"The Box"

Here is a link to the article that I will be referencing.
http://press.princeton.edu/chapters/s9383.html

1. Pick an interesting part of the article and explain why you picked it.

I was very intrigued by the argument that "the key question today about an economy is not how much capital and labor it has, but the innovations that help employ those resources more effectively to produce more goods and services." Furthermore, "The economic benefits arise not from innovation itself, but from the entrepreneurs who eventually discover ways to put innovations to practical use--and most critically,  the organizational changes through which businesses reshape themselves to take advantage of the new technology. 

So let's break this down into the two components. First, the key question has shifted. It is no longer sufficient to have all of the capital and labor in the world. An economy needs innovations to continue the growth. Let's say we have a company that outputs clothing. This company has 100 workers and each worker works at a desk with their own sewing machine. Now, let's say there is another company that is also in the clothing industry. They only have 10 workers. However, this company has just innovated a new sewing machine that outputs 500 sweaters in the time a normal worker would only output 1 sweater. So now, the company with only 10 workers can output 5,000 sweater compared to the company with 100 workers that can output just 100 sweaters in the same amount of time. From here, it is clear to see that the mass producing of sweaters will allow the "smaller" business to lower its prices so that it can sell more sweaters. This can potentially drive out the company with 100 workers, since this company is not working on any innovations to improve on the amount of goods or quality of the goods that it can produce.

The thought that the innovations are not actually beneficial unless there are entrepreneurs that can put them to good use, is a trivial, yet powerful statement. I could invent a cube that transforms into a laptop computer with the push of a button. It would be easy to carry and could potentially help people all over the world. However, if somebody does not pick up that product and tell the world how this product can be more efficient than what we have right now, then this innovation will not survive. Let's assume that there is an entrepreneur that has a way to market this innovation and says that this laptop is great for work on the go. It can very easily be stored in a purse, bag, or even coat pocket. Some people might turn their heads. Then he might take it further and say that this laptop is less likely to be stolen since it is well-hidden inside a bag, rather than being in plain sight in a laptop bag or backpack where thieves can spot it quickly. Now, there may be a market for this product that will emerge, simply because somebody found a use for it. Innovation without further marketing, will not benefit an economy.

2. How does the author see the development of shipping containers contributing to globalization?

The author points out that the shipping container contributed to globalization. Before the development of the shipping container, there was not a uniform way to move cargo from one port to another. Each ship had its own size and a different amount of cargo that it could carry. There was also difficulty with loading and unloading the ships with the cargo. The expense to pay for all of the man power needed to move all of the cargo by hand was extremely high compared to what it is now. The development of the container lead to a more unified container ship and an efficient way to load and unload the ships. Since the cost of labor went down, the cost of transportation decreased as well. More money could be spent on the transportation that would happen across land masses. Essentially the cost of the transportation by sea was negligible to the cost of transportation by truck, or train in some cases. This allows for markets in China to explore markets in the Americas and vice versa. This made shipping to places like Hungary, which is a landlocked country, worthwhile to countries outside of the European domain. The development of the container created opportunities for countries that normally did not impact the global economy, to play a larger role.

3. Who do you see gaining and losing from this transformation of global transportation.

Overall the big gainers in this development are the national economies of the world. Countries that were out of the loop before the development of the container can now trade on the global level. Countries that have been in the loop, now have another market that they can tap into and benefit from trade. However, the losers in this development are the local businesses. Local trucking businesses that would transport cargo are not needed as much because it may be cheaper to ship rather than transport by truck. Railroads are also losing business since a new mode of transportation is cheaper.