I found this story at: http://www.cnn.com/2007/BUSINESS/01/27/davos.trade.reut/index.html
It deals with a global trade agreement, started in 2001 after sept. 11th led to worries about the global economy, which had been called off last july due to disagreements.
now, the accord may be reached, as nations and business groups alike have agreed to make more compromises.
the article does not go deeply into what the compromises would be, but it mantions that they entail "Washington [needs] to make deeper cuts to farm subsidies, the EU and some leading developing country importers, such as India, [need] to accept lower farm tariffs and developing countries as a whole [need] to slash industrial duties."
as far as my understanding of economics thus far goes, though i know each country is trying to maximize its own profits and efficiency, it appears counterproductive to slash the industries of developing countries as that will prohibit creative destruction. and it will make specialization more difficult.
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hey domino-
I was kind of confused myself in the article as to why there was mention of "slashing industries" in developing countries. I would think that increasing productivity per worker would be beneficial to the global market economy and at the same time would increase the level of development per country. Ultimately, countries seeking to accelerate economic development undergo massive industrialization efforts, but most likely, given the article's purpose, they must not have meant prohibiting trade from those developing countries.
Hey there,
From the article I understood that they are "slashing industries" meaning nonproductive industries, ie cutting farm subsidies. I believe the intent is to promote industrialization in a more new sense. With increasing technology some of the old industries (farming for example), should adopt newer methods to increase productivity. I believe it goes back to the Naked Economics book in Chapter 6. It talks about displacement and productivity, basically to increase productivity and efficiency some industries are displaced and that isn’t always a bad thing. Make sense?
The article was kind of confusing - only because it doesn't explain the big "farm issue" mentioned when talks ended in July.
In India especially, they could be talking about slashing industry that is inefficient - because they (India) are concentrating more on technology and customer assistance (the second highest/best job in India right now is a telemarketer - many make more than any city doctor)(doctors are still #1) - and so perhaps the opportunity cost of production industry is higher. After all, they could send production to Bangladesh or the West Indies and still get lower prices (regardless of quality).
Globalization has many sides - it's good to get things cheaper, it's good to specialize and trade, but there are other things that affect us, too - even more than just the loss of low- or un-skilled jobs here in the US.
Hmmm...another externality....interesting...they're everywhere! :)
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