4 ms·
Yeah, balancing both budget and trade imbalance (better yet, a trade surplus) should take a country out of poverty over time. South Korea turned from agrarian t
by phkahler 4y ago
Yeah, balancing both budget and trade imbalance (better yet, a trade surplus) should take a country out of poverty over time. South Korea turned from agrarian to massive tech exporter over the time talked about. I'm writing this comment on a Samsung phone BTW. Not every country can have a trade surplus though, that part is a zero sum game. Having your own currency is probably important with a trade deficit, so exchange rate can be used to prevent outflow of currency used locally. That and tarrifs.
- zozbot234 4y agoA trade deficit is an investment surplus, and vice versa. It's not like one is always good or the other always bad, you can't reason like that from a single number.
- phkahler 4y agoMoney leaving the country directly translates to lower levels of wealth. An exception would be capital expenditures, in which case it might be good. I was mostly referring to consumption though.
- imtringued 4y agoOk but why are poor countries financing the rich countries in this scenario? I mean think about it. Country A borrows from Country B and buys Country B products, which effectively finances Country B companies. This is particularly bad when the imported products aren't physical capital but basic necessities.