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WASHINGTON, D.C., May 19 -- A new study by the International Finance Corporation (IFC) assesses the impact on the automotive industry of globalization. The study presents forecasts on the future of the industry, which plays a major role in output, employment, and exports in several developing countries. This analysis grew out of IFC-sponsored round-table discussions in Central Europe, South and East Asia, and Latin America, which brought together policymakers and industry executives. It outlines the business aspects of the industry, including technological changes, characteristics of the market, the changing relationships between suppliers and assemblers, and between multinational and developing-country companies. The study also speculates about strategic policy perspectives for major developing-country markets and covers aspects such as macroeconomics, competition, trade regimes, local content regulations, and the environment. Titled Developing Country Automotive Industries: New Policies, Radical Change (Dis
cussion Paper 21), the study was written by Peter O'Brien, an international industry consultant, and Yannis Karmokolias of IFC's Economics Department. "One of the key suggestions the paper offers," said Guy Pfefferman, Director of IFC's Economics Department, "is that component industries in developing countries - a thus far neglected segment of the automotive industry - can generate substantial foreign exchange where car assembly may not succeed. In addition, the development of future automotive industries does not need to start with assembly - as has been the case in many countries - but could be based on component manufacturing, which might lead later to assembly." IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
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