Ask government leaders and senior executives in the United States, Western Europe or Japan how they intend to cope with the challenges of China and India, and you'll get a familiar response: "We shall move higher in the value-added chain." In the past, China was the "world's factory" and India the "world's back office." Today, new multinationals in the emerging markets are no longer satisfied with imitating. In certain cutting-edge industries, they already seek to convert cost advantages to more sustainable competitive advantages—often through innovation.
Foreign multinationals - including U.S. corporations - play a vital role in the transition from cost-efficiencies to innovation in the emerging markets.
As China has become America's most rapidly-growing export destination, the debate on the U.S.-Chinese trade and investment has accelerated. Whether the next president is a Democrat or a Republican, pressure is growing on free trade in general and the U.S.-Chinese trade and investment in particular. Since these two nations now account for almost half of global growth, the future of the bilateral U.S.-Chinese relationship has worldwide implications. What is ahead?
Dr. Dan Steinbock is Research Director of International Business at the ICA Institute. He is also Visiting Professor at Helsinki School of Economics and the Director of the New York office of Academy of Finland. A senior Fulbright scholar, Dr. Steinbock has taught in the executive education programs of Columbia Graduate School of Business and Stern School of Business NYU. He authored the chapter “Higher Education and Innovation as Competitive Advantages” in Education for Innovation: Implications for India, China & America (Sense Publishers, 2008).