ECON 455 Lecture 18 Integration of markets- goods market

ECON 455 Lecture 18 Integration of markets- goods market -...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
1 1 Econ455: Economic Development in China Lecture 18: March 21 Integration of markets: goods market Sandra Poncet Lorch Hall, room 207 Email: [email protected] Office Hours: Mondays 16:30-18:30 & Wednesdays 10:30-12 2 Introduction The issue of market integration in China « A flexible and integrated domestic market is vital for broadening the basis of China’s competitiveness and growth, and for structural adjustment in the Chinese economy. A flexible and integrated market for goods and services, along with flexible entry and exit of firms, allows more productive firms to expand and exploit economies of scale, facilitates diffusion of technology, and stimulates productivity improvements that enhance competitiveness of firms across the national economy. » World Bank 2005
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
2 3 Introduction Significance of the issue: gains from trade integration -scale and scope economies: lower unit cost, productivity gains -reinforces Chinese product competitiveness -helps to attract market-seeking FDI -may promote diffusion effects: imitation, technologica spillovers Specific costs of domestic trade barriers (cf. international protection) *barrier to production reallocation according to comparative advantages -economies of scale and resources: promote efficiency against waste -reduction in price (gains for consumers) *encourages corruption (A. Krueger: rent seeking) *barriers to productivity gains and thus to economic growth 4 Introduction Fragmentation in a globalized context raises several problems -capacity to absorb macro shocks and address them with national policies (cf. criteria to form an Optimal Monetary Union) -barriers can be a source of complaints for international partners (WTO compliance) -put in question the national unity? Promotion of domestic economic integration put forward in the 3rd Plenum of the 16th Central Committee of the CP(2003) -deepening of the reforms -more balanced development -sustainability of the growth
Image of page 2
3 5 Introduction Examples of fragmentation Licenses, taxes, bans of outside producers Judiciary discrimination of «outsiders» Favored access to banks, subsidies and red tape in the distribution channel provide protection of “local” producers Long tradition of market fragmentation Inheritance of Mao: self-sufficiency: trade as a residual Protectionism surge in 2 stages during the reforms:
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern