Sunday, August 24, 2008

Mexicos (Africa, Asia and South America) v. Goliath?

Maybe the reason Mexican industry will never take off the way China's has and the way India's wants to is because the Mexican economy exists in too close proximity to the US eoconomy for tariff protection to be able to protect its nascent industries -- while they slowly worked themselves into shape to compete with the best in the world.

Indian motorcyle manufacturers are certainly not producing Harley's but high tarrifs are able to protect them from competition with Harleys and Hondas until they someday become world competitive (which they surely wish to become so they can get really rich in the global market).

But, how can tariffs protect Mexican manufacturing from American competition? Any American product any Mexican wants, he can just buy in Texas and transport across the border. If it isn't drugs or guns, nobody will even ask.

I just read in Ha-Joo Chang's 2008 book Bad Samaratins that neo-liberal have wrecked the growth prospects of many developing economies around the globe by insisting on breaking down their trade protection barriers before their infant industries are capable of competing with the outside world. Do neo-liberals really want to make the developing economies into a world of Mexicos?

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