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.
Showing posts with label extra-regional trade. Show all posts
Showing posts with label extra-regional trade. Show all posts
2009-06-23
Growth in China benefits Australia
Comments on Alan Kohler “Has China gone too far?” 22/06/2009, http://www.businessspectator.com.au/bs.nsf/Article/Has-China-gone-too-far-pd20090622-T8S9U?OpenDocument&src=mp
I think Australia is still well placed to benefit from China's continued growth, irrespective how its exports will perform in the next decade or two.
Given the international imbalance in savings and consumption, we are likely to see a period of slower consumption growth in the US for two main reasons. The first is the adjustment between savings and consumption - the saving ratio will increase and the consumption share declines. The second is the wealth factor, due to the destruction of wealth by the financial and economic crisis and the burst of assets bubbles.
The implications for China's exports are that they will be growing at a slower pace than they used to be in the past decade. An additional factor is that as the size of the major developing economies including China and India's grow more rapidly, the impact of their exports becomes larger. The capacity of the US and other advanced economies to absorb their exports does not grow as fast. so it becomes a constraint.
But China and other developing economies can still grow. What they need to do is to channel their savings to own domestic investment. This in theory can balance their internal savings and investment. But the adjustment may take time.
If China does pursue a high growth through increased share of investment to accumulate capital, then it will be good for Australia. Since investment in capitals requires more metals and more resources - that is Australia's comparative advantages.
I am hopeful that Australia will benefit from China's continued high growth and a closer economic integration between the two economies.
I think Australia is still well placed to benefit from China's continued growth, irrespective how its exports will perform in the next decade or two.
Given the international imbalance in savings and consumption, we are likely to see a period of slower consumption growth in the US for two main reasons. The first is the adjustment between savings and consumption - the saving ratio will increase and the consumption share declines. The second is the wealth factor, due to the destruction of wealth by the financial and economic crisis and the burst of assets bubbles.
The implications for China's exports are that they will be growing at a slower pace than they used to be in the past decade. An additional factor is that as the size of the major developing economies including China and India's grow more rapidly, the impact of their exports becomes larger. The capacity of the US and other advanced economies to absorb their exports does not grow as fast. so it becomes a constraint.
But China and other developing economies can still grow. What they need to do is to channel their savings to own domestic investment. This in theory can balance their internal savings and investment. But the adjustment may take time.
If China does pursue a high growth through increased share of investment to accumulate capital, then it will be good for Australia. Since investment in capitals requires more metals and more resources - that is Australia's comparative advantages.
I am hopeful that Australia will benefit from China's continued high growth and a closer economic integration between the two economies.
2009-05-22
Trade by comparative advantages not by regulations
Comments on Joel Rathus’s comments on Haruhiko Kuroda’s “theories”, 21/05/2009, http://www.eastasiaforum.org/2009/05/19/asian-development-bank-and-the-invention-of-a-new-asian-growth-paradigm/
Joel, your comments caused me to reflect on the term "interest groups". It may appear to be a remote link, but I can't help seeing a shadow there. Intraregional or extra-regional trade, it should all be based on comparative advantages and changes in those advantages overtime. They should not be regulated or forced by some authorities according to their will, such as the ADB with little real accountability.
The blunders that the IMF made to some Asian countries during the Asian financial crisis in the second half of the 1990s have been well known. Few people from IMF back then have been held accountable for the huge costs their mistakes caused to some Asian countries. One would hope that the ADB would learn from the IMF experience and avoid making similar mistakes.
Joel, your comments caused me to reflect on the term "interest groups". It may appear to be a remote link, but I can't help seeing a shadow there. Intraregional or extra-regional trade, it should all be based on comparative advantages and changes in those advantages overtime. They should not be regulated or forced by some authorities according to their will, such as the ADB with little real accountability.
The blunders that the IMF made to some Asian countries during the Asian financial crisis in the second half of the 1990s have been well known. Few people from IMF back then have been held accountable for the huge costs their mistakes caused to some Asian countries. One would hope that the ADB would learn from the IMF experience and avoid making similar mistakes.
Subscribe to:
Posts (Atom)
Posts
