I’m in Vietnam this week and next giving workshops for officials of the central and provincial governments and some state-owned businesses on WTO. Vietnam has decided it wants to complete it’s accession to WTO by 2005, so they are stepping up the training programs. Hanoi earlier this week, Da Nang for the next couple of days and then Ho Chi Minh city. I always enjoy coming to Vietnam. Despite the heavy layer of “Marxist-Lenninist thought” at one level of public affairs, the towns and cities are a bustle of vigorous markets and entrepreurial commerce. The entreprenurial culture is nowhere more apparent than on the roads: filled with a stream of small motor bikes that, from my hotel window, looks like an army of smokey, noisy ants headed on average in the same direction on each side of the road. But the avearage is a sum over a large number of individuals any one of which may be headed in any direction at one moment or another, avoiding pedestrians, other bikes and cars whose horns are constantly blaring at them. People here are pretty diligent, young—the average age must be under 20 still—and if not yet wealthy at least very resourceful.Their efforts are being rewarded with spectactular growth. This country is likely to reach Thai or Taiwanese levels of wealth in record time: a decade or so if they get it right. Even more important, the food is great. Last night in balmy, quiet evening we ate at a restaurant on a large wooden platform projecting out onto the beach at Da Nang: the old ‘China beach’. Mounds of freshly cooked shrimp, cockles, crab and a local beer brewed by Fosters. . Unbelievable value. I’m enjoying the workshops, too. Teaching every now and then is an opportunity to renew my own acquaintance with some of the basic ideas. It usually produces surprises for me. Yesterday, for example, trying to explain why ‘peak’ tariff rates are important I remembered out-of-the-blue that the adverse economic impacts of a tariff increase as the square of the increase in the tariff itself. It’s one of those points that often has a great impact when people hear about it for the first time. A tariff that is twice as high as the average level creates a distortion in the domestic economy that is something like four times (not twice) as big as the distortion created by the average level of tariff. I “leave it to the reader” to figure out why this square-rule applies, if you don’t already know (hint: it can be illustrated by a simple, similar triangles calculation and the area on a static analysis diagram normally designated the ‘deadweight loss’).
Peter Gallagher is student of piano and photography. He was formerly a senior trade official of the Australian government. For some years after leaving government, he consulted to international organizations, governments and business groups on trade and public policy.
He teaches graduate classes at the University of Adelaide on trade research methods and the role of firms in trade and growth and tweets trade (and other) stuff from @pwgallagher