RES: [lbo-talk] Recent Growth & Bush's Economic Policy

[kjkhoo at pro.SoftHome.net]

At 3:49 PM -0200 25/12/03, Alexandre Fenelon wrote:
>-----Mensagem original-----
>Re international comparisons, I think it better to use exchange rates
>rather than PPP. I think Arrighi is right on this -- the exchange
>rates measure relative command over global resources and output in a
>way that PPP doesn't. PPP would be fine if we all lived in closed
>national economies; we don't -- e.g., after 1997, my book purchasing
>power dropped by 50%.
>
>
>-That´s a good point, I think, but don´t forget the exposure to
>international trade is highly variable between countries. PPP
>measures made more sense in India (where imports are around 10%
>of GDP) than in China (around 30%). However, when you are
>calculating global growth rates, I would say both methods are
>biased. My book import purchasing fell by 60% in 1999, but my
>overall living standards didn´t. And the Brazilian economy had
>modest growth, nothing like the collpase a nominal fal of 50%
>of GDP would suggest.

True, personal living standards don't drop by the same extent, though 
the impact on different classes would vary, depending on the degree 
to which the country is self-provisioning for basic consumption 
items. But to the extent that world trade is denominated in dollars 
-- and that's true of a lot of resources, goods (incl technology), 
and services -- then Brazil's command of the same dropped by that 
extent. It's not simply a question of degree of exposure to trade. 
Even at limited exposure, there's the need for petroleum, technology, 
raw materials, intellectual and other resources, etc. This diminished 
command impacts on future growth potential.

kj khoo