Reference no: EM133105254

Transportation is one of the most critical and important ingredients for the economic and social advancement of geographic regions. From the corner grocery stores to large complex factories, efficient and effective transportation is the lifeblood of their ability to operate and compete. Globalization has made transportation even more important with the increased distances and the importance of reliability for today's organizations.

Transportation was often viewed as the "glue" to hold complex global supply together to make good on the potential, competitive advantages that were frequently extolled for effective supply chain management. Globalization has elevated transportation to a more strategic role in many organizational supply chains.

There have been some notable changes in the global economic landscape in the last 20 years or so. The emergence of the so-called BRIC (Brazil, Russia, India, and China) and VISTA (Vietnam, Indonesia, South Africa, Turkey, and Argentina) countries are examples of that change. The first group is the more advanced of the two groups, especially China and India who are challenging the more advanced economies. The second group are more appropriately labeled emerging economies, but some faster than others.

The global flow between countries of imports and exports continues to expand, which is a clear indication of the theories of absolute and comparative advantage at work. While many countries participate in these flows, the more developed countries in Asia, the EU, and the United States dominate the volume. China, the United States, Germany, and Japan are the world leaders.

An important contributing factor to the growth in trade flows among countries is the more sophisticated supply chains and transportation services, which permit the production and assembly of parts for finished products to be produced in several countries with appropriate sequencing. Overall growth of global trade more than doubled between 2000 and the present with help from trade agreements and increased acceptance of foreign products.

Population growth, age distribution, and urbanization will play important roles in fostering economic development and associated global trade flows. The populations of China and India exceed a billion in each country and represent an important advantage for these two countries in terms of labor and potential consumers as their economies have grown and developed in the last 25 years.

Land and resources are also important elements for increased economic development, especially energy, food, and water. Energy has provided the basis for improved economies in a number of countries in the Middle East and Africa, but even developed countries in Europe, and the Unites States and Canada have added growth because of energy growth associated with new technology for recovering oil and natural gas. Advancements in crop production have helped to alleviate food shortages, but there is much more that can and should be done in this area.

Technology has played a major role on a macro and micro level to influence the growth of global trade flows. Information technology and knowledge dissemination have promoted economic growth and development by allowing more countries to participate in the production of goods and services while separated by distance but connected through information technology.

Technology is broader than information and consideration has to be given to the "hard side" of technology. Industrial robots are making inroads into the production and distribution effective. In some cases, technology is replacing humans, while in other instances, complementing human effort. Industrial robotics can play an increased and important role in the future.

Increased globalization by crossing country borders through economic integration has the potential to improve the economies of many countries of the world with consequent economic advantage of their respective citizenry, but the political tensions and actual combat will thwart these efforts and protectionism may rear its "ugly head" again to the detriment of all.

Questions:

1. Transportation has sometimes been described as the glue that holds global supply chains together. What is the meaning of this statement and do you agree? Why or why not?

2. The theories of absolute and comparative advantage have been offered as economic rationale for trade between and among regions and countries. Compare and contrast the two concepts. Which of the two do you think is more important for explaining the growth in global trade during the last 25 years? Why?

3. The economic integration associated with globalization can provide an opportunity for more widely dispersed development. Why is this possible? What are the major stumbling blocks to such integration?