Trade Theory and Development Experience 切demand hrgher for Northem "capital goods" than for southem "consumption goods" and capital mobility to the model in the form of South-to-North ci
Trang 1Trade Theory and Development Experience 切
demand (hrgher for Northem "capital goods" than for southem "consumption goods") and capital mobility to the model (in the form of South-to-North cipital
Aight, ,rs occurred in the 1980s), the basis for the Third World Eade pessimism is
No country likes to think of itseH as specializing in unskilled labor activities
while letting foreigners reap the rewards of higher skills, technology, and capitat
Bypursuingthe theoretical dictates of their endorarments, howorer,less developed countries maylockthemselves into a domestic economic structure thatreinforces
such relatively poor endornmreots and is inimical to their long-n:n development aspirations Some counEies, like the For:r Asian figers (Taiwan, South Korea Singapore, 8r1d Hong Kong), may succeed in traasforming their economies
through prrrposeful effort from r:nskilled-labor to skilled-labor to
trade itself stimulating similar sEuctural economic changes are much rDore remote
fuiother interesting example of the Bew postneoclassical gerue of
intemation-al trade models is contained ia Michael Porter's Competitiue ,4duantage of
Nattoru.s Porte/s fundamentat departure from the standard, neodassical factor endorament theory is to posit a Enliatiue difference between basic factors arrd advanced factors of production- He argues that standard trade theory applies only
to basic factors like r.rndeveloped physical resources and unskilled labor For the advanced factors, which are more specialized and include highly trained workers
with specific skills, and hrowledge resources such zui government and prinate
theory does not apply.Porter concludes that
the cenral task facing developing cou-ntries is to escape from the suaitjacket of
and otler basic factor advantages provide a fragile and often fleeting ability to e:port [aad arel rnr]nerable to exchange rate and factor cost snings Many of these
first priority.lo
U n e n p I oyme nt, Besa u rce U nd e ntti I izati o n, a d th e
The assumption of fuIl employment in traditional trade models, Iike that of the standard perfectly competitive equilibrium model of microeconomic theory
vio-lates the reality of uaemplqgrent and r:nderemployment in developing nations TWo conclusions could be drawn from the recognition of widespread unemploy-ment in theThirdWorld- The first is that underutilized human resotuces create the oppor.hmity to erpand productive capacity arrd GNP at little or no real cost by pro-ducing for export markets products that are not demanded locally This is lnown
as the vent-for-surplus theory of internationd trade First formulated by Adam Smith, it has been expounded more recently in the context of developing nations
bythe Bnrmese ss6s6misf Hla Myint
͡
Trang 2473 Problems and Policies: lnternational
According to this theory the opening of world markets to remote agrarian
tra-ditional models but ratherto make use of forrrieily underemployed\and aad labor
resources to produce greater output for eryort to foreign markets The colonial
system of plantation agriculture as well as ttre com:nercielization of small-scale subsistence agricultue were made possible, 3sgslrling to this vieu/, by the
avail-ability of unemployed and underemployed human resources Lr terms of our
pro-duction possibility analyses, the vent-for-surplus argument can be represented by
a shift in production from point l/to point B in Figtue 12.3, with tade enlarging
final domestic consumption from Vto C.
We see thatbefore rade, the resources of this closedThirdWorld econornywere
gossly underutilized- Production was occurring at point Y, well within the con-fines of the production possibilityfrontier, and 0Xprimaryproducts ald
0Yman-ufactures were being produced and consumed The opening up of the nation to foreign markets (probably as a resr:lt of coloaization) provides the economic impetus to utilize these idle resources (mostly excess land and labor) and erpand primary-product erFortable production from 0Xto 0X at point B on the produc-tion frontier Given the intemational price rado F,tF^.X'-X(equal to VB)
prima-ry products can now be eryorted in exchange for Y - Y (equal to VC)
primary products (D being consu.med as before but with I'- Ymore imported
manufactures now available
The vent-for-sr-rrplus arBumen.t does provide a more realistic analytical sce-nario of the historical trading uperience of many LDCs thaa either the classical or
neoclassical model However, in the short run, the beneficiaries of this process were often colonial al:d eryatriate entreprenelrrs rather than LDC natiooals And
in the long run, the heavy stuchnal orientation of the LDC economy tohiard
pri-͡
Figure 12.3 The Vent-for-Surplus Theory of Trade in LDCs
︵∽
hPO由
7
ll
′ _
´
`ワ
_ク
/´ ｀
ヽ
￨ _ _｀ .、
04Lノ
0
y
X X′
Exportables(pコ コ IIy products)
Ａ ｎ
︿
”
︵わ
︲
Trang 3Trade Theory and Development Experience ″ 9
mary-product exPorts in maJry cases created an export "enclave" sittration and thus inhibited needed stuctural transformation in the direction of a more diver-sified aad self-reliant economy
The second conclusion that we rnay draw from the recognition of widespread
unemploynent in the Third World is that a major way to qeate substantial local job oppornrnities is to protect domestic industries (both manufacturing aad agricultr:re) againsl low-cost foreign competition This protection is accom-plished through the eriction of rrarious trade bariers such as tariffs or quotas.We
will discuss the pros and cons of commercial policyin Chapter 13;the point here
is that LDCs that place priority on employment creation may wish to pursue a
short-nrn protectionist policyin order to build up local rura] and urban indusuies
to absorb their sr.rplus labor This is what Souttr Korea and Taiwan did in the
1960s.
A thfud and most interesting theoretical implication of the violation of the
fuII-employment and immobile-capital assr:.mptions of classical trade theory ocqurs uihen (1) capital is completetymobile, (2) one nation (the MDC) in a two-country, h^/o-courmodity model has an absolute adrrantage in r:nit labor costs in both com-modities, and (3) the other nation (the LDC) has r:nemployed labor In such a
sit-uation, which occurs quite frequently in the real world, the more developed
coun-try with the absolute adrrantage in both goods can attract enough foreign capital
to meet global demand for each com-modity Ttre less developed county will, in theory then see its production a.o.d employment decline to zero!
lnternati o na I Facto r Mobi lity and Maltinati onal Co rponti ons
The third compoDeD.t of the cmcial first assumption of taditional Eade
theory-the intematisa4[ immobillty of productive factors-is, after the assr:mptioa of
perfect ssmpetition, the most unrealistic of all premises of classical and neodas-sical trade theory Capital and skilled labor have always moved between nations
The nineteenth-century growth eryerience of Westem uations can largely be explained in terms of the impact of international capital movements Perhaps the most significant development in inte'rnational ecooomic relations during the past
two decades has been the spectacr.rlar rise in power and irrfluence of the giant
multinational corporations These interuational carriers of capital, technology, and skilled labor, with their diverse productive operations throughout the Third
World, geatly complicate the simple theory of international trade, especially as
regards the distribution of its benefits Companies like IBM, Ford, F.:oron, Philips,
Hitachi, British Petroler:m, Renault, Votkswagen, and Coca-Cola have so interna-d6nalizsd their production process that calculations of the disuibution of the benefits of international production between foreigners a-ud na{onals becomes exceedingly riifficult We reflrm 1e this important issue in Chapter 15, where we
exardne the pros and corx of prirrate foreign investmenllr For the present, let us recognize that enormous intemational movements of capital and skiils play a cru-cial role in international economic relations To assume away their existence and
their imFact on the economies and economic sfirctures of developing nations, as
in the classical and factor endor,rrment theories of trade, is to blind ourselves to the
͡