Monthly Archives: September 2012

Trade Disruption — 3D Printing
Posted on September 18, 2012 by jf139239
3D printing has some amazing and scary possibilities for the world in the near future. For example, any firm would be able to create a prototype in a short period of time, leading to quick iterative prototyping. Of course, weapons can be produced the same way–a bit scary!

I had considered all of the above when I heard about 3D printing. I failed to think through the effect it would have on international trade. An article in the FT takes it to a logical conclusion:

3D printing, which is set to change the way we think about manufacturing.

Additive manufacturing allows companies to produce locally and respond quickly to changes in demand, without holding large inventories. The advantages of flexibility and of proximity to one’s market and centres of technological excellence may then outweigh those of offshoring, and large-scale process manufacturing. These have made China the hub of global production, but its position is under threat.

Why manufacture in China if you can just hit the print button and be close to your market cutting out transportation and production delays. Wow…

India has long tried to protect itself from unbridled Foreign Direct Investment (FDI). They achieved this by not allowing foreign companies to own a majority stake in ventures, which forced many companies to form partnerships. The Indian Cabinet chose to start modifying this rule by allowing it in retail and aviation. Here’s a quote from the write up in the Financial Times:

The cabinet on Friday also said it was opening the door for up to 51 per cent foreign direct investment in supermarkets and department stores, though New Delhi said each individual state could decide whether or not to allow foreign-owned operators to set up shop in their regions.

India’s economy has been slowing, and Indian Prime Minister Manmohan Singh hopes an increase in FDI will spur growth.

Singh is perhaps one of the most influential individual in India’s economic history. Following its independence, the Indian government implemented a socialist economy. These policies resulted in a much slower rate of growth than nations in the Orient that embraced more open forms of capitalism–often state-run capitalism as in Japan. The weight of these policies created a crisis by 1991. Singh’s economic reforms as the Finance Minister, fostered much faster economic growth. According to the Organization for Economic Co-operation and Development, “annual growth in GDP per capita has accelerated from just 1¼ per cent in the three decades after Independence to 7½ per cent currently, a rate of growth that will double average income in a decade.”

It will be of interest to watch how this plays out both economically and politically for India and companies pursuing investment there.

I have started blogging for my class on International Business and will cross-post entries.