'comparative advantage' and resilience

The economic and development policies of the past thirty years have reduced the resilience of communities, societies and nations.  In these COVID-19 times we are currently paying the price of this reduced resilience and realising that what we once knew how to produce locally we often no longer do.

At the heart of the ideology of those promoting globalisation is the idea of 'comparative advantage'.  For a nation to prosper, the argument goes, each nation must focus on what it is, comparatively, the best at doing. This might be cheap labour, natural resources, engineering skills etc.  With focus it can then trade its way to prosperity.  If every nation does this then global trade and GDP will grow, and consumers will be better off with more, and cheaper, goods.  Everyone wins, we are told. Globalisation is presented as both good and inevitable.

So, for example, Bangladesh has lots of cheap low-skilled labour, so it can thrive by encouraging labour-intensive factories producing cheap clothing for the international fashion market.  And given this competitive advantage Bangladesh should make sure not to mess things up by regulating the labour market too much, or by pushing up the cost of labour, or by doing anything to discourage international garment retailers in any way.  If it behaves then it will attract foreign investment (the fashion labels will get their garments made-up in Bangladesh) and be part of the global economy and global supply chains.  Bangladeshis will get jobs.  Consumers (mainly 'Western') will get cheap clothes.*  And what Bangladesh doesn't make it can import.

This notion of comparative advantage is at the heart of how poorer countries are expected (often compelled) to 'develop'.  It is also the rationale for why richer countries, and poorer ones, should no longer manufacture things they once did.  They should focus on what they can do most cheaply.  It explains why, another example, almost all butter on supermarket shelves in South Africa comes from Ireland or New Zealand, where once it was all locally produced.  This economic orthodoxy explains why global supply chains are longer and more complex than ever before, why citizens feel increasingly disconnected from what they consume, and disempowered from the fruits of their labours ...

... and why some countries are struggling to find masks, personal protective equipment (PPE), ventilators etc when they need these to deal with the coronavirus.  It made more sense, from a comparative advantage perspective, to allow these industries to close down and for their products to be produced elsewhere.

The current crisis is exposing the extent to which globalisation and the economic orthodoxies which accompany it have resulted in many countries no longer producing or even able to produce essential commodities.  It also shows the extent to which the disruption of complex global supply chains can disrupt production and manufacturing everywhere.

It seems we can have increased globalisation or enhanced societal resilience.  But not both.

* of course, as the Rana Plaza tragedy revealed, cheap clothes just means someone other than the final consumer is paying the price.  See Patel & Moore, A History of the World in Seven Cheap Things.