India and China
are both rapidly industrializing countries with a large demand for resources,
yet the vast majority of US scrap metal goes to China. The cheap transportation is what
distinguishes doing business in China versus India. Simply stated, scrap metal is going to go to
the place where the labor and transportation is cheap. Suppose the labor’s really cheap in India,
and it’s seven centers per pound to ship it to India. While the labor is also relatively cheap in
China, it’s only two cents per pound to ship it to China. Since the Chinese provide the cheaper price,
the scrap metal goes to China.
The use of the backhaul allowed the
Chinese and Americans to be efficient with their means of transportation. While the Chinese export scrap metal to the
Americans, the Americans export pounds of cardboard and/or paper. In fact, “that box your new Chinese-made
television was packed in might have once been the box that your last laptop was
packed in.” The backhaul significantly
increased globalization because it allowed containers to go back with some
cargo. In the long run this allowed
profit to be made on the backhaul as well, instead of going home empty-handed.
Diamond suggested that a society’s
success is based on access to specific resources (with transportation being one
of them). The themes raised in Diamond
relate to modern transportation in the sense that only the strongest will
survive. In Diamond’s article, “the Eurasians
proved to be so powerful because of their access to steel swords, guns, and
horses.” There were not many methods of
transportation back in the day, but these horses allowed the Eurasians to
travel from place to place and goods to be traded. Likewise, modern transportation allows
individuals to travel from place to place to exchange goods. The means of modern transportation are
through car, boat, or plane. In a
nutshell, if transportation is successful, then trade will be successful.
No comments:
Post a Comment