Future of Trade

“We might be able to stimulate our way back to stability, but we can only invent our way back to prosperity. We need everyone at every level to get smarter.”

“Sometimes, I worry, though, that what oil money is to Russia, our ability to print money is to America. Look at the billions we just printed to bail out two dinosaurs: General Motors and Chrysler.”

Tom Friedman’s op-ed in the NYTimes. Innovation clusters are hard to shift, but so far no one has been able to replicate the Si Valley code despite East Asian governments pouring lots of money into infra. What is trade like in a world of L-shape growth for SGP?

You may all have seen this, but here is a compilation of short essays mostly revolving around trade and global trade governance.

I haven’t read them all, and some of the ones I’ve read haven’t resonated that much with me, but there are some useful insights sprinkled in there.  One of my favourite essays is this one, which builds into the meta-question we talked about yesterday – the one that challenges the primacy of trade, our “trade-above-all” position.

The point that Tandon makes about the salience of power and how the West has been able to define the terms with which we view trade is interesting in the possibilities it throws up.  Perhaps one of the issues we ought to look at is the definition of tradable commodities and this idea of the value chain.  Who decides what gets commoditised and what is a “higher value-add” product or service? This has historically been defined by the West and the theory of comparative advantage.  Is this landscape going to shift in the future? Certainly the fallout from any food crisis would be instructive here.

Thoughts welcomed.

Hi everyone,

My first post centres around Linda Lim’s article on Singapore’s economic growth model. I chose this article because I think it should be one of those pieces that make us feel uncomfortable.

Basically, she argues that our growth model has been premised on “doing more of the same” government policies, which may be losing relevance or are no longer able to bring about the kind of growth that Singapore has been experiencing. For example, in light of the current global economic crisis and the mounting public debts that countries such as the US have to support in light of massive stimulus packages, Singapore’s EDB model of attracting MNCs to locate here through tax incentives here may no longer work because those countries will want to minimise any unnecessary leakages from their respective economies. Already, we have seen the US and OECD countries trying to “clamp down” on “tax havens” like Singapore.

In addition, she also uses the logic of comparative advantage and competitive advantage to demonstrate why a resource-constrained city-state like Singapore cannot “too many things at the same time” because that will just result in inflation and thereby an erosion of the economic advantages we have managed to carve out in the first place.

While these issues may not be all so directly related to trade in terms of the actual flow of goods and services, the assumptions that she questions are related nevertheless and have interesting implications for us to consider. For example, can Singapore really “go local” and be less reliant on trade? If so, to what extent and what can we do to make that happen?

The two questions that she has left me pondering, amongst other things, are these:

(i) Given the increased complexity of the global economy (compared to say 10 – 20 years ago), should Government regulate and manage the economy more or less (bearing in mind the rise of a possibly more politicised global economy)? Assumption here being that less Government control means more a responsive economy.

(ii) If Singapore had to adopt a different economic growth model, what would that model look like? How different or in what ways would it be different from the present? Assumption here being that ‘different’ means we “go local”.

You thoughts pls.

Full article can be downloaded here: http://www.fas.nus.edu.sg/ecs/scape/doc/24Oct08/Linda%20Lim.pdf