2. Trade and Technology is a Positive Sum Game
Whatever you say about opening up for globalization ( it has its bad sides), no country anywhere has achieved sustained high economic growth without opening up. Japan started to grow after they opened up in 1860, so did China in 1980, and so did India and Eastern Europe in the 1990s.
The last 50 years owes its greatest growth due to technology and globalization. World GDP rose 240 percent from 1900 to 1950 and grow even further by 700 percent from 1950 to 2000, as technology and trade accelerated. Before that, it was almost negligible.
Technology enables better products for lower prices, and improves productivity. The increases means more money for consumers to spend, and more profits for the business.
In 1962, President Kennedy declared that the major challenge of the sixties is how to maintain full employment at a time when automation will be replacing men. Well, not only were no jobs lost, but tens of millions more were created due to tech advances.
When NAFTA ( North American Free Trade Agreement which allows free trade between Canada, United States and Mexico without tariff) was to be signed, Ross Perot, a presidential candidate, declared that this will result in the giant sucking sound of jobs going to Mexico since the salary there was much cheaper.
It did not happen. In fact, the next few years after that agreement, the United States generated 22 mllion new jobs, and unemployment rate feel from 7 percent to 4 percent as new technology and trade created new jobs.
Trade has been the weapon that have made numerous countries rich. You cannot find a country that is rich that does not trade. And you become competitive in trade by investing in people and technology.
May 26th, 2010 at 2:35 am
hi po more pa ang mga technology
May 29th, 2010 at 4:22 am
Solow growth model discusses this elaborately. A very good reference to this discussion can be found in the book of David Warsch entitled, Knowledge and the Wealth of Nations…
May 30th, 2010 at 4:32 am
interesting… trade and technology? while we cannot compete in the world technological avancement today… we can compete with for our own self food sufficiency. The world today as we know it with all its faults due the financial crisi, the greed of banks, corruption in governments, self motivated interests of tycoons… the solution to these world issues and competitiveness… i still believe is food suficiency. When the people are not starving and health is assured, all else fall into place. as in your first brief.
May 30th, 2010 at 1:21 pm
HI Harry, thanks. One of the things I am looking at is whether rice self sufficiency is a valid goal. The soil of teh Philippines, and our lack of water does not seem to give us a competitive advantage in terms of rice…. I will try to come up with an article of it soon. Thanks for your feedback.
May 30th, 2010 at 1:22 pm
Hi Adrian,
thanks for your valuable comments. I will check out this book, and the pHlippine Economic mystery article.
July 8th, 2010 at 5:49 am
Trade wisely & you will make yourself rich. Trade foolishly & you will remain in debt to those you trade with.
July 13th, 2010 at 8:31 am
I find no objection to the need to open up our shores to foreign investments and trade. In fact, I would even say it is necessary. We have to accept the fact that we do not have all the goods that we need. Take the case of milk, we import 95 percent of the milk in the country today. It’s a billion dollar industry that we pay New Zealand every year.
What I object to is the tariff system that our country adapts which at the very least is outrageous. Let me go back to milk. Singapore imposes a 70% tariff on milk imports. Malaysia and Thailand charges 40%. China is at 22% and how much do you think our country charges? 1 percent, and its not even paid in dollars, but in training and travels abroad for people who would like to see a cattle-dairy farm.
If trade is done this way, then simply forget it. Sad to note it is not the laws, we have enough law governing trade… It’s how vulnerable we are the manipulation of other countries who takes advantage of the loopholes in our political system.
We need to trade that’s a given – maybe we just have to have the will to level the playing field and upgrade the “mentalities” of the people who we send to negotiate for us…
July 15th, 2010 at 6:34 am
No question about trade, by all means we have too. Techniology –
A highly educated race, we have so much technology. Any government agency promoting technology has several if not plenty gathering dust in their library or data base.
One problem with our technology innovators is their being secretive, preserving their intellectual property right, thus the slow rapture of their innovation to reality.
On the otherhand, many institutions (government mainly) have fallen trap to technology-capture. Review a typical technology development agreement with international funding agencies and there is always that standard condition that the beneficiary developer cannot utilize nor commercialize the technology produced without the consent of the country of the funding agency. The patron (usually the rich donors) has the first option to exploit the fruit of the local talent.
What we need are investors to cash in and make these technology and inventions work. There are inherent risks of course., but what worthy entrepreneur is there without factoring in risk and managing it at the same time.
At this time it is hard to compare our country with the openness of Japan during the middle of 17th century, as then, Japan had no technology to protect except perhaps in the production of the finest samurai sword. By opening up, they had learned and eventually earned a lot.
The openness of Taiwan is another art. Similarly, during their industrial period, it had no technology to boast, except the capability and skill to produce anything technical. It has no patent laws nor had joined or honored any international patent/copyright treaties or conventions. The Taiwanese simply went on copying and producing from finished or prototypes. Its World Trade Center practically a trading warehouse of immitation goods (mostly) prides on its motto “We produce anything, just show us the sample”.
Where do we place Philippine technology development? Please. tell me.
July 17th, 2010 at 5:20 am
We need the right combination and application of trade and technology to prosper. Right application of technology in order to add value to our industries wil make use more competitive. We may not have land areas for rice cultivation but we have a lot of water resources for fishing or aquaculture-related industries.
Using technology to enahance this sector will provide us the competitive advantage to do trade.
July 17th, 2010 at 8:21 pm
Is there a direct link between the NAFTA and those jobs or could it just be a coincidence? How did the neighboring countries do?