Read an article from FT about China making it hard for other developing countries:
"Being a developing country used to be easy. You followed leaders - Japan, Hong Kong, Taiwan, South Korea - up a well-trodden ladder from agriculture through manufacturing to services. Starting with tilling the soil, you moved on to turning out T-shirts, then toys, then tractors, then television sets, and ended up trading Treasuries.
The rise of China has made that less straightforward. Not only is the first rung harder to reach, thanks to the hundreds of millions of rural migrants to Chinese cities still willing to work for low wages stitching garments, but also exports of goods from China's coastal industrial fringe are rapidly becoming more sophisticated, threatening those halfway or more up the ladder. While the shoemakers of Italy and the steelmakers of Pennsylvania may complain loudly about Chinese competition, those with more to worry about are middle-income Asian countries geographically and econ-omically close to the Middle Kingdom."
It makes me wonder, have we got a chance?
Well, according to Dani Rodrik, Yes we do. All we need is an Industrial Policy for the Twenty First Century, if we want to stand a chance in the global competition:
"The right model for industrial policy is not that of an autonamous government applying Pigovian taxes or subsidies, but of strategic collaboration between the private sector and the government with the aim of uncovering where the most significant obstacles to restructuing lie and what type of interventions are most likely to remove them. Correspondingly, the analysis of industrial policy needs to focus not on the policy outcomes (which are unknowable ex ante) but on getting the policy process right."
It's a good paper (Rodrik's). Please read.
Salaam.
"Being a developing country used to be easy. You followed leaders - Japan, Hong Kong, Taiwan, South Korea - up a well-trodden ladder from agriculture through manufacturing to services. Starting with tilling the soil, you moved on to turning out T-shirts, then toys, then tractors, then television sets, and ended up trading Treasuries.
The rise of China has made that less straightforward. Not only is the first rung harder to reach, thanks to the hundreds of millions of rural migrants to Chinese cities still willing to work for low wages stitching garments, but also exports of goods from China's coastal industrial fringe are rapidly becoming more sophisticated, threatening those halfway or more up the ladder. While the shoemakers of Italy and the steelmakers of Pennsylvania may complain loudly about Chinese competition, those with more to worry about are middle-income Asian countries geographically and econ-omically close to the Middle Kingdom."
It makes me wonder, have we got a chance?
Well, according to Dani Rodrik, Yes we do. All we need is an Industrial Policy for the Twenty First Century, if we want to stand a chance in the global competition:
"The right model for industrial policy is not that of an autonamous government applying Pigovian taxes or subsidies, but of strategic collaboration between the private sector and the government with the aim of uncovering where the most significant obstacles to restructuing lie and what type of interventions are most likely to remove them. Correspondingly, the analysis of industrial policy needs to focus not on the policy outcomes (which are unknowable ex ante) but on getting the policy process right."
It's a good paper (Rodrik's). Please read.
Salaam.
Cartoon: Slate magazine
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