The Lure and Challenges of the Automobile Industry
The automobile industry simultaneously entices and challenges developing countries. It is a leading employer, a major trader, and a crucial integrator of manufacturing technologies. Would-be entrants into the industry face formidable challenges, however: high entry barriers, demanding quality requirements, and (for components producers) assemblers’ expectations that component producers will be able to co-locate with their plants. Only 15 of the world’s largest auto components manufacturers come from outside Europe, Japan, or North America. Changes in technology and regional and global trade regimes have consolidated the industry and reduced the availability of policy instruments. Nonetheless, opportunities exist for developing economies, not least because of the potential for integration into regional and global supply chains. Most of the growth in demand for autos is concentrated in the developing world. Less developed countries on the periphery of major markets have substantially increased their share of global output over the last two decades.