Update: Prof. Rodrik says that I’ve got his examples exactly wrong (see his comment) and that he meant that the World Banks’ “globalizers” including Vietnam have outperformed those higher on the Heritage Foundation’s index. Well… that certainly makes more sense. My apologies to him—and to you—for the misunderstanding. [2 April, 2009]
I am sympathetic to Dani Rodrik’s underlying thesis in his ‘One Economics, Many Recipes’ publications because, like most who’ve witnessed development policies go off-the-rails, I’ve blamed the failure of simple-minded economic ‘orthodoxy’ to account for the complex imperfections of real markets.
But ‘sympathetic to’ doesn’t mean ‘agree with’. I think Rodrik fails to explain how a’ solid application of second-best thinking’—by which he means, roughly, ‘non-laissez-faire’ intervention—can be distinguished from managerialism (by technocrats) and dirigism (by autocrats). I’ve seen plenty of examples of that kind of policy derailment, too.
The Rodrik thesis about the value of planning based on ‘second-best’, it seems to me, can be tested only by reference to examples. It’s an empirical, rather than theoretical, question. But his examples are often at best arguable
and, in his most recent presentation of his case, bizarre.
As usual, the export outlook depends more on the dollar exchange-rate than on the impact of recession on underlying demand—at least, from 2010 onwards:
“The main uncertainty for the long run concerns the value of the U.S. dollar compared with currencies of other major trading countries. One possibility is that the dollar will continue to strengthen substantially, especially against the Chinese yuan and currencies of other major emerging markets. Another is that the dollar will weaken, as it did doing during most of the 2000s before the 2008 crisis.
In the ﬁrst scenario, U.S. farmers will face a stronger dollar, which will reduce the price competitiveness of U.S. agricultural exports… U.S. net farm income will decline by almost 7 percent to $83 billion and agricultural exports will drop by 27 percent to $85 billion by 2013.
In the second scenario, the weaker dollar relative to the reference case will strengthen U.S. farmers’ competitiveness on world markets… projected net farm income will increase by 19 percent to $106 billion in 2013 and to $118 billion in 2017, while agricultural exports will rise to $120 billion in 2013 and $134 billion in 2017.” Extract from “The 2008/09 World Economic Crisis: What it means for U.S. agriculture”
Toshiba is buying out Matsushita’s (‘Panasonic’) share of their LCD business, snapping up Fujitsu’s disk-drive business and extending into lithium batteries, while facing a deteriorating balance sheet.
Geek-stuff. A recipe for ‘repurposing’ images for the web using ImageMagick. It took me a few hours to figure this out from the terse documentation…so I’m hoping to save you the trouble.
Over the fold, an Applescript to resize an image, sharpen, expand the contrast range, and create a thumbnail. Even if you don’t run under OSX you can use the ImageMagick routines embedded in this script with Windows or Linux.
If you can’t let the banks fail and won’t take over their assets, they own you.
“[W]e face at least two major, interrelated problems. The first is a desperately ill banking sector that threatens to choke off any incipient recovery that the fiscal stimulus might generate.The second is a political balance of power that gives the financial sector a veto over public policy [owing to the Geitner plan’s reliance on banks’ cooperation], even as that sector loses popular support.” Extract from Simon Johnson, “The Quiet Coup”, The Atlantic Online
Would an IMF ‘lender of last resort’ program—usually reserved for emerging markets in crisis—help the United States?
It’s difficult to call this, one way or the other. The generally xenophobic reaction to three recent, high-profile, Chinese resource bids (Rio, Ozminerals and Fortescue) is a good reason to be alert to a questionable ‘national interest’ claim.
Some people have smelled a rat in the Treasurer’s announcement that he won’t approve OzMetals’ $2.6 bn sale to China’s MinMetals, on national security grounds, if the deal includes the Prominent Hill property (it appears from his statement that he will approve a different configuration of the deal):
“The location of Oz’s Prominent Hill mine – within South Australia’s vast Woomera Prohibited Area, which is the size of England – was cited by Canberra as the problem. But it was pointed out that the ‘sensitive’ weapons testing range that is said to make a valuable contribution to Australia’s national defence was at least 150 kilometres away from the Prominent Hill site.” Extract from Financial Times
Hmm… this sounds suspicious. My view is that only a credible ‘national security’ claim could be sufficient to justify threshold (i.e. at the border) barriers to foreign investment. Do the facts on the ground justify a national security barrier in this case?