Читать книгу Sustainable Futures - Raphael Kaplinsky - Страница 23

The post-war Golden Age growth boom between 1950 and the early 1970s was accompanied by a steady reduction in impediments to trade across national borders. Tariffs on imports and ‘non-tariff barriers’ (affecting the quantity of traded goods rather than their price) were steadily reduced in most of the high-income economies. After the mid-1970s and until the second decade of the twenty-first century, the pace of trade liberalization intensified. It also spread throughout the global economy to low- and middle-income economies, as well as to the formerly heavily protected communist countries in Eastern Europe. Even China, which continued to maintain many formal and informal restrictions on imports, opened many of its markets to imports.

The neo-liberal commitment to free trade was premised on the belief that market-based trade relations would promote growth much more effectively than controls introduced by governments on trade with other countries. This commitment to free trade and ‘open borders’ was complemented by the withdrawal of government support for ‘Industrial Policy’ (a term loosely used to describe policies directed at all activities in the productive sector). Government support for industry – ‘picking winners’ (promoting particular sectors and ‘national champion’ firms) – and financial support for innovation and other determinants of long-term growth were seen as raising the tax burden and reducing the efficiency of resource allocation, and thus being harmful to economic growth.

The consequence of this dual neo-liberal policy agenda was a hollowing-out of manufacturing in those high-income countries pursuing the neo-liberal agenda most vigorously, particularly the US and the UK. It resulted in the growth of high levels of unemployment in the rust-belt regions which had formerly been centres of industrial activity, for example in cities such as Michigan in the US Midwest, and Birmingham and Sunderland in the Midlands and the North-East in the UK. (I will discuss the social and political consequences of this deindustrialization in the next chapter.) It also led to a shift in the geography of investment by many of the major global corporations. There was a massive outflow of investment from the home economy and other high-income economies to economies in the developing world, particularly China. Much of this investment was directed to shifting supply chains to low-wage developing economies. The share of global direct foreign investment directed to developing economies rose from 17 per cent in 1990 to 44 per cent in 2019.¹

These developments resulted in the growth of trade imbalances between economies. That is, they consistently imported more from other countries than they exported. The level of this deficit was particularly high for the world’s largest economy, the US, and for the UK (Figure 2.4). By contrast, countries such as China, Korea and Germany, which had pursued dirigiste policies to support industry, had growing trade surpluses, accompanied by relatively high rates of economic growth.

Figure 2.4 Balance of payments: largest debtor and surplus economies, 1998–2019 ($m)

Source: data from Organisation for Economic Co-operation and Development (OECD)

This toxic combination of deindustrialization and free trade undermined the incentive to invest and reduced the rate of productivity and economic growth in the economies pursuing neo-liberal policy agendas. But, as we will see in the following chapter, it also contributed to growing inequality, the precarity of livelihoods and the rise of populist political leaders.