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2013-10-05

Balanced and unbalanced growth again

Comments on Edward Oughton "Connecting China’s broadband ambitions to development",5/10/2013,http://www.eastasiaforum.org/2013/10/03/connecting-chinas-broadband-ambitions-to-development/

Balanced economic growth perhaps needs s clear definition. This is because it is not clear how the idea of balanced growth needs to be reconciled with comparative advantage theory in international trade.

To illustrate the point, if every country has the same economic structure, is that a balanced or unbalanced world economy?

Secondly, if comparative advantage theory has relevance (as I suppose it does), it means a country’s economic structure is to a large degree determined by its comparative advantage. Then it follows that the balanced growth must be consistent with this path of growth along the lines of changing comparative advantage.

PS: These comments seem to be at odd with the title, this is because the article started with the following: "Premier Li Keqiang recently stressed at the World Economic Forum that structural economic reform is pivotal if China is to achieve a sustainable economic growth trajectory.

China evidently needs to balance its economy to avoid overreliance on its manufacturing base. The government’s latest plan to invest $US323 billion in expanding fixed-line and wireless broadband connectivity will bring it one step closer to this goal by helping to spur the development of its service sector."

It seems people are so with balance and imbalance and it is very fashionable.

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