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Archive for the ‘International Trade’ Category

Export Bans as Price Control

March 30, 2017 Leave a comment

A great post by Alex Tabbarok: A Visit to the Lasalgaon Onion Market. In class today we’ll discuss this:

When prices are high the government bans exports and blames farmers for hoarding (when prices are low as is true today, exports are allowed).

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When We Get to Oligopoly…

October 13, 2016 Leave a comment

…remind me, students, of this news item. It’s a great example of the difficulty of getting members of a cartel to stick to their agreements to limit production in order to maximize total profits of the group.

Following yesterday’s latest IEA report which showed that OPEC production had hit an all time high, this morning OPEC released its own estimate of production by OPEC member nations for September and, not surprisingly, the latest report showed that in the month OPEC was supposed to be set on “cutting” production, the 14-nation group produced a whopping 33.39 million b/d crude in Sept., up 220k b/d from August.

I, Pencil

September 12, 2016 1 comment

A great video introducing economics from another prespective–that of wonder at the way markets actually work to deliver goods of great complexity with great efficiency.

I plan to show it in my Introduction to Microeconomics class this week.

Leading African Entreprenuers

September 12, 2016 Leave a comment

A student called my attention to the Ethiopian commodities exchange market and Eleni Gabre-Madhin’s work there (she’s since left to start a new venture).

Here’s a link to some TEDx talks by other African entrepreneurs my students may find interesting.

Categories: International Trade

Brexit Commentary

June 30, 2016 Leave a comment

 

brexit

Though I am generally quite positive towards freer trade, economic ties as a way to secure peace by making war too expensive for elites, and freer movement of people across borders, I think it’s a mistake to think Brexit will have catastrophic effects.

Some thoughts:

(1) If economic specialization is good, why isn’t political and cultural specialization also beneficial? Suppose Germany stays very open to immigration and the UK becomes more closed. Isn’t this a good experiment on the economic and cultural impact of more (or less) open borders? Shouldn’t we have a little humility about what we do and do not know with regards to the impact of freer movement of labor?

(2) I suspect the UK will become very focused on making trade deals with a number of trading partners besides the EU. Feels like competition–of a positive kind–to me.

(3) This may help those within the EU who want to focus more on trade and economics and less on political union to gain clout. The EU people are smart and will make adjustments.

It’s really out of my area of expertise, though. Here’s some commentary by people smarter than me:

Paul Krugman

Tyler Cowen

Brexit impact on China: , but see this from an unnamed APF stringer.

 

Categories: International Trade

What Damage the U.S. Raising Tariffs on Chinese Products Will Do

April 9, 2016 Leave a comment

It would be bad for the U.S. and bad for China:

…the Chinese government’s response would probably be tariffs of its own on American goods and services rather than lowering barriers for American companies doing business in China. It moved quickly to retaliate for the tariff on Chinese tires with punitive duties on American products. Because the Chinese market has become critical for many American companies — whether Apple, Starbucks or Boeing — any steps taken by the Chinese government to curtail their ability to operate in China would be bad news for them.

This might be good for India, Vietnam, Bangladesh and other countries to which at least some of the production happening in China is likely to shift.

Categories: China, International Trade

Always The Optimist

January 19, 2016 Leave a comment

Actually, I don’t see myself as a China optimist. I just think the most realistic view is a positive one.

I have several questions for the pessimists. When someone says:

But we do know that the vast global network of mines, roads, agricultural development, and financial speculation built on the assumption that the old Chinese economy would grow at eight percent forever is running on empty.

I have to ask: was there really a lot of money invested on the assumption of 8% growth forever? Sure, some investing is irrational and can create over-capacity. But I doubt that any really big investors used “8% forever” as their basis for decision making.

Is is possible that, having seen the Chinese economy grow quickly for a far longer period of time than expected, investors were acting rationally? That they risked over-shooting by a few percentage points rather than under-shooting because it made sense in an economy that consistently grew faster for longer than had ever happened in recent history?

And does it really matter? So what if the Chinese economy doesn’t grow at eight percent a year? If it keeps growing at all, but on an ever-increasing base, won’t a lot of that demand materialize sooner or later?

But we have not yet hit bottom. The new reality of a much slower growth in China’s demand for basic manufacturing inputs is still young and its impact is only now beginning to be felt.

But…what if it is a good thing that there is “slower growth in China’s demand for basic manufacturing inputs?” What if that just means that, as China’s productivity is growing and its economy is maturing, it’s moving out of basic manufacturing?

That would mean China will demand many more goods produced from “basic manufacturing” relative to the goods it’s producing in basic manufacturing. That sounds like lots of imports to me. Those imports will have to be produced somewhere–probably they will be spread over a number of smaller economies that are able to gain comparative advantage in the manufacture of basic goods.

Really, which is more likely: that global demand for “basic manufacturing inputs” will move from China to…nowhere? Or from China to Bangladesh, Vietnam, India, Ethiopia, Tanzania?

Will that really be a bad thing?

For anyone?

 

 

 

Categories: China, International Trade