bearish wrote:Paul wrote:Sounds like a stupid way to make crankshafts. Expensive, inefficient, bad for the environment.
It sure sounds that way, although I'm going to go out on a limb and guess that the engineers at BMW have given it some thought. Of course, I also wouldn't rule out that it is a grand scheme to harvest a variety of local subsidies and tax breaks...
In some countries you get manufacturing grants etc. if you can prove it's 'manufactured' in the country. My neighbour was MD of Fyffes and true to get a manufacturing grant for bananas in the 80s, even though it was just some kind of postprocessing. 12.5% tax.
And in NL the great outsourcing exist began when they discovered gas. It would surprise me if Norge has met a similar fate.
In economics, the Dutch disease is the apparent causal relationship between the increase in the economic development of a specific sector (for example natural resources) and a decline in other sectors (like the manufacturing sector or agriculture). The putative mechanism is that as revenues increase in the growing sector (or inflows of foreign aid), the given nation's currency becomes stronger (appreciates) compared to currencies of other nations (manifest in an exchange rate). This results in the nation's other exports becoming more expensive for other countries to buy, and imports becoming cheaper, making those sectors less competitive. While it most often refers to natural resource discovery, it can also refer to "any development that results in a large inflow of foreign currency, including a sharp surge in natural resource prices, foreign assistance, and foreign direct investment"
The term was coined in 1977 by The Economist to describe the decline of the manufacturing sector in the Netherlands after the discovery of the large Groningen natural gas field in 1959.
// I used to work with manufacturing companies in EU in the 80's as outsourcing spree was in full motion.