I have read this very interesting working paper about the impacts of trading with China on Argentina's poverty and welfare. It is a bit of a long and difficult read but I learned a lot from it and it had some very interesting information and I would recommend reading it. I will be summing it up a bit and share my thoughts on this paper.
In class we talk about how there are winners and losers in trade but I believe in most cases the overall welfare in both countries went up so I thought this paper would be very interesting. This paper talks about how during the 90's Argentina increase it's trade with China greatly especially in industrial sectors. With this increased competitions there were some negative effects. There were slow lagged declines in industrial employment but the studies in this paper find that trade with China only had small impacts on this.
Based on household surveys and the amount of trade that was being done with China the authors of the paper were able to determine that trade with a low wage country in this case China, would sightly reduce poverty and there also is a slight reduction in inequality in a developing country like Argentina. The authors also go into the importance of looking at tariffs, price changes and trade reforms and how they can greatly influence the results. Unfortunately this paper only goes into trade with a low wage country like china and a developing country like Argentina but does not touch on if non developed countries were to trade with China.
I think this paper does a great job of showing how the country importing from a low wage country will see benefits even though some will lose their jobs like Argentinians working in the industrial sector in this case.
I agreed. The most advanced countries importing from a low wage countries goods even though home country loose some sector. Because the price is low and consumer demand increase. Also, sales revenue are increase.
ReplyDeleteVery intriguing. When a country trades with another, poverty elimination doesn't come to mind as a result...but indeed it seems to be true. Trading with other nations can lower prices, allowing consumers to spend less on goods and thus save more/reallocate that money elsewhere. I'd be interested to see what the effect is on a developing nation to make the comparison between that nation and what Argentina has done.
ReplyDeleteAs long as the positives are outweighing the negatives, I'm sure Argentinians as a whole do not mind sacrificing a few jobs for seeing lower poverty rates and lower prices for goods. I think that if a non developed country were to trade with China the result would not be the same as trading with a developed one like Argentina.
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