Re: Re: Re: Re: Re: Keeping focus after the WTO

[Bill Rosenberg <w.rosenberg@xxxxxxxxxxxxxxxxxxxxxxx>]

Brad De Long wrote:
> >
> >- free trade (as opposed to more limited trade) is irrelevant except
> >(sometimes) to squeeze the optimal out of the status quo - and has
> >very small gains even then (Krugman called it economics' dirty little
> >secret didn't he?)
>
> Krugman and Rodrik are on that side of the argument. A whole bunch
> of other people are on the other side. (I tend to lean toward the
> anti-Kruman-Rodrik side: without trade how can you buy the capital
> goods from the industrial core that embody so much of technology?

But the opposite of free trade isn't no trade. The problem for many
countries is to have enough foreign exchange to buy the capital goods
they need. It's not just because of the lack of exports (which free
trade claims to address). It's also because of the increase in
consumer goods that tend to get imported under free trade both
because of the growth of a wealthy minority with a tendency to spend
a large proportion of their incomes on imports, and because of the
destruction or lack of development of local industry to replace
imports. Not all capital goods are useful for development
either. Somehow, trade has to be managed: trade in both consumer
and capital goods.

Yes, you still need to trade. Yes, you need to import capital goods.
But doesn't that really beg the development question rather than
answer it?

> without trade who in the industrial core will get excited about
> teaching you how to raise your technology level?

I presume that by this you mean that foreign investors won't go
where there is not free trade. Aside from being wrong (there are
plenty of examples of foreign investors setting up behind quite
severe tariff and import quota walls) there are also the questions of
whether they will teach you anything (little R&D is done outside the
FDIs' "home" countries for example), or what you want to know
(commercial secrecy, intellectual property etc) and whether you can
afford it (the effect on the balance of payments of remittance of
income from FDI and intellectual property). But assuming there are
things you learn from having people employed in more technically
advanced enterprises, isn't the conditionality of it (you must
compeletely open your economy, with all its other effects) the
corporate expression of what people were opposing in the name of the
WTO in Seattle?

Bill