The Elephant and the Dragon

I’m just back from the Adelaide Festival of Ideas, which was great. The 24-hour flight and 8 1/2-hour time difference are still killers though. I participated in a discussion about the future of India and China on my first evening at the festival, which was rebroadcast on ABC’s programme The National Interest. I also gave a talk about my book, and participated in a panel discussion called People without Borders.

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Net profit

A fascinating article in this week’s Economist explains how mobile phones can help promote development. The spread of mobile phones has allowed fishermen in the Indian region of Kerala to call while at sea to find out where their catch will fetch the highest price.

This more efficient market benefited everyone. Fishermen’s profits rose
by 8% on average and consumer prices fell by 4% on average. Higher
profits meant the phones typically paid for themselves within two
months. And the benefits are enduring, rather than one-off.

EU fails to mend its protectionist ways

Anti-dumping duties, which unfairly penalise imports that are deemed too cheap, are one of the most pernicious protectionist devices. After all, we ought to be cheering if the cost of imports falls, because it makes the money in our pocket stretch further, not taxing consumers in order to try to prop up less efficient domestic producers.

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America alone is not to blame for Doha collapse

The world’s trade negotiators cannot seem to agree on much these days, but on one thing there is near-unanimity: the United States is responsible for the collapse of the WTO’s Doha Round.

Peter Mandelson, the EU’s trade commissioner, told the FT:

“If
the US continues to demand dollar-for-dollar compensation in market
access [cutting agricultural tariffs] for reducing domestic support, no one in the
developing world will ever buy that and the EU will not either.”

Kamal Nath, India’s fork-tongued commerce minister, said of the US:

“Everybody put
something on the table except one country who said ‘we can’t see
anything on the table’.”

This is nonsense. Whenever negotiations fail, all sides must take
some of the blame. And the US, for good reasons and bad, is guilty
mainly of being too ambitious to free up world trade – which is meant to
be what the WTO is about.

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The sceptics are wrong: Freeing trade has boosted growth in China and India

In a comment on my recent post on the contribution of trade liberalisation to Asia’s success, Jim takes issue with my contention that

China and India are very powerful examples of the benefits of
liberalisation: before they started their reforms, growth was slow, but
as they have opened up their economies, growth has accelerated.

He argues that growth speeded up before they opened up, and that their growth since they opened up is not due to freer trade.

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