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

[kjkhoo at pro.SoftHome.net]

At 4:11 PM -0200 27/12/03, Alexandre Fenelon wrote:
>-----Mensagem original-----
>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
>
>-You´re right, however, we can´t forget that countries with less
>exposure to external trade are also less dependent on foreigners
>to obtain these goods you´re mentioning. We also must consider that
>sometimes the currency devaluation stimulates economic growth by
>correcting imbalances in current account. So you have a period of
>crisis followed by a sharp recovery, even if nominal GDP falls.

I don't think that "countries with less exposure to external trade 
are also less dependent on foreigners to obtain these goods" applies 
as a general rule. In any case, in the present period, all countries 
are more and more exposed to external trade. Then, there's also the 
question of leading edge technology, etc. Thus, whether or not 
exposed to external trade, there are only a few firms in the world 
from which one can purchase, e.g. pcr equipment or sequencing 
technology. Ditto the family of ICT goods. And these are usually 
priced in USD, and in a world market at exchange rates. E.g., Dell's 
low-end computers sell in the US at, say, USD800, and in Malaysia for 
around RM3,000 -- compare that to GDP/cap at local currencies.

As for crisis followed by sharp recovery -- part of that, maybe a 
good part, is just a statistical thing. But in this day and age, when 
change comes fast and furious, a crisis may also be reflective of a 
change in the world deployment of capital, and unless you are in the 
'transnational elite' or some such like, you will likely find, as a 
country/region, that it's suddenly harder to make a living. To a 
large degree, I think that's what's happened in SE Asia, including 
Singapore whose currency was minimally affected by the 1997-98 
financial crisis.

kj khoo