REVIEW
“You can’t leave it entirely to the market”
The Future of the Factory: How Megatrends are Changing Industrialization Jostein Hauge, Oxford University Press, 2023, 224 pages
I n his landmark 2023 book The Future of the Factory economist Jostein Hauge investigates how industrialization has been shaped by technological developments, new forces of globalization and the threat of ecological collapse. It also charts new opportunities for industrial policy and global governance. He spoke to the OPEC Fund Quarterly in a telephone interview. OPEC Fund Quarterly : Let’s start with China and its impact on global industrialization. How does the rise of China to become the “factory of the world” influence development in other developing countries and their chances to join the world market? Jostein Hauge: China is obviously challenging the global dominance of Western-based corporations. In the past 20 years or so, China has massively increased its manufacturing capacity and is now close to accounting for 40 percent of global manufacturing production. If you have a big Economist Jostein Hauge on the power balance shaping the global economy, China as a challenger and lessons for the developing world By Mahdi Rahimi, Senior Financial Analyst, OPEC Fund
War II: there are not that many. We’re living in a world economy that is organized around the principles of competition. The countries that are best aligned will succeed and China has been competing impressively. But let’s not forget that consumers and transnational corporations based in high income countries have benefitted massively from efficient production systems and cheap labor in China. Additionally, many developing countries have built mutually beneficial trading relationships with China. Overall, the global economy has benefitted greatly from China’s industrialization. OFQ : You started your PhD in 2013, when neoliberalism was the dominant doctrine. This seems a completely different era now. How do you see the world today in terms of trade pacts and economic unions such as the BRICS, especially for developing countries? JH: I believe that neoliberalism is still very much alive, but we can also describe what is happening now as a sort of neomercantilism. The area where we see a change is trade. US President Donald Trump does not align himself with free trade. His favorite tool is tariffs, even though the economic rationale is not always clear. He is burning a lot of bridges and in that sense, he can be called a neomercantilist. However, as an ideology, neomercantilism is about using trade policy and industrial policy strategically. The strategic economic element seems to be missing from Trump’s tariffs, so in that sense the neomercantilist label is questionable in his case.
manufacturing sector, you have a lot of power in the world economy. In that sense, China is emerging as a global economic superpower. But China is not yet rivalling the global dominance of large US corporates in the digital and high-tech spaces. Currently, global corporate power remains highly concentrated within the US. So, the degree to which China will challenge Western economic hegemony remains to be seen – it has certainly caught up in some areas already. For the Global South more broadly, we need to keep our expectations realistic. The process of development from low to high income has always been arduous and challenging. Think about the number of countries that have transitioned from low income to high income since World
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