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jerryking : comparative_advantage   10

China Started the Trade War, Not Trump
March 23, 2018 | WSJ | By Greg Ip.

Even free traders and internationalists agree China’s predatory trade practices—which include forcing U.S. business to transfer valuable technology to Chinese firms and restricting access to Chinese markets—are undermining both its partners and the trading system....starting in the 1980s, economists recognized that comparative advantage couldn’t explain success in many industries such as commercial jetliners, microprocessors and software. These industries are difficult for competitors to enter because of steep costs for research and development, previously established technical standards, increasing returns to scale (costs drop the more you sell), and network effects (the more customers use the product, the more valuable it becomes).......In such industries, a handful of firms may reap the lion’s share of the wages and profits (what economists call rents), at the expense of others. China’s efforts are aimed at achieving such dominance in many of these industries by 2025.
China  China_rising  comparative_advantage  Donald_Trump  Greg_Ip  increasing_returns_to_scale  myths  network_effects  predatory_practices  protectionism  tariffs  technical_standards  trade_wars  U.S.-China_relations  winner-take-all  WTO 
march 2018 by jerryking
Movement politics: a guide to the new globalisation
NOVEMBER 24, 2016 by: Alan Beattie.

The Great Convergence: Information Technology and the New Globalization, by Richard Baldwin, Harvard University Press, RRP£22.95/$29.95, 344 pages.

....Just as South Korea has changed, so newly industrialising countries are less keen on setting up entire industries at home and instead try to insert themselves into global supply chains. Sometimes this means changing, not just exploiting, their comparative advantage. Baldwin cites Vietnam, which joined Honda’s supply network by starting to manufacture motorcycle parts using production and technical expertise imported from the parent company. Thus Vietnam’s existing advantage of low-cost labour joined with the management and technical know-how of Japan to create a new specialism......

This framework explains a lot about current tensions around globalisation. For one, the stricken manufacturing towns of the American Midwest, many of whose poorer inhabitants switched to voting for Donald Trump, have experienced first-hand what it feels like rapidly to become a redundant link in a global value chain.

Second, it shows why modern trade deals, such as the proposed Transatlantic Trade and Investment Partnership between the US and EU, are centred on rules protecting patents and copyrights, and allowing foreign corporations to sue governments if they feel their investments are being expropriated. Multinationals are less concerned with goods tariffs, which are now generally low and belong to an earlier era of trade governance, than they are with trying to protect the specialist knowledge on which their global supply chains depend.

It also foresees the future of globalisation once technology has relaxed the third constraint, the movement of people. The easier it becomes to manage processes from afar — improved videoconferencing, remote-controlled robots — the more virtual immigration can substitute for actual and the specialisation of global supply chains proceed even faster.
books  book_reviews  supply_chains  Vietnam  Honda  international_trade  comparative_advantage  patents  videoconferencing  TTP  MNCs  redundancies  globalization  Midwest  Rust_Belt  industrial_Midwest  value_chains  copyright  transatlantic 
november 2016 by jerryking
Canadian economy suffers from the myth of comparative advantage - The Globe and Mail
Canadian economy suffers from the myth of comparative advantage
Special to The Globe and Mail
Published Thursday, Mar. 05 2015

Consider the recent bid by China to assist in the design, build and operation of high-speed trains in Ontario, perhaps in return for preferred access to raw resources. China is seeking to displace Bombardier, one of our foremost innovative companies, in our own domestic market.

Just as instructively, Bombardier is entering into joint aerospace production deals with Chinese companies, in large part because that is the key to access to the Chinese market. China wants to import our raw resources, not out trains or our planes, and wants to build up a competitive aerospace industry.

The key point here is that China has a competitive advantage based upon still relatively low wages (though they have risen a lot) and is also creating a competitive advantage in sophisticated industries through active industrial and managed trade policies. While we talk about comparative advantage, they are shaping trade and production in their own developmental interests.
industrial_policies  China  Bombardier  high-speed_rail  competitive_advantage  competitiveness_of_nations  comparative_advantage  myths  international_trade  economics  HSR 
march 2015 by jerryking
Will we ever be proud of our oil sands? - The Globe and Mail
The Globe and Mail
Published Monday, Jun. 23 2014

Unless politicians and industry do a better job at making the case for their exploitation, they will sow regional tensions and exacerbate a national malaise about the direction the country is heading.

The first step involves spelling out for Canadians just how critical the oil sands are to the national economy. In 2011, Albertans contributed $19-billion more to federal coffers than Ottawa spent in their province. No other province comes close to making as large a contribution to the federation. Indeed, at least seven out of 10 provinces are net beneficiaries of federal spending. Without Alberta’s wealth, federal transfers to have-not provinces would need to shrink, compromising the quality of life and public services for millions of Canadians.

Those who argue that other, cleaner industries would fill the economic vacuum if we shut down the oil sands ignore the fact that countries do best by exploiting their comparative advantages. Ours lie in resources. Though our technology sector has occasionally produced global success stories, our collective expertise still lies mainly in large-scale resource development.

Canadians, however, also want to be seen as conscientious global citizens. Our Prime Minister (if not this one, the next) could build a consensus behind developing the oil sands if he were to make shrinking its environmental footprint a national priority. Such a project would be a boon to domestic innovation, producing economic and social returns for the whole country.
oil_sands  oil_industry  Alberta  Konrad_Yakabuski  R&D  oil_patch  pride  economic_vacuum  comparative_advantage  natural_resources  resource_extraction  environmental_footprint 
june 2014 by jerryking
Economist Ricardo Hausmann Says U.S. Should Reinvent Manufacturing
January 4, 2013 | MIT Technology Review | By Antonio Regalado.

[ less keen on setting up entire industries at home and instead try to insert themselves into global supply chains. Sometimes this means changing, not just exploiting, their comparative advantage.]

Using complexity theory and trade data, Hausmann looks at what a country is good at making and predicts what types of more valuable items it could produce next.

That sounds plain enough, but the results of Hausmann’s analyses are often surprising. A country with a competitive garment industry might want to move into electronics assembly—both need an industrial zone with quality electrical power and good logistics. A country that exports flowers may find it has the expertise in cold-storage logistics necessary to spark an export boom in fresh produce.
economists  manufacturers  reinvention  competitiveness_of_nations  industrial_zones  competitive_advantage  economies_of_scope  linkages  policymaking  kaleidoscopic  comparative_advantage  supply_chains  value_chains  capabilities  cold_storage 
march 2013 by jerryking
Competitive Analysis for Competitive Advantage
(Charles Waud & WaudWare)
Who are my relevant competitors?
What are the criteria to determine customer value creation?
What are the priorities for competition?
Compared to the leading competitors, how do we look on each criterion?
On which criteria are we better?
On which criteria are they better?
How can we better position ourselves on our "strong" criteria?
How can we improve the customer's perception of our "weak" criteria?
Where should we allocate resources?
Where will future changes come from in my competitor's strategies?
On what key customer "value criteria" will they change?
How can we anticipate these changes and "reposition" our strategy most effectively?
Ivey  frameworks  competitive_advantage  market_segmentation  Five_Forces_model  value_chains  competitive_strategy  strategy  products  product_strategy  competitive_intelligence  experiece_curves  cost_analysis  comparative_advantage  customer_segmentation 
december 2012 by jerryking
Peter Thiel’s CS183: Startup - Class 11 Notes Essay
May 11, 2012 | Blake Masters

Where does the U.S. have the biggest comparative advantage in exports? Probably in agriculture. Looking into agricultural technology is counterintuitive for tech investors, since agriculture is often about as far removed from technology as possible. But that’s a good sign. It turns out that there is some very promising agritech development underway. Agritech may turn out to be a valuable secret that one might miss by not thinking about how people are talking (or not talking) about the economy.
Peter_Thiel  Stanford  law_schools  agriculture  farming  comparative_advantage 
june 2012 by jerryking
Manufacturing: The end of cheap China
Mar 10th 2012 | HONG KONG AND SHENZHEN | The Economist

The era of cheap China may be drawing to a close. Costs are soaring, starting in the coastal provinces where factories have historically clustered (see map). Increases in land prices, environmental and safety regulations and taxes all play a part. The biggest factor, though, is labour...If cheap China is fading, what will replace it? Will factories shift to poorer countries with cheaper labour? That is the conventional wisdom, but it is wrong....Louis Kuijs of the Fung Global Institute, a think-tank, observes that some low-tech, labour-intensive industries, such as T-shirts and cheap trainers, have already left China. And some firms are employing a “China + 1” strategy, opening just one factory in another country to test the waters and provide a back-up.

But coastal China has enduring strengths, despite soaring costs. First, it is close to the booming Chinese domestic market. This is a huge advantage. No other country has so many newly pecunious consumers clamouring for stuff.

Second, Chinese wages may be rising fast, but so is Chinese productivity. The precise numbers are disputed, but the trend is not. Chinese workers are paid more because they are producing more.

Third, China is huge. Its labour pool is large and flexible enough to accommodate seasonal industries that make Christmas lights or toys, says Ivo Naumann of AlixPartners. In response to sudden demand, a Chinese factory making iPhones was able to rouse 8,000 workers from their dormitory and put them on the assembly line at midnight, according to the New York Times. Not the next day. Midnight. Nowhere else are such feats feasible.

Fourth, China’s supply chain is sophisticated and supple. Professor Zheng Yusheng of the Cheung Kong Graduate School of Business argues that the right way to measure manufacturing competitiveness is not by comparing labour costs alone, but by comparing entire supply chains. Even if labour costs are a quarter of those in China to make a given product, the unreliability or unavailability of many components may make it uneconomic to make things elsewhere.
China  cheap  comparative_advantage  competitive_advantage  competitiveness  factors_of_production  flexibility  Hong_Kong  low-cost  manufacturers  measurements  productivity  supply_chains  think_tanks 
march 2012 by jerryking
A New Vocabulary for Trade
Aug 4, 2005 | WSJ pg. A.12 | Jagdish Bhagwati. The flat world
metaphor is, , both inept and mistakenly alarming. The real problem in
the increasingly globalized economy is rather that most producers in
traded activities -- an expanding set because services have become
steadily more tradeable -- face intensified competition. A specific
producer here will find rival suppliers stealing up on him from
somewhere, whether Portugal, Brazil or Malaysia, indeed from sources
which may not include India and China....Historically, comparative
advantage was "thick," shielded by big buffers. This is no longer so:
not predictably from India and China, but almost certainly from
somewhere. Hence I use the metaphor: "kaleidoscopic comparative
advantage." Today, you have it; but in our state of knife-edge
equilibrium, you may lose it tomorrow and regain it the day after.
...[How quickly can Ontario's colleges pull together a new course? How
much of the content is general vs. specific? for Dianne-- pinboard search on "institutional_integrity" "legal system" ]
ProQuest  flat_world  globalization  Tom_Friedman  metaphors  India  China  comparative_advantage  impermanence  transient  kaleidoscopic  instability  accelerated_lifecycles  global_economy 
december 2010 by jerryking

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