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2009-07-22

Trade and growth - an interesting twist

Comments on Ron “PNG: Trade Policy and Trade Agreements”, 21/07/2009, http://www.eastasiaforum.org/2009/07/21/png-trade-policy-and-trade-agreements/

It is discouraging to hear that "there is no convincing evidence of a positive relationship between trade openness and increased growth". The comparative advantage theories of trade are one of the most agreed areas in economics by economists, but now it is in question.

But on the other hand, "other factors, particularly so-called ‘institutional’ factors, are important in whether removing trade restrictions leads to faster growth", we are hearing. Is this another area of the conflicts between micro and macro economics? Does that mean we need a macro intervention of the type of traditional macro economics on trade issues by government, as opposed to free trade?

Economics is complex and increasingly becomes more so, it seems. Education and re-education of economics.

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