Problem%20Set%20_6b%20ANSWERS

Problem%20Set%20_6b%20ANSWERS - Econ 181 International...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Econ 181: International Trade Spring 2009 Problem Set #6b (Due Tuesday, May 5, 2009) 1. Article Analysis—Import-Substituting/Export-Oriented Industrialization. Read this article and answer the following questions. Stephen Kotkin, “In Africa, One Step Forward and Two Back”. The New York Times, July 08, 2007. The URL is: http://www.nytimes.com/2007/07/08/business/yourmoney/08offtheshelf.html?_r=1&scp=1&sq=%93In%20Afri ca,%20One%20Step%20Forward%20and%20Two%20Back%94&st=cse&oref=slogin . a. The textbook argues that import substitution industrialization did not work well, including in Africa. However, export oriented industrialization might have had some success in East Asia. However, according to the article, Paul Collier seems to argue that export oriented industrialization or trade liberalization policies enacted by African countries would not help Africa develop. Why? Do you believe his argument? There are various answers to this. Here is one: Mr. Collier seems to argue that "the bottom billion" residing mostly in Africa would not benefit from trade liberalization because East Asian countries "stand in Africa's way", which seems to imply that Africa is not competitive or productive enough to export to other countries. This thinking ignores the fact that Africans are productive in something, even if they can not competitively export, say light manufactures, to rich countries. There is no reason why African countries should mimic Asian countries in their export sectors; in fact, the theory of comparative advantage says they should not. Asian countries can not produce everything for themselves and for the world; Africa can and does produce something for itself and for the world more productively and competitively than other regions. Furthermore, it is unclear why Mr. Collier points his finger at "cheap-labor Asia" instead of say, Brazil, Mexico, Europe or the U.S.. Each country or region can and does produce goods and services for trade. b. Mr. Collier seems to argue that rich countries need to lead trade liberalization in a way that gives preferential treatment to African countries—so that African countries can engage in a kind of "export oriented industrialization" initiated by rich countries and driven by demand in rich countries. Please comment. Again, there are various answers to this. While reduction of trade barriers by rich nations (in particular in the agricultural sector as the next chapter discusses) could help both the rich nations and some African countries, African countries could help themselves by doing their own trade liberalization. And if policy makers are uncomfortable about making goods imported from rich countries cheaper, they could lower trade barriers on products from other African countries so that intra-African trade could increase. Interesting studies could compare the demand of products in other African nations versus, say European nations.
Image of page 1

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

View Full Document Right Arrow Icon
Image of page 2
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