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Release the power of positive externalities,
This review is from: Competition Friendly Protectionism - How a Certain Kind of Protectionism Could Temper and Improve Globalisation (Paperback)
Competition Friendly Protectionism is a sideways look at globalisation. It's not anti-globalisation, as there are plenty of benefits to our global trade systems, but it is critical. Globalisation doesn't quite work as well as it should. It isn't delivering on its promise. Perhaps if we could look at it a little differently, we'd see some opportunities to make it better.
For that alternative perspective, Stuart takes inspiration from two key economists, Erik Reinert and Ha Joon Chang. Building on their work, he explains the limits to export-led growth as a development strategy. Since the global total of exports has to match the total of imports, it's simply impossible for every country to be exporting their way to growth at once, and yet that seems to be everyone's default plan. Global trade becomes unbalanced as countries vie for limited opportunities, gaming the system by protecting their markets to subsidising their industries, hoping to achieve that ellusive export surplus.
There has to be a better way to distribute trade in the global economy, but that still preserves the efficiencies of competition and keeps markets free and fair. Stuart suggests that 'competition friendly protectionism' is possible when you look at the correct scale. Sectors can be protected when the scale of the domestic market is large enough to allow internal competition. The sectors you want to protect are the ones where there are the biggest positive externalities, in the form of networks, skills and infrastructure. "GDP generated by nominally growing economic activity alone is an empty, perishable and reversible activity if it does not engender solid, irreversible steps of positive externality growth."
Despite the name of the book, it's actually on positive externalities where the book is at its best. Synergistic relationships are an economic secret weapon waiting to be discovered, Stuart suggests. "The field of mainstream economics does not typically frame positive externalities as a primary source of progress and development, as this book suggests." It is this insight which is the key idea here, rather than protectionism, which is more of a means to an end.
Competition Friendly Protectionism has a lot of ideas, from technology to postgrowth economics to game theory. Unfortunately it doesn't quite showcase the best of them. It's a little unfocused and tangential in places, and by the author's own admission, it is a work in progress. That's not a bad thing, as long as you know ahead of time that to read it is to engage in a speculative conversation. If you want your economic theory cut and dry, this isn't for you. If you're prepared to explore a promising and neglected avenue of economics, give it a go.
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Initial post: 13 Sep 2012 13:44:33 BDT
Rob Julian says:
As you know I am a big fan of the post growth themes you are involved in and I would still maintain that a strong opportunity for synergy exists between post growth economics and the specific kind of protectionism I am advocating. CFP would both reduce the prospect of growth and at the same time ease the effects of less growth on those most at risk of suffering in developed countries. It would act as a stealth Robin Hood tax on the rich.
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