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Big Picture Economics: How to Navigate the New Global Economy by Ron Scherer, Joel Naroff

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Chapter 10

The Panama Canal Widens and the Middle Class Grows in China—How Does That Affect Indiana?

Atop-selling computer starts as an idea that some genius dreams up in Anywhere, USA. An investor in New York may pay the nascent company's salaries. The research and development might take place in a campus-like series of buildings in California. A prototype may be tested in Germany. Then a factory in China or Mexico may start making the pieces, which are ultimately shipped back to the United States for final assembly.

What this illustrates is that companies are no longer tethered to their markets. As a result, business integration across borders is one of the keys to economic success. But, as corporations widen their supply chain, they need to keep a wary eye on what's happening—the context, if you will—in that global loop.

In this chapter, we show how events taking place outside of America's borders can affect us. China, with one of the strongest growth rates in the world, fights to keep its currency from rising too rapidly. Greece is unable to pay its pensioners or lenders. That causes a tightening of credit across Europe. The middle class grows in Brazil, increasing demand for products previously unaffordable.

Sometimes a global change can be physical. In this chapter, we also look at how the widening of the Panama Canal can affect trade, ports, and jobs from Bayonne, New Jersey, to Long Beach, California, and, yes, to Fort Wayne, Indiana.

Ports Get Ready for Change

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