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India tried this approach for multiple years and was a catastrophic failure. Indians had to survive on subpar cars such as Ambassador and Maruti, expensive TVs

by dmode 9y ago

India tried this approach for multiple years and was a catastrophic failure. Indians had to survive on subpar cars such as Ambassador and Maruti, expensive TVs and fridge with subpar quality, and a dwindling economy. The way many Asian economies have succeeded is not by protectionism, but by identifying their niche capability and focusing on them. For example, automobile in Japan, semi-conductor in Taiwan, appliances in Korea. The equivalent approach in the US would be to concede low end manufacturing to China and focus on improving high end manufacturing and future industries that can sustain higher labor costs. Not trade tariffs.

dgut 9y ago
The difference is that the US is home to some of the best universities, attracts a lot of educated/talented people and has the largest knowledge economy in the world. So while India might have failed to develop great cars and whatnot as you claim, the US could (and does) that just fine. Taiwan and South Korea can hyper-focus on one or two sole industries because their population's sizes are fairly small (comparatively), and that has turned out well for them -- but I think the US needs to at least partially dominate a range of industries to stay afloat. Also, people forget 1850 Germany essentially entered the industrial age through a good dose of protectionism. It worked because they already enjoyed a good educational system and skilled workforce.
globuous 9y ago
Although I wonder how much of that was helped by the US post WWII to counter communism. I remember looking online for something like 'how did japan become so wealthy after WWII considered how much they lost after WWII. I got a few links like this one: https://www.quora.com/How-did-Japan-become-wealthy https://www.quora.com/How-did-Japan-become-wealthy (points 1 and 3 of first answer, second answer is interesting as well) And what I got form it was that in was in the US' interest to have successful capitalist countries in the area during the cold war. Because there was so much communist influence is that area of the world.
jeffreyrogers 9y ago
But they don't just focus on one industry. South Korea has steel making, automobiles, ship building, and more. Japan has automobiles, steel, consumer electronics, and more. India hasn't even figured out how to get most of its population out of poverty, so I don't think it's a good example. It's hard to have competitive industry when your population can't feed itself. Plus it's a huge country that has had what are effectively ongoing civil wars within its states, and its problems are compounded by it's cultural and linguistic heterogeneity. The Asian countries I mentioned that succeeded all had major agricultural reforms (some violent, some not) prior to their industrial success.
rasz 9y ago
How can you think India got screwed? There would be nothing but sweatshops without protecting own market, instead India got Tata Group which owns Land Rover/Jaguar and Daewoo car business. Look what happened in eastern Europe after "progressive" governments opened to the west and sold everything for pennies.
fwgwgwgch 9y ago
Are you suggesting that us like India of old cannot manufacture good technology in house? That's just plain dumb sorry. It's not even apples vs oranges. It's apples vs orange seeds.
- fellellor 9y ago
  Technology isn't as important for economic success as functioning markets are.
lenkite 9y ago
India actually _didn't_ try this approach. Nearly all our industries were corrupt government owned 'public sector' industries. The idea using this approach is to develop innovative, private industry in a regulatory-friendly environment while providing proper trade protection and financing. Automobile Industry In Japan was heavily protected http://www.americanautocouncil.org/sites/aapc2016/files/Japans%2BProtected%2BAuto%2BMarket.pdf http://www.americanautocouncil.org/sites/aapc2016/files/Japa... https://www.huffingtonpost.com/ian-fletcher/japan-the-forgotten-prote_b_850269.html https://www.huffingtonpost.com/ian-fletcher/japan-the-forgot... South Korean industry was heavily protected from 1960-90 and now is well-protected through unique Korean mandatory standards (nice WTO loophole).
- fellellor 9y ago
  I'm not sure about the other Asian countries mentioned, but in India we kind of messed up when public sector companies were competing with privately owned companies in the same sphere. The government always bailed out the public companies whenever they messed up, but the private companies themselves have managed to set up organized anti-competitive cartels wherever possible. But that said, tariffs alone can't explain how some economies succeed or fail. There are a lot of other variables which tend to be ignored in such simplistic thesis about macroeconomic outcomes, as there always are.

by dmode 9y ago

dgut 9y ago

The difference is that the US is home to some of the best universities, attracts a lot of educated/talented people and has the largest knowledge economy in the world. So while India might have failed to develop great cars and whatnot as you claim, the US could (and does) that just fine. Taiwan and South Korea can hyper-focus on one or two sole industries because their population's sizes are fairly small (comparatively), and that has turned out well for them -- but I think the US needs to at least partially dominate a range of industries to stay afloat. Also, people forget 1850 Germany essentially entered the industrial age through a good dose of protectionism. It worked because they already enjoyed a good educational system and skilled workforce.

globuous 9y ago

Although I wonder how much of that was helped by the US post WWII to counter communism. I remember looking online for something like 'how did japan become so wealthy after WWII considered how much they lost after WWII. I got a few links like this one: https://www.quora.com/How-did-Japan-become-wealthy https://www.quora.com/How-did-Japan-become-wealthy (points 1 and 3 of first answer, second answer is interesting as well) And what I got form it was that in was in the US' interest to have successful capitalist countries in the area during the cold war. Because there was so much communist influence is that area of the world.

jeffreyrogers 9y ago

But they don't just focus on one industry. South Korea has steel making, automobiles, ship building, and more. Japan has automobiles, steel, consumer electronics, and more. India hasn't even figured out how to get most of its population out of poverty, so I don't think it's a good example. It's hard to have competitive industry when your population can't feed itself. Plus it's a huge country that has had what are effectively ongoing civil wars within its states, and its problems are compounded by it's cultural and linguistic heterogeneity. The Asian countries I mentioned that succeeded all had major agricultural reforms (some violent, some not) prior to their industrial success.

rasz 9y ago

How can you think India got screwed? There would be nothing but sweatshops without protecting own market, instead India got Tata Group which owns Land Rover/Jaguar and Daewoo car business. Look what happened in eastern Europe after "progressive" governments opened to the west and sold everything for pennies.

fwgwgwgch 9y ago

Are you suggesting that us like India of old cannot manufacture good technology in house? That's just plain dumb sorry. It's not even apples vs oranges. It's apples vs orange seeds.

fellellor 9y ago
Technology isn't as important for economic success as functioning markets are.

lenkite 9y ago

India actually _didn't_ try this approach. Nearly all our industries were corrupt government owned 'public sector' industries. The idea using this approach is to develop innovative, private industry in a regulatory-friendly environment while providing proper trade protection and financing. Automobile Industry In Japan was heavily protected http://www.americanautocouncil.org/sites/aapc2016/files/Japans%2BProtected%2BAuto%2BMarket.pdf http://www.americanautocouncil.org/sites/aapc2016/files/Japa... https://www.huffingtonpost.com/ian-fletcher/japan-the-forgotten-prote_b_850269.html https://www.huffingtonpost.com/ian-fletcher/japan-the-forgot... South Korean industry was heavily protected from 1960-90 and now is well-protected through unique Korean mandatory standards (nice WTO loophole).

fellellor 9y ago
I'm not sure about the other Asian countries mentioned, but in India we kind of messed up when public sector companies were competing with privately owned companies in the same sphere. The government always bailed out the public companies whenever they messed up, but the private companies themselves have managed to set up organized anti-competitive cartels wherever possible. But that said, tariffs alone can't explain how some economies succeed or fail. There are a lot of other variables which tend to be ignored in such simplistic thesis about macroeconomic outcomes, as there always are.