CHAPTER 1 The Lexus and the olive tree revisited Myths and facts about globalization eak Once upon a time
tree revisited Myths and facts about globalization eak Once upon a time, the leading car maker of a developing country n real exported its first passenger cars to the US. Up to that day, the little company had only made shoddy products poor copies of quality items made by richer countries. The car was nothing too sophisti- cated just a cheap subcompact (one could have called it four wheels eta and an ashtray). But it was a big moment for the country and its exporters felt proud. Unfortunately, the product failed. Most thought the little car looked lousy and savvy buyers were reluctant to spend serious money o why family car that came from a place where only second-rate products to he were made. The car had to be withdrawn from the US market. This disaster led to a major debate among the country's citizens. Many argued that the company should have stuck to its original business of making simple textile machinery. After all, the country's biggest export item was silk. If the company could not make good cars after 25 years of trying, there was no future for it. The govern- ment had given the car maker every opportunity to succeed. It had ensured high profits for it at home through high tariffs and draconian controls on foreign investment in the car industry. Fewer than ten years ago, it even gave public money to save the company from immi nent bankruptcy. So, the critics argued, foreign cars should now be let in freely and foreign car makers, who had been kicked out 20 years before, allowed to set up shop again. Others disagreed. They argued that no country had got anywhere without developing 'serious' industries like automobile production.