Stories

GE's new Indian factory shows globalization in retreat

Donald Trump isn't the only world leader making hey from protectionist rhetoric and policy — more than 800 new protectionist trade measures have been implemented around the globe since November 2008, including many "Buy American" provisions signed into law by President Obama. The Wall St Journal reports that this dynamic is forcing companies like GE to build factories abroad to win contracts, even if their U.S. operations are more efficient.

One example is a $2.5 billion contract the manufacturer won from Indian Railways, which the company says it couldn't have won without first building a factory complex there in 2014. And if it wanted what is now one of GE Transportation's largest-ever contracts, building a second facility in the remote town of Marhuara, India — a location handpicked by a powerful Indian politician for development reasons — was its only choice.

Why it matters: Once poor countries like China, India, and Indonesia are building infrastructure and human capital necessary to handle sophisticated manufacturing, and they are demanding that multinational firms hire domestically if they want to sell domestically.