Comments on James Laurenceson, UTS “In the US–AU–China love triangle, actions speak louder than words”, 12/10/2017
The author seems persuasive in arguing that trade and investment relations are both important. It is also probably true that it is difficult to be sure which of the two is more important and by how much. Notwithstanding those, it is probably also true that the two may not be completely equally important, or equally important in all circumstances and at all times. Some people may say they are two different things similar to things like apple and orange. Trade is a flow concept and FDI is more closely related to stock of capital.
Given that, a question to ask may: is there a way to assess which is more important and under which circumstances?
To begin to tackle that question, one may consider saving/consumption ratio, capital/labor ratio, capital/income ratio for the role of investment in the economy. Besides, a factor may be relevant is the depreciation rate of investment (maybe real economic depreciation rate). There is also the question of the role of FDI which is a little more difficult to have a fixed value on each dollar of FDI.
For trade, while there is the GDP identity, the question of trade to the economy and welfare is probably more than that seeming relationship of exports add to GDP and imports subtract from GDP.
The question is how to value/measure that and how to compare that with investment/FDI.
I don’t know how to answer that now, but hope someone may have that as an interest of a research topic.