Re: Keeping focus after the WTO

[Rod Hay <rodhay@xxxxxxxxxx>]

We all want the poorer countries to have more. But, we are not sure about how
to go about it. I think we need more trade, more technological transfer, etc.
The question is how do we get that. Freer trade is one possibility. But it
has its dangers. Barkley suggested increased trade with controls on capital
flows. But capital flows are the one of the surest way to get technological
transfer. My preference would be managed trade, with rules about certain
things like labour and environment, with international subsidies where
needed, but enforcement is problematic. The larger and richer countries like
the US and the EU have already shown that they will abide by rules only if it
suits them.

I think the historical record shows that free trade itself will not lead to
convergence. We need other things in addition. My favourite other thing is
education. International compulsory education paid for with an international
tax. And pay the kids to go to school is necessary. It solves the problem of
child poverty. It raises labour productivity and speeds technological
transfer. And compared to the money wasted on military expenditure it would
cost very little.


michael perelman wrote:

> Brad, if free-trade is the key to convergence among economies, why has
> the South taken so long to catch up with the northern United States, even
> with the concentrated political power of the South that gave them so much
> military spending?
>
> What country, as Paul asked before, has developed following the rules of
> laissez-faire?  The closest example may have been Sweden, which Barkley
> suggested, but Sweden was atypical.  It had a better chance of converging
> because it had relatively good labor standards, good education, and
> fairly good natural resource base. But then, I don't know much about
> Sweden.
>
> The literature about convergence is very spotty.  In some places, some
> previously poor countries have made a great deal of progress, often as
> entrepots and never are following the rules of laissez-faire.
>
> By the way, this discussion about convergence dates back to the time of
> David Hume and Josiah Tucker.
>
> Finally, although I rebuked Lou for the way he criticized you, he had a
> strong point of the destructive form that peripheral development takes.
>
> Brad De Long wrote:
>
> > One of the principal facts of world economic history over the past
> > century has been *divergence*--that technology is invented in the
> > industrial core and by and large *stays* *there* rather than being
> > adapted to conditions elsewhere and implemented. Hence workers and
> > bosses in the industrial core today are richer than their
> > counterparts in 1850 by a factor of 10? 20? 30? or so, it depends how
> > you count.
> >
> > By contrast, workers and bosses out on the periphery are only richer
> > in a material sense than their counterparts in 1850 by a factor of 5?
> > 2? and in a bunch of cases not at all. (Of course, improvements in
> > public health that standard economic statistics do not measure very
> > well have had a powerful impact on human happiness: material standard
> > of living is not the be-all and end-all for this and for other
> > reasons.)
> >
> > One view--a view that has evidence supporting it, but that I am not
> > sure is correct--is that our best chance for large-scale technology
> > transfer is free trade: more economic contact between center and
> > periphery means more technology transfer to the periphery. And the
> > bosses won't be able to appropriate *all* of the gains.
> >
> >  From this perspective, those who are opposed to free trade--whether
> > because they view high labor productivity in Hermosillo as a threat
> > rather than an opportunity, because they think the U.S. should use
> > its market power to shape environmental policy in India (rather than,
> > say, negotiating with India for the terms on which shrimp fishers
> > will use TED's, because they want Agra to stay picturesque, or other
> > reasons--are the Enemies of Utopia.
> >
> > I actually thought that Barkley was somewhat restrained...
> >
> > :-)
> >
> > Brad DeLong
>
> --
> Michael Perelman
> Economics Department
> California State University
> Chico, CA 95929
>
> Tel. 530-898-5321
> E-Mail michael@xxxxxxxxxxxxxxxxx

--
Rod Hay
rodhay@xxxxxxxxxx
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