Saturday, September 7, 2019

China and India Build Internal Supply Chains — Timothy Taylor

One of the key questions in the escalating US trade disputes with China and other countries is how much the economy of other countries depends on trade. The answer helps to determine how much leverage the US has in trade disputes. Thus, it's interesting to note that starting about a decade ago, both India and China started reducing their dependence on exports as a source of growth, while doing more to build internal supply chains and relying more on domestic products....
Building national self-sufficiency but not autarchy. There is a tradeoff here between national sovereignty/security and economic efficiency. Global supply chains can be more efficient, but resilience requires national supply chains to overcome dependence on foreign powers. 

This is especially the case at a time of great-power rivalry that as is again rising, with a new cold war and hybrid warfare, including economic warfare, while neoliberal globalization is receding. This results in decoupling of economies and a building of national self-sufficiency. 

Russia is already a go way along in developing self-sufficiency and decreasing exposure to Dutch disease, or dependence of exports of extraction, petroleum in particular.

Agitation is also growing in the US to develop greater self-sufficiency after decreasing it to increase economic efficiency while neoliberal globalization was expanding in reach and depth.

Now de-dollarization and decoupling are the order of the day. China, Russia and India are cooperating on this.

Conversable Economist
China and India Build Internal Supply Chains
Timothy Taylor | Managing editor of the Journal of Economic Perspectives, based at Macalester College in St. Paul, Minnesota

No comments: