Monday, December 12, 2005

History vs. theory

Provocative piece in the Guardian from economics editor Larry Elliott, in the run-up to the WTO talks in Hong Kong. With the rich companies, backed up by the heavyweights of neoclassical economics, demanding further liberalisation of trade, Elliott follows Harvard economist Dani Rodrik's comparative study of Mexico and Vietnam:

One has a long border with the richest country in the world and has had a free-trade agreement with its neighbour across the Rio Grande. It receives oodles of inward investment and sends its workers across the border in droves. It is fully plugged in to the global economy. The other was the subject of a US trade embargo until 1994 and suffered from trade restrictions for years after that. Unlike Mexico, Vietnam is not even a member of the WTO.
So which of the two has the better recent economic record? The question should be a no-brainer if all the free-trade theories are right - Mexico should be streets ahead of Vietnam. In fact, the opposite is true. Since Mexico signed the Nafta (North American Free Trade Agreement) deal with the US and Canada in 1992, its annual per capita growth rate has barely been above 1%. Vietnam has grown by around 5% a year for the past two decades. Poverty in Vietnam has come down dramatically: real wages in Mexico have fallen.
Rodrik doesn't buy the argument that the key to rapid development for poor countries is their willingness to liberalise trade. Nor, for that matter, does he think boosting aid makes much difference either. Looking around the world, he looks in vain for the success stories of three decades of neo-liberal orthodoxy: nations that have really made it after taking the advice - willingly or not - of the IMF and the World Bank.
Rather, the countries that have achieved rapid economic take-off in the past 50 years have done so as a result of policies tailored to their own domestic needs. Vietnam shows that what you do at home is far more important than access to foreign markets. There is little evidence that trade barriers are an impediment to growth for those countries following the right domestic policies.

National specifics trump theoretical generalisations each time, it seems. Who'd have thought it.

Another even more sceptical (if less reasoned) view in the same paper, from Gary Younge in Jamaica:

Little wonder that, according to a Christian Aid poll, two-thirds of African trade delegations questioned said that their economies would suffer if they accept what is currently on offer, while more than half said they would halt the negotiations if they didn't like what was on offer. They should follow their instincts, and other less developed nations and progressive NGOs should follow their lead. When the only thing on the menu is going to make you sick, it is time to walk away from the table.


Thursday, December 08, 2005

New additions

A few additions to the main 2ubh site:
In Features, my investigation for Corporate Financier into the performance so far of the government-backed Regional Venture Capital Funds. The basic verdict is they're a nice idea, but... a good deal more government intervention at this end of the market is likely to be needed before the commercial investors are convinced that the sub-£1m market is a worthwhile place to put their money.
This was the feature shortlisted for the BVCA Private Equity & Venture Capital Journalist Of The Year Awards 2005. I'm currently working on another feature for Corporate Financier on the role of advisory boards in corporate finance firms - what do they do, and do they offer anything more than glamour by association?

And in Reviews, another couple from the Fortean Times: a comparison of the two recent biographies of the iconoclastic astronomer Fred Hoyle; and a sceptical verdict on the much-hyped Freakonomics. I note of the latter that 'much of this Freakonomics is already becoming the conventional wisdom, and ripe for overturning in turn' - the Economist this week has a provacative account of what it calls an embarrassing hole in the evidence for Levitt's most (in)famous theory.
Latest tome to arrive from the FT is 'Are we alone? The Stanley Kubrick extra-terrestrial intelligence interviews', a collection of transcripted interviews with leading scientists of the late 1960s, commissioned for Kubrick's 2001 but dropped from the finished film. Parts of these were included in a contemporary 'Making of 2001' book that I recently exhumed from the local secondhand book cave, and I'm looking forward to reading more.


Monday, December 05, 2005

Barry Hines - pride in industry

Good interview with writer Barry Hines in the Observer. Hines took as his subject the industrial communities of his native South Yorkshire - most famously in A Kestrel for a Knave (filmed as Kes) - and, in the 1980s, their dismantling in the creative destruction of Thatcherism. Even the nuclear apocalypse visited on Sheffield in his infamous BBC play Threads can be seen as mirroring the economic devastation being wrought at the time.

The economy in South Yorkshire has more or less recovered by most measures (read a 2004 overview here), but has the community? As Observer writer Richard Benson asks Hines:

...for my generation, industries that actually make things have always seemed to be on the way out, and the industries we're supposed to be excited about seem mostly to involve moving paper about and they're boring. Most people I know hate their work as much as anyone ever did, but they don't have the sense of embattled piss-taking and comradeship that you find in The Price of Coal. So, to be honest, I can't help romanticising a world where people actually made things, even though the work was hard. And I'm not the only one. Even some younger people now feel a sort of nostalgia for times they didn't even live through themselves. Do you think that's silly?

'No, it's not silly,' he says. 'The people who made those things and designed them were proud of them. I mean, most of the blokes in Sheffield who worked in the steel factories were proud. You would be, if you were walking down the street in Brighton or somewhere and you saw "Made in Sheffield". You'd say, "Look at that! I made that" or "So and so made that". Or "We did that".'

Has anything come to replace that?

'I've thought a lot about that,' says Hines, as we turn and head back up the street to where the car is parked, 'but I don't know. I just don't know ... maybe the time will come when no one will bother about that, when no one will remember that feeling, when it won't matter. Maybe it's come now.'

Some of Hines' novels have been recently republished by Pomona Books, based just down the valley from here in Hebden Bridge. I'll be looking out for them.