(A new vocabulary for world trade flat, kaleidoscope what next?)
Observers of the ever-increasing globalisation of the economy argue that countries such as China and India are advancing to the point where the world is becoming “flat,” says New York Times columnist Thomas Friedman. In other words, the United States will no longer have any comparative advantages over other countries.
However, international trade expert Jagdish Bhagwati disagrees, noting that globalisation has resulted in a “kaleidoscope” of comparative advantage. Despite outsourcing, integration of financial markets and converging interest rates of global assets, stark differences still remain among countries’ economies:
Years ago, says Bhagwati, similar concerns sprang up about Japan dominating the U.S. economy, but that never happened. In fact, even today, Japan struggles in managing its financial sector. Ultimately, Friedman’s metaphor of a “flat earth,” says Bhagwati, is simply false and misleading.
Source: Jagdish Bhagwati, A New Vocabulary for Trade, Wall Street Journal, August 4, 2005.
For text (subscription required): http://online.wsj.com/article/0,,SB112311935638704645,00.html
For more on Benefits of Trade: http://www.ncpa.org/iss/tra/
FMF Policy Bulletin/ 16 August 2005
