Home > International Trade, Microeconomics > Man Bites Dog, Part 2

Man Bites Dog, Part 2

(If you don’t know the meaning of the phrase “man bites dog” try this.)

Taxing imports and promoting exports are the default positions of most governments, so when a story like this one comes along, I have to flag it for my students:

Indonesia, rich in resources, is imposing a tax of 20 percent on some metal ore exports and will prohibit shipments of raw minerals unless miners submit plans to build smelters.

The rules are likely to affect less than a third of Indonesia’s metal exports but are a precursor to a total ban on exports of raw materials.

Why would a government block exports? The article gives the Indonesian government’s stated reason. What else could be behind this unusual decision? Who gains and who loses?

You can be sure this story will make it into either next year’s Microeconomics lecture on the benefits of international trade. Even better, if I teach International Economics again next year, this would make a great presentation topic. Especially for my Indonesian students!

(See Man Bites Dog part 1, too.)

Advertisements
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: