Irwin R. Tiongson is Professor of Practice in the Global Human Development Program at Georgetown University.
What if we told you that you could read real-world history on the underside of your child's Hot Wheels?
As children in the Philippines in the 1970s, my older brother Hector and I played with die-cast toy cars. I remember the first time I saw the underside of these cars, soon after I could read, and realized that they were made in different countries in different years. Some are made in the UK or the US. The new one was made in Japan. Decades later, when my family immigrated to the United States for my job as an economist, my two children acquired toy cars almost identical to mine. First it was made in China and later in Vietnam.
We now have a small collection of these cars and use them from time to time as educational tools. I ask the students in my economics class to inspect the underside of the car, and together we trace the step-by-step movement of toy car production. He's from England and America in the 1960s, he's from Japan in the mid-1970s, and he's from Korea in the mid-1970s. China from the 1980s to the late 1990s, and then Vietnam.
I told them that the manufacturing process for die-cast toy cars has changed little since the 1960s, and has been steadily passed down from country to country, marking the beginning of an economy-wide transformation. We look at how toy export data reflects global trends in industrial employment over the past 60 years. That is, a gradual increase in toy production and toy exports in developing countries, an expansion of light industry in those countries, followed by an increase in more complex production. And the entire industrial sector quickly dwarfs the traditional agricultural sector, freeing people from low-wage, low-productivity jobs.
And we see the decline of the industrial sector in the richer economies as quickly as the next industrialized country becomes able to produce at lower prices. When this phenomenon is expressed graphically, the data for each country looks like a hill over time around the world. It's a beautiful and surprisingly understated representation of how countless lives have been changed in the process.
So much of the world's history is reflected in some toy cars.
A few years ago, at the end of a class conversation about economic transformation, I boldly told my students: “If you want to know where the world economy is heading, go to the toy store and look at the underside of the die-cast cars.” Given my children's car and Vietnam's rapid industrial transformation, I was confident they would find me a car from Vietnam. Or maybe from fast-growing Bangladesh or Ethiopia.
The arrival of the coronavirus disease (Covid-19) pandemic has left industries reeling from massive supply chain disruptions. In early 2022, Mattel, which makes Hot Wheels and Matchbox toy cars, moved some production “near-sourcing,” moving its supply chain closer to the United States and away from Asia and China. The company announced a $50 million injection. To the factory in Mexico. So I was expecting to see some toy cars made in Mexico.
Not again. After two years, things may or may not change.
This past holiday season, my kids and I took turns visiting the toy department of a large store in suburban Washington. It was like a game. Find a random car, take a picture of the box and the underside of the car, and send it to the group chat. No items were found from Bangladesh, Ethiopia, or Mexico. They came from Malaysia, Thailand, and surprisingly even China. The world seemed to have taken several detours on its way to inevitable economic transformation.
Near sourcing has turned out to be more complex than expected, as recently documented in the Mexican case. Some of the challenges include scaling and adjusting. As more companies seek nearby production facilities, nearby economies with limited human and infrastructure resources are quickly overwhelmed. And just as key components in toy manufacturing are still imported from China, inputs from China are becoming an integral part of more sophisticated global supply chains more generally. .
Moreover, toy production reflects not only the hopes of industrialization but also its disappointments. At the end of 2022, Mattel celebrated 40 years of manufacturing in Malaysia by announcing the growth of the world's largest Hot Wheels factory. Although this was a positive development, Malaysia's economy reached middle-income status several decades ago. If this pattern were to follow, they would have moved on to manufacturing more complex and profitable products by now. Instead, the country remains caught between developing and rich countries, what economists Indermit Gill and Homi Karas have defined as the “middle-income trap.”
As my kids and I examined this generation's toy cars, we struggled to explain what we were seeing. Not because toy cars don't tell us something about the world, but because they tell us something about the world. They reflect the reality of the world, including its surprises.
