A Convoy Model of Globalisation

Abstract

A convoy model of globalisation is a model of globalisation whereby countries of underdevelopment experience deterioration in their terms of trade due to a devalued currency in order to become competitive while leading countries through their demand provide a stimulus for that industrialisation. The equalising effects of full employment capitalism will function internationally whereby productivities converge, allowing developing countries to catch up to the productivity levels of the leading economies. China is an example of a country that has developed through industrialisation, a devalued currency and increasing wages; it now acts as the leader for less advanced countries like Vietnam and Thailand in that China’s increasing internal demand is fuelling their exports as they absorb them. The multinationals’ relocation from developing countries in search of even lower wages can be overcome, as it was in South Korea and Taiwan, if factors of production are sufficiently diversified and the skilled people transfer to new spin-off companies that can serve to replace them.