris and in March 1998.  Twenty-four countries: Group of 24 were represented at this meeting called on by the Ghanaian Government with projected announcement that, Ghana’s goal and target of reaching the high-income economy status and reaching the newly industrialized country status, would be easily realized by 2020 and 2039 should Ghana rapidly enact its Ghana: Vision 2020 and macroeconomic program.

I really had no idea that they had a Vision 2020 just like Malaysia.  Maybe it’s time other countries did the same.

MittelstandPhoto Credit: Roxanna

As for developed countries, cheaper labor costs in emerging markets have been a bane to their own manufacturing.  But as Germany shows, that does not have to be so:

Over the past 30 years, Germany has stuck firmly to its contention that a manufacturing base is vital for economic growth.  And in 2013 it finds that its once derided position is firmly back in fashion, as countries that have relied too heavily on services attempt a manufacturing revival.

“Economic growth is directly related to the capabilities of the manufacturing sector in a given country,” says Thomas M. Doebler, partner at Deloitte in Munich.  “This has now been recognized in the United States, which is attempting a return to manufacturing after putting an emphasis on services over the past twenty years.”

So when it comes to employment:

This greater job security was afforded in large measure through a “short work” scheme: workers’ total number of hours were reduced to avoid layoffs, and the government covered part of their lost salaries.  Approximately 1.5 million Germans were enrolled in the program at its peak, in May 2009, at a cost to the government of 4.6 billion euros that year alone.  According to a 2009 report by the Organization for Economic Cooperation and Development, the program saved approximately 500,000 jobs during the recent economic recession.

I would prefer this to having no job at all.

As it says in Voltaire‘s Candide:

Work keeps us from three great evils: boredom, vice, and need.

Conveyor of boxes factory

Photo Credit: Robert N. Dennis collection of stereoscopic views. / United States. / States / Texas. / Stereoscopic views of Texas. (Approx. 72,000 stereoscopic views : 10 x 18 cm. or smaller.) digital record

Sources:

http://en.wikipedia.org/wiki/Economy_of_Ghana

http://www.theglobeandmail.com/report-on-business/economy/canada-competes/germany-shows-that-making-things-still-pays/article12258236/

http://www.foreignaffairs.com/articles/67899/steven-rattner/the-secrets-of-germanys-success

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