Re: China

[Bruce McFarling <ecbm@xxxxxxxxxxxxxxxxxxx>]

oN Fri, 08 Mar 2002 09:53:33 +0100, Sven R Larson
<larson@xxxxxx> wrote:

>You may be right about the micro states in the Caribbean, but they
>are as relevant to a general analysis as are the city states of
>Europe (Monaco, San Marino, Andorra).

Most nations in Africa, for example, will not be able to benefit
from a large, closed economy model.  Even some fairly large
countries, such as Congo-Kinshasa, face such challenges in
policing their border that they will not be helped by a
development program that cannot assist small, open economies.

>you should keep in mind that a country can run a trade deficit for
>decades and still make it to the top of the prosperity league.
>Denmark is an evident example.

One thing that can be said about the China case is that at least
it is more relevant for these countries than Denmark, unless
you reckon that Gambia can apply to join the next round of
entry into the EU?

On Date: Fri, 08 Mar 2002 09:06:53 -0500, Warren Mosler
<mosler@xxxxxxxx> wrote:

>Yes, and all the more reason for the govt. not to have any
>external debt.  Let the private sector go into debt as it
>pleases, but keep the govt. operating in its own floating
>exchange rate currency and keep the local population 'fully
>employed' with it.

But in the dependent case, how much can the government
*accomplish* without directly or indirectly incurring
external debt?  When a substantial portion of expenses
in the activities that the government is funding involve
goods or services that cannot be produced inside a country,
it either must constrain its actvities to the level where
the external component can be financed by hard currency
tax collections, or it must have a hard currency component
to its borrowing.




Virtually,

Bruce McFarling, New Lambton, NSW
ecbm@xxxxxxxxxxxxxxxxxxx