Wednesday, April 26, 2006

Exclusiveness of what?

In an article, Robert B. Reich says that most economists and policy makers now accept David Ricardo's argument that the gains from trade exceed the losses regardless of whether trading partners are more or less economically advanced, as each nation shifts to where it has a comparative advantage. The new and more interesting debate, he continues, is about how the benefits of trade should be shared.

I am a little skeptical about “Free Trade Agreements (FTAs)”, because they are not free at all, as they should be. But, there is no doubt that this is the direction countries should follow. This mean that a better a country could be, is positive related to the number of FTAs a country has. The main example is Chile, which has FTAs with USA, Mexico, Canada, European Union, Korea, Central America and China, and soon will have with Japan. Looking only at the benefits of its FTA with USA, one can see that the bilateral commerce between Chile and USA has grown in 36.6% in the two years of the agreement, the exports to USA have grown in 35.1% with respect to 2004 and the imports have grown in 38.8%. Other benefits have been the diversifications of products send to USA, mainly from the small and medium enterprises.

The benefits are really enormous and certainly these have helped Chile a lot to reach the second place in GDP per capita among 19 Latin-American countries with US$ 12.737 (only Argentina is ahead with US$ 14.838). We (Bolivia) are also in the second place, but counting backwards, we occupy position 18th with US$ 2.879 beating Haiti only. Of course there are some other structural reasons that explain this, but we are a closed economy an that is a binding constraint for our development.

So, I really can not understand this discussion about the CAN (Comunidad Andina de Naciones), TLC (Tratado de Libre Comercio) with USA and TCP (Tratado Comercial de los Pueblos). We are really mistaking the way by thinking that they are exclusive among each other. Of course they are not, we have to continue in the CAN, we have to sign a FTA with USA and it is a good thing to have also this TCP with Venezuela and Cuba. And if tomorrow we have to sign a FTA with Timbucktu, ok let’s do it. But stop this discussion about exclusiveness. We and our government looks like “perro del hortelano” by saying to other governments what they have to do. Concentrate in what we can do and how we can enjoy the benefits of commerce.

It is a shame that we are not looking at the economic benefits of a situation and looking only at the political benefits. Are we going to enjoy more welfare with those political benefits? Could somebody explain how these political benefits can be translated in economic benefits for the poor? Paraphrasing what Viva Bolivia! said: Where are the economists in Bolivia?

9 comments:

Anonymous said...

The answer to your last question is: Chile (like yourself), USA, England, Germany, and a couple of adventurous are living in even more remote countries.

Diego A. Escobari said...

Guccio,
El anterior comentario (anonimo) nos esta dando en el ojo. Esta hablando de los Bolivian-econ-bloggers. Simplemente estamos confirmando la Tiebout Hypothesis: "voting with your feet". Como no estamos de acuerdo con las politicas economicas en Bolivia (TLC, TCP, etc), simplemente "elegimos" (votamos) vivir donde las politicas son mas acordes a lo que queremos. Obviamente, desde lejos queremos que las cosas mejoren para Bolivia (y eventualemnte volveremos a trabajar). En todo caso la pregunta era: where are the economists IN Bolivia? que es justamente lo que queremos saber, y no: Where are the Bolivian economists?

Diego

Briegel Busch said...

Why do you think Bolivia is a closed economy?

It seems to me the economy is quite open to trade since the "Nueva Política Económica" started.

Briegel Busch said...

Hey:

It is not polite to leave the comments of your readers without an answer.

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