Impact on World's Economy

Following recent news is likely to affect, economics, employment and living standards of a number of persons in countries like U.S.A., China, India and other countries

1. GM, the largest automobile manufacturer in the world is seeking technical know-how from the smallest automobile manufacturer ”Reva”? of India. GM wants know how for electric motor from “Reva”. GM wants to change “Spark” car produced by Chevrolet to be changed with electric engine using Riva’s technology. GM will produce car in India and market in India as well as export to other countries including USA. GM will pay royalty to Reva Electric Car Company for every Spark sold by it.

2. In an article titled ”how GE is disrupting itself” and published in the Harvard Business News (22^nd Sept 2009), Chief Executive of G.E. Jeff Immelt wrote “ GE plans to test a new management model in India that the largest US conglomerate believes will help it flourish through a long period of sluggish post recession growth in developed market.---- GE needs to focus on designing lower cost technologies that will appeal to customers in emerging markets. -- Doing so might mean breaking away from the management approach the world’s largest maker of jet engines and electricity producing turbines has relied upon for years. The shakeup is intoned to boost GE’s chance of success in emerging markers. Success in developing counters is prerequisite for continued vitality in developed ones. If GE does not come up with innovations in poor countries and take them global, new competitors from the developing world – like Mindray, Suzlon, Goldwind and Heler – will. GE has R&D centre in India with 5000 employees, mostly with PhDs. They employ 11000 people in India in their manufacturing.

3. In sophisticated technology and equipment India’s cost is much lower, for example cost of Chandrayan 1- sent for moon mission- was $ 75 million( cost of pay load $ 30 million. Cost of pay load for missions like Japan’s SELENE was $ 480 million, China’s Changli $ 187 million and NASA’s LRO was $ 491 million.

4. Finding a business model competitors can't copy
Creating a unique business model can make it difficult for competitors to keep up, writes Kaihan Krippendorff. Krippendorff cites QuEST Global, an Indian engineering firm that divided its engineering and customer service operations between India and the U.S., implementing a "global-local model" that's not only highly innovative, but difficult to copy piecemeal. FastCompany.com/FC Expert Blogs (9/18)

5. 
   

5. GE chairman has come to India, in an interview to economics times he said. We need to be looking to design and engineer products in India that meet the need of Indian market and then look for opportunity to sell these products in other markers. A couple of good example- a $ 1000 hand held electrocardiogram device developed in India and a PC based ultra sound machine developed in China that sells for as little as $15,000 are revolutionary just because of their small size and low price. They are also extra ordinary because they were originally developed for rural markets of emerging economics. But they are now sold in USA where they are pioneering new uses for such machines.. If GE’s businesses are to survive and prosper in the next decade, they must become as adept at reverse innovations as they are at Globalization. Success in developing countries is prerequisite for continued vitality in developed ones.

6. There are 200 large R&D Centers being operated by MNCs to develop technologies, take patents and use these to produce products, may be in US or in their own countries or in India. This is not clearly known.

7. Yesterday World Bank President Robert Zoelick said in Washington the USA should not take dollars status as the world’s key reserve currency for granted because other options are emerging.

8. There are some recent estimates that it will take 6-7 years for U.S. employment to become normal.

All above raises the question as to what is the motive of American Companies. Is it to increase profit in India and China and send profit to US to reduce current account deficit. Or is it to reduce manufacturing in US, which will affect manufacturing employment?

What effect it will have on economy of China and India. Would it bring living standards of poor masses or would it make rich richer.

Would this have implication on other economics?

Please give your views.