Friday, October 28, 2005

Free trade?

EU Trade Barriers Kill
This is a very long pdf paper, 14 pages, and is about International Trade, mostly it argues that trade barriers are bad. If you have any responses / thoughts, let's hear them...thanks. I found it here.

11 comments:

geon said...

I agree that agricultural/food tariffs in particular are often unjustified and hurt poor countries, but in general poor countries are better off focusing on developing their domestic and regional markets and not just relying on exports to wealthy countries, which are subject to large sudden shifts in price (just ask oil producing countries) and consumer demand. A better development strategy would be to identify sectors for which there's the potential for domestic or regional production and encourage local production to replace imports, if necessary by imposing selective import tariffs for a period (countering, for example, the sugar dumping in Africa reported in your article). This is what the USA did in the first half of the 19th century to provide an incentive for the creation of an industrial base to replace imports from Britain (the government also encouraged the infringement of British patents).

We had a talk yesterday by a guy named Paul Polak who heads an organization that develops ways (such as small-scale irrigation and new crops) for small farms in poor countries to make more money. They focus on food that can be sold at the local or national level, because the logistics are simpler and farmers know more about what their costumers want.

t said...

Nir, your comments appear to be in opposition to the "trade" stuff I'm learning: make what you have an advantage in making, sell it, use some of the wealth to buy what you need. How do you resolve these, then?

t said...

Hi:
I went to the talk yesterday by Paul Polak of IDE.
He argued many things including:
1. Designers/producers, such as all of us plan to be, must shift from thinking about what to produce for the wealthiest 5% of the world's population, to thinking about what to produce for the more than 1 billion people (that's almost 1 in 5 humans) that lives on less than a dollar a day. UNTAPPED MARKETS => PLENTY MONEY
2. Some design principles for dollar-a-day people: MAKE PRODUCT AFFORDABLE - that's not always how we think of design. Basically, you must GET what the design constraints are, by (either being poor yourself, or) talking A LOT with your CUSTOMERS. This way you learn what they don't want (big, centralized, complicated, difficult to repair, expensive, not-divisible, not-expandible, over-designed toys) and maybe learn what they want. Also, if you can't sell a million of a product, don't bother.
3. Subsistence farming, he thinks, is a formula for staying in poverty. Growing crops they can sell on the market can make small farmers money to buy (mass-produced, cheaply produced) food for subsistence while leaving some extra.
4. IDE's products, e.g. little drip-irrigation modules, massively increased the income of small-scale farmers. See the company here.
(thanks for bringing this up, Nir)

Busayo Michael Oluwagbemi said...

The larger issue of fair trade need to be considered within the context of sustainable national development and entrepreneurship. Case in point is the Brazilian, SIngapore and Malaysian models which represent a far more sustainable system to the trade dependent India and Chinese economic model or the totally dependent Taiwanese and South Korean models for economic development. Which ever case only an economic policy that has education, people, consientous economic policy fitted to local needs and increased involvement of local "money" (remember TATA Industries india?, Shangai Businessese?) not Foreign Investment as many poor countries are made to believe today..

Busayo Michael Oluwagbemi said...

In continuation of the idea of local money remember the Daewoo family in Korea, the great Taiwanese local money from thrift or even if you consider the Chinese people's party as a business organization you can easily see the roots of Chinese prosperity of the Jiang Zemin Led Chinese economic revolution of the 90s

geon said...

I think busayo puts it very well. while it may in principle be a good thing to have access to, say, European markets, usually you're better off focusing on local opportunities where you have the advantage of knowing the market and being able to form long-term economic relationships. a country whose economy is based on a few export products is dependent on commodity prices which vary unpredictably, and the export sectors usually employ only narrow sectors of the population so that most people are left out. in other words - trade with your neighbors rather than with Tesco or Wal-Mart.

t said...

hmm, thanks.
What is the story with TATA? I always heard of TATA as a good thing?

Busayo Michael Oluwagbemi said...

Attached are some very informative links on Tata Conglomerate..what a story!

http://www.tata.com/tata_sons/media/20041205_tata.htm

http://www.britannica.com/eb/article-9071372

Busayo Michael Oluwagbemi said...

Also this article in Newsweek will give u an insight on this sprawling industrial empire built from Indian soil by Indian hands:

http://msnbc.msn.com/id/8359069/site/newsweek/

geon said...

excellent, Zoroastrians! I haven't heard of the company before.

t said...

Dear Busayo and Nir/Geon:
Finally, I think I get your point about sustainability in trade: not being dependent on one partner or undiversified partners for your economic model.

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