Saturday, 8 March 2008

Economics is the enemy of the community - or is it?

A link to Dani Rodrik's post on a new book out called "The Dismal Science: How Thinking Like an Economist Undermines Community.". Rodrik is not entirely convinced.

Economics is the enemy of the community

Dani has done work looking at Chinese exports and the possible impact of government intervention on the increasingly high tech nature of Chinese trade.

The paper is called "What's So Special About China's Exports?"

Much more than comparative advantage and free markets have been at play in shaping China's export success. Government policies have helped nurture domestic capabilities in consumer electronics and other advanced areas that would most likely not have developed in their absence. As a result, China has ended up with an export basket that is significantly more sophisticated than what would be normally expected for a country at its income level. This has been an important determinant of China's rapid growth. What matters for China's future growth is not the volume of exports, but whether China will continue to latch on to higher-income products over time.


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