Notes # 19 reading

Notes # 19 reading - Trading in Illusions By Dani Rodrik...

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Trading in Illusions By Dani Rodrik Openness to trade and investment flows: - Component of a country's development strategy - Economic growth known to humanity. World economy - Barriers to trade and investment - Long list of admission requirements - New patent rules - Rigorous banking standards. Global integration = a substitute for a development strategy By focusing on international integration, governments in poor nations - Divert human resources - Administrative capabilities - Political capital World markets are a source of technology and capital Globalization is not a shortcut to development. Policymakers need to forge a domestic growth strategy by relying on domestic investors and domestic institutions. EXCUSES, EXCUSES Countries in Latin America and Africa are stagnating or growing less rapidly than in the heyday of import substitution during the 1960s and 1970s. By contrast, the fastest growing countries are China, India, and others in East and Southeast Asia. Policymakers in these countries have also espoused trade and investment liberalization, but they have done so in an unorthodox manner— gradually, sequentially, and only after an initial period of high growth—and as part of a broader policy package with many unconventional features. A successful trade-liberalization program requires - Reduction of tariff and nontariff barriers - Tax reform to make up for lost tariff revenues - Social safety nets to compensate displaced workers - Administrative reform to bring trade practices into compliance with WTO rules - Labor market reform to enhance worker mobility across industries - Technological assistance to upgrade firms hurt by import competition - Training programs to ensure that export-oriented firms and investors have access to skilled workers.
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