-Jamaican Proverb
Can emerging economies be characterized with this truism? Culture is rarely addressed when assessing the dynamics of economic output. However, economists and business-people alike must start considering culture when analyzing the potential of growth markets. Cultural homogeneity has resulted from having to accommodate contrasting personalities within a single, harmonious community. Complying with conventions of mannerism, courtesy, and even fashion can silence innovative minds. In abiding by these codes of civility, are individuals suppressing their creativity? By infusing a culture with extreme diversity, is process efficiency and short-term productivity sacrificed?
Consider China; with its deep historical roots alongside considerably less genetic diversity within its population. In the modern world, China has been the epicenter of manufacturing efficiency and cost reduction through economies of scale. When it comes to taking a proven process, and refining it until maximum benefit has be extracted for the lowest cost, China has developed a level of expertise found nowhere else in the world. Their mastery of manufacturing has become so pervasive that we can observe it in everything from computers to clothing. Such efficiency requires a lot more than well-designed factories or reliable materials suppliers. It requires similar ideologies and parallel thought paradigms among the workforce. With 98% of China's population being "Han Chinese", there is a high level of ethnic and cultural unity in the country. In fact, a study conducted by the National Center of Biotechnology Information showed that Han sub-populations in different regions are genetically close to local ethnic minorities. Is it a coincidence that a country this homogeneous has been able to master efficiency and repeatability?
Contrast this with a distinctly different culture: The United States. The "Melting Pot", often touted as the most racially, ethnically, religiously, and genetically diverse country in the world which coincidentally, also boasts a high proportion of free thinkers and non-conformist eccentrics. With such an eclectic population, how does US manufacturing efficiency compare to China's? While the U.S. is currently the world's largest manufacturer (as of 2008), this may not be true much longer. Just 4 days ago, it was announced that Chinese manufacturing is likely to surpass the US within the decade. While economists might attribute such a shift to cheaper labor, lower taxes, and favorable foreign exchange rates, culture is rarely considered to be a explanation of why Chinese manufacturing is so successful. To illustrate; the US has had a ratio of manufacturing output to GDP between 16% and 19% since the 1940s. Productivity gains during this time have largely been the result of increased automation and "outsourcing". China, on the other hand, has readily invested in manufacturing with human capital in addition to automation. 350,000 additional engineers join the Chinese workforce each year, for example.
In light of this, what kinds of disciplines is the US currently excelling in? Innovation-centric outputs such as music, film and art, seem to thrive in the US. In these disciplines, creative vicissitudes define productivity and individuals are granted the luxury of time and resources. With its credit-leveraged prosperity and obsession with "cool", the US provides such an atmosphere quite effectively. Not surprisingly, this country is the ganglion of the world's media and entertainment industry, and generates creative input for pop-culture internationally. In film, music, fashion, and often art, the US often defines the standard. Does the abundance of cultural diversity here drive this creativity? Moreover, does reduced cultural homogeneity impede our manufacturing efficiency?
Irrespective of the many opinions on this matter (and I'm sure there are many); in considering the economic shifts we are observing in our world today, any economist would be remiss if he/she did not consider the cultural context of an economy before assessing its productive potential.
Consider China; with its deep historical roots alongside considerably less genetic diversity within its population. In the modern world, China has been the epicenter of manufacturing efficiency and cost reduction through economies of scale. When it comes to taking a proven process, and refining it until maximum benefit has be extracted for the lowest cost, China has developed a level of expertise found nowhere else in the world. Their mastery of manufacturing has become so pervasive that we can observe it in everything from computers to clothing. Such efficiency requires a lot more than well-designed factories or reliable materials suppliers. It requires similar ideologies and parallel thought paradigms among the workforce. With 98% of China's population being "Han Chinese", there is a high level of ethnic and cultural unity in the country. In fact, a study conducted by the National Center of Biotechnology Information showed that Han sub-populations in different regions are genetically close to local ethnic minorities. Is it a coincidence that a country this homogeneous has been able to master efficiency and repeatability?
Contrast this with a distinctly different culture: The United States. The "Melting Pot", often touted as the most racially, ethnically, religiously, and genetically diverse country in the world which coincidentally, also boasts a high proportion of free thinkers and non-conformist eccentrics. With such an eclectic population, how does US manufacturing efficiency compare to China's? While the U.S. is currently the world's largest manufacturer (as of 2008), this may not be true much longer. Just 4 days ago, it was announced that Chinese manufacturing is likely to surpass the US within the decade. While economists might attribute such a shift to cheaper labor, lower taxes, and favorable foreign exchange rates, culture is rarely considered to be a explanation of why Chinese manufacturing is so successful. To illustrate; the US has had a ratio of manufacturing output to GDP between 16% and 19% since the 1940s. Productivity gains during this time have largely been the result of increased automation and "outsourcing". China, on the other hand, has readily invested in manufacturing with human capital in addition to automation. 350,000 additional engineers join the Chinese workforce each year, for example.
In light of this, what kinds of disciplines is the US currently excelling in? Innovation-centric outputs such as music, film and art, seem to thrive in the US. In these disciplines, creative vicissitudes define productivity and individuals are granted the luxury of time and resources. With its credit-leveraged prosperity and obsession with "cool", the US provides such an atmosphere quite effectively. Not surprisingly, this country is the ganglion of the world's media and entertainment industry, and generates creative input for pop-culture internationally. In film, music, fashion, and often art, the US often defines the standard. Does the abundance of cultural diversity here drive this creativity? Moreover, does reduced cultural homogeneity impede our manufacturing efficiency?
Irrespective of the many opinions on this matter (and I'm sure there are many); in considering the economic shifts we are observing in our world today, any economist would be remiss if he/she did not consider the cultural context of an economy before assessing its productive potential.
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