- Only if they think a good or service they import will be more beneficial than it turns out to be, only if they think an international loan will improve their economic productivity more than it really can, can developing economies be disadvantaged in the eyes of most mainstream economists.. - advanced economies at the “center” of the global economy exploit less advanced economies in the “periphery. - Andas long as the terms of trade distribute part of the benefit of specialization to both countries, trade can be beneficial to both trading partners.. - Suppose, for example, by moving productive resources from the shirt industry to the tool industry in the US shirt production falls by 4 shirts for every additional tool produced, while moving resources from the shirt industry to the tool industry in Mexico results in a. - The opportunity cost of a tool in the US is 4 shirts while the opportunity cost of a tool in Mexico is 8 shirts. - Conversely, since moving productive resources from the tool to the shirt industry in the US leads to a loss of 1 ⁄ 4 tool for every new shirt produced, while moving resources from the tool to the shirt industry in Mexico leads to a loss of 1 ⁄ 8 tool for every new shirt produced, the opportunity cost of a shirt in the US is 1 ⁄ 4 tool while the opportunity of a shirt in Mexico is 1 ⁄ 8 tool. - As long as opportunity costs of producing goods are different in different countries, (1) specialization and trade can increase global efficiency, and (2) there are terms of trade that can distribute part of the efficiency gain to both trading partners thereby making all countries better off.. - Ricardo showed that even if one country was more productive in the production of both goods, that is, even if one country hadan absolute advantage in the production of both goods, the more productive country, not just the less productive country, could gain from specialization and trade. - Suppose in the above example it only takes 1 hour of labor to make either 1 tool or 4 shirts in the US, but it takes 10 hours of labor to make 1 tool or 8 shirts in Mexico. - Notice that the conclusion we derived above – both Mexico and the US are better off specializing in the good where they have the lower opportunity cost, or comparative advantage, and trading 6 shirts for 1 tool – still holds. - Since the logic was airtight, the conclusion holds even if the US is more productive in the production of both tools and shirts, i.e. - tool in the US, 4 shirts, forms a lower bound on the feasible terms of trade, i.e. - Any terms of trade in the feasible range – 1 tool trades for more than 4 shirts but fewer than 8 shirts – leave both countries better off because it distributes part of the efficiency gain from international special- ization to each country. - That is, Mexico gets a greater share of the efficiency gain the closer the terms of trade are to the opportunity cost of tools in the US (4 shirts). - That is the US gets a greater share of the efficiency gain the closer the terms of trade are to the oppor- tunity cost of tools in Mexico (8 shirts).. - In our example the opportunity cost of a tool is lower in the US (4 shirts) than it is in Mexico (8 shirts. - The opportunity cost of a shirt is lower in Mexico ( 1 ⁄ 8 tool) than it is in the US ( 1 ⁄ 4 tool. - As we proved above, if the terms of trade are 1 tool for 6 shirts – or more generally 1 tool for more than 4 shirts but fewer than 8 shirts – each country is better off specializing in the production of the good in which it has a comparative advantage and importing the good in which it has a comparative disadvantage.. - That is why Mexico shouldproduce shirts andlet the US produce tools – provided terms of trade can be agreed to that distribute part of the efficiency gain to each country. - Differences in the accessibility of deposits of natural resources are obvious reasons for differences in the oppor- tunity costs of producing oil, coal, gas, and different minerals in different countries. - If we could move all Mexican workers to the US and they instantly became as productive as US tool and shirt makers, it would be efficient to do so and make all shirts and shoes in the US. - For example, we know the social costs of modern agricultural production in the US are greater than the private costs because envi- ronmentally destructive effects such as soil erosion, pesticide run-off, and depletion of ground water aquifers go uncounted or are under- valued. - This translates into commercial prices for corn in the US that underestimate the true social cost of producing corn in the US. - The positive external effects of rural village life when corn is produced in Mexico are undercounted in the commercial price of Mexican corn.. - So we know the commercial price of corn divided by the commercial price of shoes is lower than the social cost of corn divided by the social cost of shoes in the US, but higher than the social cost of corn divided by the social cost of shoes in Mexico.. - If the external effects are large enough, relative commercial prices in the two countries can misidentify which country truly has a com- parative advantage in corn, and which country truly has a comparative advantage in shoes. - The problem is that even if external effects are significant enough so that taking them into account means it is more efficient to continue producing corn in Mexico and shoes in the US, free trade will lead to counterproductive specializa- tion in which the US expands environmentally damaging corn production, importing more shoes from Mexico, while Mexico moves its population from traditional rural villages to urban slums and maquiladoras to increase shoe production, importing more corn from the US. - In the first half of the twentieth century there were years when the international price of sugar was ten times higher than in other years. - If every decade a crash in the price of sugar or tin means local businesses selling to the growing domestic market go bankrupt as well, it is difficult to develop new sectors of the economy. - If less developed economies further specialize in the sectors they have always specializedin, it may well be less likely that they will findways to increase their productivity. - Japan moved from exporting textiles, toys, and bicycles right after World War II, to exporting steel and automobiles in the 1960s and early 1970s, to exporting electronic equipment and computer products by the late 1970s and early 1980s. - Neither Japan, South Korea, nor any of the successful Asian tigers allowed relative commercial prices in the free market to pick their comparative advantages and determine their pattern of indus- trialization and trade for them. - (3) In the short run the internal distributive effects of trade favor the owners and employees of firms in the industries in which a country has a com- parative advantage and disfavor the owners and employees of firms producing goods in which a country does not have a comparative advantage. - In other words, in the short run owners and workers in exporting industries benefit and owners and workers in importing. - (4) In the long run, after resources have moved from industries where imports rise to industries where exports increase, the internal distributive effects of trade favor the owners of relatively abundant factors of production and disfavor the owners of relatively scarce factors of production. - Unfair distribution of the benefits of trade between countries While it is true that trade could take place on terms anywhere in the feasible range – which means that trade could reduce the inequality between countries if the terms distributed more of the efficiency gains to poorer countries – unfortunately, the international terms of trade usually distribute the lion’s share of any efficiency gains to countries that were better off in the first place, and thereby aggravate global inequality. - The most important reason they do this is that as long as productive capital is scarce globally, that is, as long as having more machines and equipment would allow someone, someplace in the global economy to work more productively, there is good reason to believe the terms of trade will distribute more of the efficiency gains from trade to capital rich countries. - The only difference assumed between countries in the model is that “northern” countries begin with more machines than “southern” countries. - But the model allows us to go beyond CA theory – which merely establishes the range of feasible terms of trade – to determine where in the feasible range the. - As long as capital is scarce globally, even when the international markets for corn and machines are both assumed to be competitive, free market terms of trade give more of the efficiency gain from trade to northern. - The implications are profound: Even if international markets are competitive, free market terms of trade will aggravate global inequality in the normal course of events.. - In the simple corn–machine model of international trade the terms of trade distribute the efficiency gain when imported machines allow southern countries to produce corn using a more productive technology. - In this model as long as machines are scarce, southern countries compete among themselves to import more machines by offering to pay more corn for a machine until the terms of trade become favorable to northern machine exporters, who thereby capture most of the increased efficiency in the southern economies. - (3) If trade unions are stronger in more developed economies than less developed economies, wage costs will hold steadier in MDCs than LDCs during global downturns, leading to a deterioration in the terms of trade for LDCs. - Ironically, the easiest way to reduce global inequality is through trade simply by setting the terms of trade to distribute more of the efficiency gain to poorer countries than richer ones. - The efficiency gain they distribute is the same size no matter where in the feasible range the terms of trade fall. - Unfair distribution of the costs and benefits of trade within countries. - Of course this is exactly what has occurred in the US, making the AFL- CIO a consistent critic of trade liberalization. - In a study published by the very mainstream Institute for International Economics in 1997, William Cline estimates that 39% of the increase in wage inequality in the US over the previous 20 years was due solely to increased trade.. - But they make a better living than their cousins crowded around every major city in the third world from Lima to Sao Paulo to Lagos to Cape Town to Bombay to Bangkok to Manila. - If machinery andknow-how increase productivity more when located in a subsidiary in a southern economy than they do when locatedin a plant in the home country of the MNC, DFI increases. - But when interna- tional investors panic and sell off their currency holdings, stocks, and bonds in an “emerging market economy,” there are huge efficiency losses in the emerging market “real” economy, and therefore the “real” global economy as well.. - The intuition is quite simple: When all goes well in the international financial system it can increase the number of loans that increase economic productivity. - In the simple international corn model in chapter 9 we assume that the interna- tional credit market works perfectly without interruption or crisis, and therefore generates the maximum global efficiency gain. - As explained above, when we append a more realistic version of international finance to the international corn model in chapter 9, we discover how international financial crises can cause efficiency losses in the “real” economies of developing countries. - Sandra Sugawara reported from Bangkok in the Washington Post on November 28, 1998:. - In an article entitled “Asia’s Doors Now Wide Open to American Business” Nicholas Kristof expanded on this theme in the New York Times on February 1, 1999:. - Govern- ments in the region have sometimes owned banks and almost always controlled them, and leaders frequently regarded pinstriped American bankers as uncontrollable, untrustworthy and unpredictable barbarians at their gates. - What I called the “Great Global Asset Swindle” when writing about it in Z Magazine in the aftermath of the Asian financial crisis works like this: International investors lose confidence in a third world economy – dumping its currency, bonds and stocks. - At the insistence of the IMF, the central bank in the third world country tightens the money supply to boost domestic interest rates to prevent further capital outflows in an unsuccessful attempt to protect the currency. - more of the efficiency gain to borrowers than to lenders. - Recently the side of the blade with positive potentials has gone dull, while the side that destroys real developing economies and aggravates global inequality is cutting ever more sharply in the brave, new, neoliberal global economy.. - Maddison compared growth rates in the seven major regions of the worldfrom 1950 to 1973 – the Bretton Woods era – to growth rates from 1974 to 1992 – the neoliberal era – and foundthere hadbeen significant declines in the annual average rate of growth of GDP per capita in six of the seven regions, andonly a slight increase in one region, Asia. - Maddison reported that the average annual rate of growth of worldGDP per capita during the neoliberal periodwas only half what it hadbeen in the Bretton Woods era. - the Center for Economic Policy Research updated Maddison’s work and reconfirmed his conclusion that neoliberal policies continue to be accompaniedby a significant decrease in the rate of growth of worldGDP per capita. - that swept the world’s intellectual and policy making elites beginning in the 1980s. - One example of uncritical support for global economic liberalization was a series titled“For Richer or Poorer” that ran in the Washington Post from December 29, 1996 through January 1, 1997. - When companies sell goods or services produced in the US to buyers from other countries we call this US exports. - US trading activity is kept track of in what we call the trade account of the US balance of payments account. - When US businesses buy or build a plant abroad (US direct foreign investment), when foreign companies build subsidiaries in the US (foreign direct foreign investment in the US), when US citizens or corporations buy foreign financial assets (US international financial investment), or foreigners buy US financial assets (foreign financial investment in the US), or when any businesses or citizens repatriate profits or earnings from foreign investments, we call this international investment and keep track of all this activity in the capital account of the US balance of payments account. - favorably or unfavorably in the global economy.. - So when US businesses or consumers buy imports, goods flow in – adding to the aggregate supply of goods and services in the US – and dollars flow out of the US to pay for them. - When foreigners buy US exports they use their currency to buy dollars in the inter- national currency market to pay the US exporter who brings those dollars back into the US. - The Long Run Capital Account: If at some point in the future the US multinational company repatriates profits from its foreign subsidiary, or if the US pension fund repatriates earnings from its foreign bond holdings, they will trade their foreign currency earnings for dollars in the international currency market and bring the dollars back into the US in some future year. - Conversely, if foreigners engage in either business or financial investment in the US, dollars flow into the US. - The short run capital account can be in surplus if new foreign direct and financial investment in the US exceeds new US direct and financial investment abroad during a year, or in deficit if new US international investments exceed new foreign investments in the US. - The overall balance of payments deficit or surplus is just the summation of the deficits and surpluses in the trade, short run, and long run capital accounts.. - If we simply want to know what is likely to happen to the value of a nation’s currency in the near future, we only have to look at the overall balance of payments surplus or deficit. - But if we want to know whether a country is doing well or poorly in the international division of labor we have to look at where and why the deficits or surpluses are occurring in the trade, short run, and long run capital accounts.. - If the US runs a $100 billion balance of payments deficit in a given year this means there are 100 billion more dollars in the interna- tional currency market at the end of the year than there were at the beginning of the year – and we would expect the value of the dollar to fall in foreign exchange markets, ceteris paribus. - While an overall balance of payments deficit puts downward pressure on a nation’s currency, and a balance of payments surplus puts upward pressure on the value of a country’s currency, whether or not a country has a BOP deficit or surplus tells us little about how well a country is doing in the global economy. - A deficit in the short run capital account could mean a country is not attractive to foreign investors, but it could also mean the country’s businesses are busy buying and building subsidiaries abroad. - The US ran large deficits on its short run capital account in the 1950s and 1960s as US businesses expanded rapidly into Europe, Latin America, the Middle East, and Asia in the aftermath of World War II. - In the simple open economy macro model in chapter 9 we express imports only as a positive, linear function of domestic income:. - There is an important change in the size of the multipliers when we change from a closed to an open economy model. - This implies that income expenditure multipliers in the open economy model must be smaller than in the closed economy model, and that the multipliers for “trading” economies like Japan and Great Britain. - While the MPM in the US is slightly over 10%, which means the multiplier effect of changes in aggregate demand are greater in the US than in Japan or Britain. - In the simple, open economy model in chapter 9 we express the net inflow on the capital account of the balance of payments as a positive, linear function of domestic interest rates: KF = 1000r – k where r is expressed as a decimal. - When domestic interest rates fall relative to interest rates in the rest of the world fewer foreigners will invest their financial wealth in a country, and more domestic wealth holders will invest abroad where interest rates are higher. - Finally, since all in the country who owe foreign creditors receive their income in local currency, anything that keeps the local currency from depreciating will allow debtors to buy more dollars with their local currency, which is what they need to pay their international creditors. - They are only counterproductive if one cares about employment, output, capital accumulation, andprospects for economic development in economies where the poorest 4 billion people in the worldlive andsuffer. - Progressive observers were justifiably disappointed in the economic policies of the Carter Administration from 1976–80. - In the 1975 election campaign incumbent President Gerald Ford announced that he considered inflation a more serious problem than unemployment. - $65 billion in 1977 putting serious downward pressure on the value of the dollar. - Since the oil price increases were widely believed to be responsible for a substantial part of the stagflation – rising unemployment and rising inflation – that rocked the European and US economies in the 1970s, Carter deemed it critical to persuade the Saudis not to abandon their opposition to the majority of their Arab brethren in OPEC who wanted to cut world supplies and boost oil prices even further. - If the dollar was going to fall it was obviously better to leave more oil in the ground where it would only increase in value, rather than pump it out and sell it for dollars that were losing value. - As a result, Jimmy Carter’s Secretary of the Treasury, Michael Blumenthal, was spending more time in Riyadh, the capital of Saudi Arabia, than in the capital of his own country, Washington DC, in an effort to assure the Saudi government that the Carter Administration was going to shore up the flagging greenback.. - Carter’s problem was that the only effective way to hold the line on the trade deficit, at least in the short run, was to cool down, not heat up the American economy. - Carter adopted deflationary fiscal policies to slow the economy, and the trade deficit declined in 1979 to $45 billion and disappeared altogether in the election year recession of 1980 just as our simple open economy macro model predicts it should. - Carter’s overwhelming loss to Ronald Reagan in the 1980 election ushered in the conservative Reagan era that has dominated US politics ever since, and Carter Administration fiscal and monetary policy bears a major responsibility for his election defeat
Xem thử không khả dụng, vui lòng xem tại trang nguồn hoặc xem
Tóm tắt