1/6 Shekhar Aiyar is worried that the global environment has become...
Michael Pettis@michaelxpettis
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Sep 06, 2024
~1 min read
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Shekhar Aiyar is worried that the global environment has become less friendly for developing countries "now that Western countries are turning increasingly protectionist."
This makes little sense. Global trade has been protectionist for decades.
nytimes.com/2024/08/30/opi…
Shekhar Aiyar is worried that the global environment has become less friendly for developing countries "now that Western countries are turning increasingly protectionist."
This makes little sense. Global trade has been protectionist for decades.
nytimes.com/2024/08/30/opi…
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Some countries, both Western and developing, have long relied for growth on aggressive beggar-thy-neighbor trade and industrial policies. These policies reduce global demand (as Keynes explained in the 1940s), distorting global trade and sharply reducing the global benefits of comparative advantage.
Some countries, both Western and developing, have long relied for growth on aggressive beggar-thy-neighbor trade and industrial policies. These policies reduce global demand (as Keynes explained in the 1940s), distorting global trade and sharply reducing the global benefits of comparative advantage.
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Other countries, mostly Western, decided for foolish political and ideological reasons to accommodate those surpluses by absorbing excess savings. To balance their deficits, they had either to allow domestic unemployment to rise or they had to encourage domestic debt to expand.
Other countries, mostly Western, decided for foolish political and ideological reasons to accommodate those surpluses by absorbing excess savings. To balance their deficits, they had either to allow domestic unemployment to rise or they had to encourage domestic debt to expand.
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They're easy to tell apart. The former run persistent surpluses, and the manufacturing share of their economies is higher than the global average, while the latter run persistent deficits, and the manufacturing share of their economies is lower.
phenomenalworld.org/analysis/trade…
They're easy to tell apart. The former run persistent surpluses, and the manufacturing share of their economies is higher than the global average, while the latter run persistent deficits, and the manufacturing share of their economies is lower.
phenomenalworld.org/analysis/trade…
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In recent years, in response to a series of global shocks that threatened to slow their economies, the former have taken aggressive steps to expand their surpluses, and this has forced the latter increasingly to try to reverse these surpluses by retaliating.
In recent years, in response to a series of global shocks that threatened to slow their economies, the former have taken aggressive steps to expand their surpluses, and this has forced the latter increasingly to try to reverse these surpluses by retaliating.
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But it is silly to see this retaliation as the "beginning" of protectionism. The beginning lies in the original trade and industrial policies that led to global trade imbalances. Retaliation by the deficit countries is the inevitable response that Joan Robinson warned about in the 1930s.
But it is silly to see this retaliation as the "beginning" of protectionism. The beginning lies in the original trade and industrial policies that led to global trade imbalances. Retaliation by the deficit countries is the inevitable response that Joan Robinson warned about in the 1930s.
