2
May

Trade or Exports

Escrito el 2 mayo 2010 por Mikel Aguirre en Economía Global

One of the main tools the countries are encouraging their companies, during these crisis years is the promotion of exports. 

It is very unlikely to find any politician talking about increasing the imports.  But if the exports of US, Germany ,China or Spain increase this year it is because some destinations are going to increase their imports.  When a company in Australia is thinking about exporting wine to England is fulfilling the need of UK consumers to enjoy a good that you wouldn’t otherwise see.

First David Ricardo with the comparative advantage theory and later Eli Heckser and Bertil Ohlin with the specialization (The exports of a capital-abundant country will be from capital-intensive industries, and labor-abundant countries will import such goods, exporting labor intensive goods in return) explained how relevant was for the economies to specialize in what they do best and trade for the rest.

In this situation the total welfare and output raises for all the parties included.

Ricardo and Heckser Ohlin did not talk much about exchange rates.  In Europe many exporters complain about the strength of the euro –although the US dollar has appreciated around 11% against both the pound and the euro since last December.  The traders have to realize that price is an important driver but so does service and quality and service.  Germany has proved for four decades that you can run an export machine and at the same time have a strong, appreciating currency.

Countries as US or Spain have to rethink about their specialization (¿cars?)  and go on to foreign markets with design, service and any ideas that could fulfill the needs of countries in the other corner of the world.

It is not about exports, it is about Trade

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