The Importance Of The Auto Industry In The World Economy

Detroit auto makers made plenty of mistakes as they pled their case for a bridge loan from Washington last week. The biggest was underestimating how little Congress and America understand the crucial role vehicle manufacturing plays in the global economy.

Every other industrial power and developing country is working to either bolster its domestic auto industry or develop one, yet much of the U.S. seems content to see ours disappear.

In the early 1990s, China declared autos as one of five “pillar industries” (in addition to electronics, housing, petrochemicals and machinery) that would be the foundation for its great leap into modernity.

China’s leaders understood that manufacturing vehicles creates tremendous wealth and raises a nation’s standard of living by providing millions of good-paying manufacturing, engineering and related technical and non-technical jobs.

The strategy worked. China is on its way to become the world’s largest vehicle market very soon. Currently, Russia, India, central Europe and many other countries also are planning to use auto manufacturing to bolster their emerging economies.

Brazil, the world’s fifth largest car market, has used the industry both to grow economically, and to become energy independent. Due to flexible-fuel vehicles and ethanol, Brazil’s economy is no longer destabilized by volatile oil prices.

The European Union is doing everything to assist its struggling car makers, who are being bashed by the same forces killing GM, Ford and Chrysler.

Besides understanding the important role auto makers play in their economies, European leaders see the industry as a bridge to a greener, energy-independent future, powered by electricity and alternative fuels.

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