The decline in manufacturing as a creator of wealth and jobs will inevitably bring about a new protectionism. For the first reaction to a period of turbulence is to try to build a wall that shields one’s own garden from the cold winds outside. But such walls no longer protect institutions—and especially businesses—that do not perform up to world standards. It will only make them more vulnerable.

The best example is Mexico, which for fifty years from 1929 on had a deliberate policy of building its domestic economy independent of the outside world. It did this not only by building high walls of protectionism to keep foreign competition out. It did it—and this was uniquely Mexican in the twentieth-century world—by practically forbidding its own companies to export. This attempt to create a modern but purely Mexican economy failed dismally. Mexico actually became increasingly dependent on imports, both of food and of manufactured products, from the outside world. It was finally forced to open itself to the outside world, since it simply could no longer pay for the needed imports. And then Mexico found that a good deal of its industry could not survive.

ACTION POINT: When manufacturing jobs decline, is the country’s manufacturing base threatened? Why is it so difficult to accept that society and the economy are no longer dominated by manual work in developed economies?

Management Challenges for the 21st Century
The New Realities
Managing in the Next Society