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People like to pretend that protectionism is such a bad thing. But Western nations built themselves through protectionism, it's something China has been doing t

People like to pretend that protectionism is such a bad thing. But Western nations built themselves through protectionism, it's something China has been doing to great success and the Asian tiger economies (primarily South Korea) did as well. After all, there's only so much you can do for your population if you never ensure a steady supply of high quality jobs that provide a path into the middle class, and you don't protect fledgling industries (beyond basic commodities) that are necessary to create these jobs but can't compete properly against well-established companies elsewhere. It's one of the great neoliberal myths that they've so successfully perpetuated (primarily through institutions like the IMF and the World Bank) that free trade and vicious, expansive privatization is the only right path.

magicMonkeyPaw 6y ago
oh yeah, I bet all the indians were very happy being only able to buy off-brand cola at horrendous prices. Woooo weeee.
systemvoltage 6y ago
This is wrong, misguided and naive. International trade when done with effective reciprocity and managing the trade deficit, can lead to competition on a larger scale, better outcome for consumers and specialization in particular aspect of manufacturing or services. Even domestically, specialization is how human species became to me. If humans continued to be inwards looking and never engaged in barter-trade or any kind of bilateral exchange either with monetary instrument or goods/services; we would still be caves. National to international trade is just one more step in the expansion of trade that we all benefit from. We have proof that it works when all parties are rational and cooperative. If we found aliens on another planet, it would only make sense to trade with them (just increasing the abstraction layer from national to international to interplanetary).
- rbecker 6y ago
  > International trade when done with effective reciprocity and managing the trade deficit This is exactly what protectionism can help achieve. Without it, you get banana republics, wholly owned by foreign multinationals. It's telling you ignore the parent posts Asian tiger economies as examples of successful protectionism, and instead address the ridiculous strawman of "never engaged in barter-trade or any kind of bilateral exchange either with monetary instrument or goods/services"
- deleted 6y ago
  [deleted]
- a9h74j 6y ago
  > aliens on another planet Related thought experiment: What if the aliens were 1000 years ahead in patenting everything (in a way which didn't expire), then forced their IP regime on Earth, extracting IP rent for everything, since it would _only_ make sense to trade with them?
  - systemvoltage 6y ago
    You know the answer. Mutual trade makes sense when trade deficit is managed, there is cooperation and symmetry. We don't need to go to aliens for that, right now we have China that's creating asymmetry in the trade and it doesn't play by the fair rules. For example, US allowing TikTok and WeChat but China banning Facebook/IG and Google.
  - mahkeiro 6y ago
    It won’t prevent new product to be patented, so innovate...
  - imtringued 6y ago
    This is such an amazingly good question because it directly relates to real life. Of course you would trade with them to get 1000 years ahead and then once you are at the same level as them you would betray them and completely ignore their "stupid" IP laws. This is basically what China has been doing for decades now.
- pcurve 6y ago
  "International trade when done with effective reciprocity and managing the trade deficit, can lead to competition on a larger scale, better outcome for consumers and specialization in particular aspect of manufacturing or services." you need a properly functioning local government, which is pretty rare in developing countries.
  - missedthecue 6y ago
    But it's not an indictment of free trade
- Mekantis 6y ago
  > This is wrong, misguided and naive. I'd appreciate it if you didn't jump straight to insults. > International trade when done with effective reciprocity and managing the trade deficit, can lead to competition on a larger scale, better outcome for consumers and specialization in particular aspect of manufacturing or services. I didn't say international trade should be stopped entirely. "Free trade" isn't "all trade". I'd appreciate it if you didn't strawman me. A part of the myth is the idea that free trade means perfect competition. No, it means a massive existing company can easily buy up local competitors and ensure that competition ceases entirely. > Even domestically, specialization is how human species became to me. If humans continued to be inwards looking and never engaged in barter-trade or any kind of bilateral exchange either with monetary instrument or goods/services; we would still be caves. This ignores the many cases where countries have protected local industries despite these industries existing elsewhere producing far better products and being far more competitive, and been wildly successful because of it. And again, I never said "no trade ever at all allowed because all trade is bad". > National to international trade is just one more step in the expansion of trade that we all benefit from. We have proof that it works when all parties are rational and cooperative. If we found aliens on another planet, it would only make sense to trade with them (just increasing the abstraction layer from national to international to interplanetary). I never said otherwise. Trade is fine. Foreign companies crowding out local industries to the point that local jobs are primarily low quality and low paying is not (see the number of countries that are relegated to production of fabrics and other low-cost goods).
thrwo334324 6y ago
This is not surprising though, is it ? Britain's "benign civilizing" (schools in anglo-saxon nations have no shame) policies vis-a-vis India were severely skewed against India, and towards protecting her own fledgling industries. Mercantilism, 'a.k.a' Free Trade, was then exactly what China does now - freedom to sell my goods in your place. Opium wars too was all about 'Free Trade'.
- rayiner 6y ago
  > Mercantilism, 'a.k.a' Free Trade Where do people get this Orwellian Newspeak? Mercantilism is the opposite of free trade. Colonials were prohibited from trading with anyone else, and prohibited from choosing not to trade (were not permitted to have their own industries higher up the value chain). It was not free trade in any respect.
mardifoufs 6y ago
Latin america and even india are proofs that "pure" protectionism does not work. Even China is an example of free trade working. China opened up massively, reduced customs, reduced costs of doing business etc for 3 decades before moving towards more restrictive and more protectionist policies. After learning as much as possible from foreign corporations that flocked to China. Even now, free trade would be much more beneficial to china economically if it wasn't for the current geopolitical situation. Of course it was very far from a totally deregulated free market, but the Chinese government craved foreign investment for most of the 1990s-2000s and did everything to attract it. India on the other hand has a very bad reputation when it comes to international investment because of it's famously poor economic (and protectionist/populist) policies that made investment very risky. It's very hard for a country like India or Argentina to actually innovate when they restrict themselves to a local pool of knowledge, talent, and experience. And that's precisely why India has lagged far, far behind China even if they were ahead in the 1970s-80s. You don't want to reinvent everything all the time, it just isn't possible without lagging far behind and that's what happens with protectionism.You will almost always end up with a low skilled economy with basic economic output (like beverages or commodities). It's easy to totally replace coca cola with local alternatives, it's impossible to do for sectors like semiconductors or finance when you have to start from almost 0 because no one wants to invest in a protectionist economy.
- systemvoltage 6y ago
  Easy to prove the point: Stop importing semiconductors and see how India or Argentina would fare.
- adi2907 6y ago
  China never allowed unfettered access to global firms. Since Deng Xiaoping opened up, the rule for a foreign firm to gain access was 1) to tie up with a local company which will have significant stake and 2) ensure technology transfer to the local company over a period. This was a pre condition for market access, and basically how electronics components makers were built. The recent stars like Huawei, Xiaomi and Lenovo could only be built once the supply ecosystem was local. You will not find a single example of any country becoming developed following free trade except for island nations like Singapore
reaperducer 6y ago
The problem is that so many people have an all-or-nothing mindset. It's part of the tribalism that's running rampant through society as a whole, and is very destructive. Free markets are great. So are some closed markets. There has to be a balance.
WalterBright 6y ago
When one company tries to punish another, it imposes embargoes and sanctions. I.e. protectionism. The "embargoes bad", "protectionism good" doesn't make a whole lot of sense.
bobthechef 6y ago
Friedrich List[0] made exactly this point. The United States, for example, is often portrayed as the paradigmatic example of the unregulated free market, but it is actually quite protectionist (some of the measures lead to perverse economic incentives like those surrounding the corn industry) and its economic power rose precisely because it exercised protectionist measures against the emerging industrial powers of Europe like Britain and France who would have been able to crush nascent American competition. List believed that free markets make sense within a domestic economy, but that import tariffs may be legitimately imposed when it results in domestic benefits. [0] https://en.wikipedia.org/wiki/Friedrich_List https://en.wikipedia.org/wiki/Friedrich_List
nabla9 6y ago
Joe Studwell's book "How Asia Works" explains how to do protectionism well (as how Asian tigers and others did it) 1. Land reform so that people can generate money from farming and generate financial surplus. 2. Controlled domestic finance sector protected from external competition.. 3. Export oriented manufacturing where products are exposed to global competition but financing comes from domestic sources. This kind of partial protection allows capital accumulation even when products are inferior at first. Asian countries that failed in the first step never became tigers or are still trying. Incidentally China had partial land reform that started from bottom up (illegally) but was later accepted.
vl 6y ago
Free trade advances human race as a whole and raises average standard of living. But it’s important to understand what is at the end of this advance: irrelevance of labor. Not only hyper-optimization produces fragile systems (i.e. look at the mask and sanitizer shortages at the most wealthy nation on Earth), it also eventually will make most of the labor uncompetitive. You can only consume so much on credit, I’m not sure how world will reshape when most of the humans cannot contribute anything of value.
- ejanus 6y ago
  I don't think this is correct. It favors those with capital and technology. The strong over the weak. And it increases the barrier to enter. Look at Africa(my continent) as an example of where free market leads to collapse of economy.
ardit33 6y ago
If that is true, then Argentina (and many other Latin countries that adopted protectionism policies) would be flourishing. Argentina should be as rich as Canada, but they are 1/5th of their level. Protectionism might workout/help out for a limited time to jump start nascent local industries, but in the long term is damaging to an economy.
- mistermann 6y ago
  Or, perhaps there is more than one single variable involved in economic development.
- imtringued 6y ago
  Protectionism isn't about jump starting local industries. It's about converting foreign owned local industries into domestically owned local industries. You can only afford to do it once you no longer need foreign investors.
econcon 6y ago
Like Indian comment producers were found colluding to keep the domestic cement price high. If there was competition from foreign players, this would have not happened
- newyankee 6y ago
  This is true. Transparent regulation and enforcement of rules is the only protection. Other examples is the sugar industry 'mafia' in the state of MH where private players cannot easily enter. It is not like we do not have any checks and balances. We have an activist Supreme court as well as high courts which ignore average folks but open their doors at 3 am for special hearings for important folks. However overzealous regulation in India has also meant that a Copper plant in India was closed in Tuticorin after protests allegedly funded by Chinese interests. Now India imports Copper from China. Apparently the main reason why protests happened (pollution) did not change 1 year after closure of the plant. Whereas thousands of poor unskilled laborers did lose their jobs.
missedthecue 6y ago
"People like to pretend that protectionism is such a bad thing" David Ricardo mathematically proved it was a bad thing over 200 years ago. It absolutely befuddles me that people, especially in scientific communities, continue to support its implementation. Hong Kong has always been free trade and their GNP per capita is now greater than all of western europe, barring Norway (which is equal to HK). Protectionism makes yourself poorer. Isn't interesting concerning tariffs that what we do to our enemies during wartime we do to ourselves during peacetime.
- throwaway9482 6y ago
  Cause mathematics and economics deal with the same layer of abstractions
- dragonwriter 6y ago
  > David Ricardo mathematically proved it was a bad thing over 200 years ago. Ricardo’s proof applies to comically simplified conditions which fail to consider a number of factors that exist in real world trade and resulting shifts of specific industries between countries including: (1) potential impacts of current activity on future production possibilities, and (2) strategic impacts of different production patterns and how that effects non-trade international relations, including war. That's not to say it's not an important result that has massive implications for policy, but it is far from proof that protectionism is a bad thing in every case. It does prove that it always comes at a short-term cost, so you'd better have a specific long-term strategy that justified the short-term cost, though.
  - ethbro 6y ago
    Politicians have always befuddled economists. Economists have always befuddled politicians. Unfortunately, the collision of the two typically leads to the worst of all outcomes without the benefit of any. E.g. Implementing protectionist policies without a low term plan for their withdrawal.
- deleted 6y ago
  [deleted]
econcon 6y ago
> it's something China has been doing to great success and the Asian tiger economies (primarily South Korea) did as well. When india imposed duties against chinese steel, the steel sector grew but soon the Real Estate sector accrued high input costs and real estate became expensive. Same happened to automobile sector in india, yes few people gain from protectionism at expense of others. I'd go on 1 foot and tell everyone, quality of skilled labor in india is bad not because of lack of quality education but because they are not able to afford quality tools which international market has to offer. Primary reason for that is those tools are only available to you if you work for big companies, goverment has put lots of taxes/tarrifs/duties on that which is HUGE relative to what people make there. India has taxes duties more than europe but doesn't offer its citizen as much benefits as europe does.
- newyankee 6y ago
  Indian real estate is expensive due to outdated town planning and land use laws. This is because the people who control most of the real estate (politicians) do not want increase in supply which depresses its price. Construction cost although important is a much lower part of the equation compared to land cost.
imtringued 6y ago
The real secret is economic stability and business friendliness. Foreign investors will automatically flock to your country if you do that and they will leave as soon as you destroy investor confidence. Foreign investors are good because they provide money, training and business expertise. Once foreign companies have set up shop in your country they provide a workplace for your citizens but more importantly your citizens are becoming skilled workers. Some of those skilled workers may become entrepreneurs and when that happens you will need some degree of protectionism for specific industries. Argentina basically trampled on economic stability and investors. The idea behind welfare is dragging up the poor because there are so many rich people your country can easily afford it, obviously Argentina is not such a country. They have some core export industries but not much else. What happened instead is that the government spent too much on social programs, ran a heavy deficit with no ability to borrow money because they were locked out of the international lending market through their own incompetence. So you have to print money to fund government programs which leads to heavy inflation. They also randomly partially nationalize companies if they are mostly owned by foreign investors. Imagine you buy a car and the car dealer calls you tomorrow that you must bring your car back for a refund. Once an investor gets burned he won't come back. The importance of investor money can't be overstated when your country is bleeding money with no ability to borrow. Metaphor: For some reason people prefer being "in moderate pain" for the rest of their lives over a quick but highly painful recovery.

magicMonkeyPaw 6y ago

oh yeah, I bet all the indians were very happy being only able to buy off-brand cola at horrendous prices. Woooo weeee.

systemvoltage 6y ago

This is wrong, misguided and naive. International trade when done with effective reciprocity and managing the trade deficit, can lead to competition on a larger scale, better outcome for consumers and specialization in particular aspect of manufacturing or services. Even domestically, specialization is how human species became to me. If humans continued to be inwards looking and never engaged in barter-trade or any kind of bilateral exchange either with monetary instrument or goods/services; we would still be caves. National to international trade is just one more step in the expansion of trade that we all benefit from. We have proof that it works when all parties are rational and cooperative. If we found aliens on another planet, it would only make sense to trade with them (just increasing the abstraction layer from national to international to interplanetary).

rbecker 6y ago
> International trade when done with effective reciprocity and managing the trade deficit This is exactly what protectionism can help achieve. Without it, you get banana republics, wholly owned by foreign multinationals. It's telling you ignore the parent posts Asian tiger economies as examples of successful protectionism, and instead address the ridiculous strawman of "never engaged in barter-trade or any kind of bilateral exchange either with monetary instrument or goods/services"
deleted 6y ago
[deleted]
a9h74j 6y ago
> aliens on another planet Related thought experiment: What if the aliens were 1000 years ahead in patenting everything (in a way which didn't expire), then forced their IP regime on Earth, extracting IP rent for everything, since it would _only_ make sense to trade with them?
- systemvoltage 6y ago
  You know the answer. Mutual trade makes sense when trade deficit is managed, there is cooperation and symmetry. We don't need to go to aliens for that, right now we have China that's creating asymmetry in the trade and it doesn't play by the fair rules. For example, US allowing TikTok and WeChat but China banning Facebook/IG and Google.
- mahkeiro 6y ago
  It won’t prevent new product to be patented, so innovate...
- imtringued 6y ago
  This is such an amazingly good question because it directly relates to real life. Of course you would trade with them to get 1000 years ahead and then once you are at the same level as them you would betray them and completely ignore their "stupid" IP laws. This is basically what China has been doing for decades now.
pcurve 6y ago
"International trade when done with effective reciprocity and managing the trade deficit, can lead to competition on a larger scale, better outcome for consumers and specialization in particular aspect of manufacturing or services." you need a properly functioning local government, which is pretty rare in developing countries.
- missedthecue 6y ago
  But it's not an indictment of free trade
Mekantis 6y ago
> This is wrong, misguided and naive. I'd appreciate it if you didn't jump straight to insults. > International trade when done with effective reciprocity and managing the trade deficit, can lead to competition on a larger scale, better outcome for consumers and specialization in particular aspect of manufacturing or services. I didn't say international trade should be stopped entirely. "Free trade" isn't "all trade". I'd appreciate it if you didn't strawman me. A part of the myth is the idea that free trade means perfect competition. No, it means a massive existing company can easily buy up local competitors and ensure that competition ceases entirely. > Even domestically, specialization is how human species became to me. If humans continued to be inwards looking and never engaged in barter-trade or any kind of bilateral exchange either with monetary instrument or goods/services; we would still be caves. This ignores the many cases where countries have protected local industries despite these industries existing elsewhere producing far better products and being far more competitive, and been wildly successful because of it. And again, I never said "no trade ever at all allowed because all trade is bad". > National to international trade is just one more step in the expansion of trade that we all benefit from. We have proof that it works when all parties are rational and cooperative. If we found aliens on another planet, it would only make sense to trade with them (just increasing the abstraction layer from national to international to interplanetary). I never said otherwise. Trade is fine. Foreign companies crowding out local industries to the point that local jobs are primarily low quality and low paying is not (see the number of countries that are relegated to production of fabrics and other low-cost goods).

thrwo334324 6y ago

This is not surprising though, is it ? Britain's "benign civilizing" (schools in anglo-saxon nations have no shame) policies vis-a-vis India were severely skewed against India, and towards protecting her own fledgling industries. Mercantilism, 'a.k.a' Free Trade, was then exactly what China does now - freedom to sell my goods in your place. Opium wars too was all about 'Free Trade'.

rayiner 6y ago
> Mercantilism, 'a.k.a' Free Trade Where do people get this Orwellian Newspeak? Mercantilism is the opposite of free trade. Colonials were prohibited from trading with anyone else, and prohibited from choosing not to trade (were not permitted to have their own industries higher up the value chain). It was not free trade in any respect.

mardifoufs 6y ago

Latin america and even india are proofs that "pure" protectionism does not work. Even China is an example of free trade working. China opened up massively, reduced customs, reduced costs of doing business etc for 3 decades before moving towards more restrictive and more protectionist policies. After learning as much as possible from foreign corporations that flocked to China. Even now, free trade would be much more beneficial to china economically if it wasn't for the current geopolitical situation. Of course it was very far from a totally deregulated free market, but the Chinese government craved foreign investment for most of the 1990s-2000s and did everything to attract it. India on the other hand has a very bad reputation when it comes to international investment because of it's famously poor economic (and protectionist/populist) policies that made investment very risky. It's very hard for a country like India or Argentina to actually innovate when they restrict themselves to a local pool of knowledge, talent, and experience. And that's precisely why India has lagged far, far behind China even if they were ahead in the 1970s-80s. You don't want to reinvent everything all the time, it just isn't possible without lagging far behind and that's what happens with protectionism.You will almost always end up with a low skilled economy with basic economic output (like beverages or commodities). It's easy to totally replace coca cola with local alternatives, it's impossible to do for sectors like semiconductors or finance when you have to start from almost 0 because no one wants to invest in a protectionist economy.

systemvoltage 6y ago
Easy to prove the point: Stop importing semiconductors and see how India or Argentina would fare.
adi2907 6y ago
China never allowed unfettered access to global firms. Since Deng Xiaoping opened up, the rule for a foreign firm to gain access was 1) to tie up with a local company which will have significant stake and 2) ensure technology transfer to the local company over a period. This was a pre condition for market access, and basically how electronics components makers were built. The recent stars like Huawei, Xiaomi and Lenovo could only be built once the supply ecosystem was local. You will not find a single example of any country becoming developed following free trade except for island nations like Singapore

reaperducer 6y ago

The problem is that so many people have an all-or-nothing mindset. It's part of the tribalism that's running rampant through society as a whole, and is very destructive. Free markets are great. So are some closed markets. There has to be a balance.

WalterBright 6y ago

When one company tries to punish another, it imposes embargoes and sanctions. I.e. protectionism. The "embargoes bad", "protectionism good" doesn't make a whole lot of sense.

bobthechef 6y ago

Friedrich List[0] made exactly this point. The United States, for example, is often portrayed as the paradigmatic example of the unregulated free market, but it is actually quite protectionist (some of the measures lead to perverse economic incentives like those surrounding the corn industry) and its economic power rose precisely because it exercised protectionist measures against the emerging industrial powers of Europe like Britain and France who would have been able to crush nascent American competition. List believed that free markets make sense within a domestic economy, but that import tariffs may be legitimately imposed when it results in domestic benefits. [0] https://en.wikipedia.org/wiki/Friedrich_List https://en.wikipedia.org/wiki/Friedrich_List

nabla9 6y ago

Joe Studwell's book "How Asia Works" explains how to do protectionism well (as how Asian tigers and others did it) 1. Land reform so that people can generate money from farming and generate financial surplus. 2. Controlled domestic finance sector protected from external competition.. 3. Export oriented manufacturing where products are exposed to global competition but financing comes from domestic sources. This kind of partial protection allows capital accumulation even when products are inferior at first. Asian countries that failed in the first step never became tigers or are still trying. Incidentally China had partial land reform that started from bottom up (illegally) but was later accepted.

vl 6y ago

Free trade advances human race as a whole and raises average standard of living. But it’s important to understand what is at the end of this advance: irrelevance of labor. Not only hyper-optimization produces fragile systems (i.e. look at the mask and sanitizer shortages at the most wealthy nation on Earth), it also eventually will make most of the labor uncompetitive. You can only consume so much on credit, I’m not sure how world will reshape when most of the humans cannot contribute anything of value.

ejanus 6y ago
I don't think this is correct. It favors those with capital and technology. The strong over the weak. And it increases the barrier to enter. Look at Africa(my continent) as an example of where free market leads to collapse of economy.

ardit33 6y ago

If that is true, then Argentina (and many other Latin countries that adopted protectionism policies) would be flourishing. Argentina should be as rich as Canada, but they are 1/5th of their level. Protectionism might workout/help out for a limited time to jump start nascent local industries, but in the long term is damaging to an economy.

mistermann 6y ago
Or, perhaps there is more than one single variable involved in economic development.
imtringued 6y ago
Protectionism isn't about jump starting local industries. It's about converting foreign owned local industries into domestically owned local industries. You can only afford to do it once you no longer need foreign investors.

econcon 6y ago

Like Indian comment producers were found colluding to keep the domestic cement price high. If there was competition from foreign players, this would have not happened

newyankee 6y ago
This is true. Transparent regulation and enforcement of rules is the only protection. Other examples is the sugar industry 'mafia' in the state of MH where private players cannot easily enter. It is not like we do not have any checks and balances. We have an activist Supreme court as well as high courts which ignore average folks but open their doors at 3 am for special hearings for important folks. However overzealous regulation in India has also meant that a Copper plant in India was closed in Tuticorin after protests allegedly funded by Chinese interests. Now India imports Copper from China. Apparently the main reason why protests happened (pollution) did not change 1 year after closure of the plant. Whereas thousands of poor unskilled laborers did lose their jobs.

missedthecue 6y ago

"People like to pretend that protectionism is such a bad thing" David Ricardo mathematically proved it was a bad thing over 200 years ago. It absolutely befuddles me that people, especially in scientific communities, continue to support its implementation. Hong Kong has always been free trade and their GNP per capita is now greater than all of western europe, barring Norway (which is equal to HK). Protectionism makes yourself poorer. Isn't interesting concerning tariffs that what we do to our enemies during wartime we do to ourselves during peacetime.

throwaway9482 6y ago
Cause mathematics and economics deal with the same layer of abstractions
dragonwriter 6y ago
> David Ricardo mathematically proved it was a bad thing over 200 years ago. Ricardo’s proof applies to comically simplified conditions which fail to consider a number of factors that exist in real world trade and resulting shifts of specific industries between countries including: (1) potential impacts of current activity on future production possibilities, and (2) strategic impacts of different production patterns and how that effects non-trade international relations, including war. That's not to say it's not an important result that has massive implications for policy, but it is far from proof that protectionism is a bad thing in every case. It does prove that it always comes at a short-term cost, so you'd better have a specific long-term strategy that justified the short-term cost, though.
- ethbro 6y ago
  Politicians have always befuddled economists. Economists have always befuddled politicians. Unfortunately, the collision of the two typically leads to the worst of all outcomes without the benefit of any. E.g. Implementing protectionist policies without a low term plan for their withdrawal.
deleted 6y ago
[deleted]

econcon 6y ago

> it's something China has been doing to great success and the Asian tiger economies (primarily South Korea) did as well. When india imposed duties against chinese steel, the steel sector grew but soon the Real Estate sector accrued high input costs and real estate became expensive. Same happened to automobile sector in india, yes few people gain from protectionism at expense of others. I'd go on 1 foot and tell everyone, quality of skilled labor in india is bad not because of lack of quality education but because they are not able to afford quality tools which international market has to offer. Primary reason for that is those tools are only available to you if you work for big companies, goverment has put lots of taxes/tarrifs/duties on that which is HUGE relative to what people make there. India has taxes duties more than europe but doesn't offer its citizen as much benefits as europe does.

newyankee 6y ago
Indian real estate is expensive due to outdated town planning and land use laws. This is because the people who control most of the real estate (politicians) do not want increase in supply which depresses its price. Construction cost although important is a much lower part of the equation compared to land cost.

imtringued 6y ago

The real secret is economic stability and business friendliness. Foreign investors will automatically flock to your country if you do that and they will leave as soon as you destroy investor confidence. Foreign investors are good because they provide money, training and business expertise. Once foreign companies have set up shop in your country they provide a workplace for your citizens but more importantly your citizens are becoming skilled workers. Some of those skilled workers may become entrepreneurs and when that happens you will need some degree of protectionism for specific industries. Argentina basically trampled on economic stability and investors. The idea behind welfare is dragging up the poor because there are so many rich people your country can easily afford it, obviously Argentina is not such a country. They have some core export industries but not much else. What happened instead is that the government spent too much on social programs, ran a heavy deficit with no ability to borrow money because they were locked out of the international lending market through their own incompetence. So you have to print money to fund government programs which leads to heavy inflation. They also randomly partially nationalize companies if they are mostly owned by foreign investors. Imagine you buy a car and the car dealer calls you tomorrow that you must bring your car back for a refund. Once an investor gets burned he won't come back. The importance of investor money can't be overstated when your country is bleeding money with no ability to borrow. Metaphor: For some reason people prefer being "in moderate pain" for the rest of their lives over a quick but highly painful recovery.