Re-reading this, the “Manufacturing Systems” explanation seems to agree with one of the stories of economic development in poorer countries. Quoting two relevant sections from Scott Alexander’s review of How Asia Works:
Imagine having to start your own car company in Zimbabwe. Your past experience is “peasant farmer”. You have no idea how to make cars. The local financial system can muster up only a few million dollars in seed funding, and the local manufacturing expertise is limited to a handful of engineers who have just returned from foreign universities. Maybe if you’re very lucky you can eventually succeed at making cars that run at all. But there’s no way you’ll be able to outcompete Ford, Toyota, and Tesla. All these companies have billions of dollars and some of the smartest people in the world working for them, plus decades of practice and lots of proprietary technology. Your cars will inevitably be worse and more expensive than theirs.
. . .
Aren’t there good free-market arguments against tariffs and government intervention in the economy? The key counterargument is that developing country industries aren’t just about profit. They’re about learning. The benefits of a developing-country industry go partly to the owners/investors, but mostly to the country itself, in the sense of gaining technology / expertise / capacity. It’s almost always more profitable in the short run for developing-world capitalists to start another banana plantation, or speculate on real estate, or open a casino. But a country that invests mostly in banana plantations will still be a banana republic fifty years later, whereas a country that invests mostly in car companies will become South Korea.
In terms of doing the thing the only meaningful difference between someone in an undeveloped country now and the people in 1800 is their complete certainty that the thing can be done. For that matter, the same rules apply to me for anything I try to make in my garage.
The ease with which the idea applies across scale and distance is a point in its favor, to me.
Re-reading this, the “Manufacturing Systems” explanation seems to agree with one of the stories of economic development in poorer countries. Quoting two relevant sections from Scott Alexander’s review of How Asia Works:
. . .
In terms of doing the thing the only meaningful difference between someone in an undeveloped country now and the people in 1800 is their complete certainty that the thing can be done. For that matter, the same rules apply to me for anything I try to make in my garage.
The ease with which the idea applies across scale and distance is a point in its favor, to me.