The world’s twenty largest economies give around $100 billion in aid to poorer countries each year, about 40% of which is to promote economic development. Promoting economic development and growth in other countries is not just charity or to buy peace. More prosperous countries, those that produce more, contribute to our own prosperity more directly as well.
It is easiest to understand this fact if we think of growth within our own country or state or town. https://wcoats.blog/2023/01/22/trade-once-again/ When you sell something you made and/or own, you benefit from the sale or you wouldn’t have undertaken it. Similarly, the buyer benefits or it wouldn’t have made the purchase. As you have heard or read me and other economists state over and over again, trade is win-win.
But the benefits go beyond the win-win benefits of the transaction itself. Being able to buy some of what I need from others rather than having to make it myself frees up my time to specialize in producing for sale to others what I am best at. In short, and forgive me for repeating this for the umpteen time, world out increases from the specialization that trade enables. As the result of trade world GDP skyrocketed in just 50 years from $1.3 trillion in 1971 to $96.5 trillion in 2021. https://wcoats.blog/2018/03/03/econ-101-trade-in-very-simple-terms/
We benefit from the inventions of entrepreneurs anywhere in the world and should encourage such developments. Pfizer’s Covid vaccine was developing in Germany by BioNTech, with whom Pfizer partners to produce to large quantities demanded. China’s incredible growth over the last thirty years has contributed to our own growth as well. In 1991 the US exported to China $5.2 billion worth of goods, which had grown to $151.i billion in 2021. In 1991 the US imported $12.7 billion worth of goods, which had grown to $506.4 billion in 2021. Following Nixon’s famous trip to and recognition of China in 1972, I remember well a friend who asked “what would we possibly want to buy from China?” We should cheer the fact that China’s economy has grown dramatically to the benefit of us all.
In general, we should welcome and encourage the economic growth of all countries around the world. The exceptions might be for countries that threaten war on their neighbors or us. We might well block the export of our products and related technologies with clear military applications to countries that might pose a military threat. And we might be cautious not to rely on such products from such countries. While these would be sensible policies, they are also easily abused by domestic industries wanting to be protected from competition.
When I was in China in the summer of 2002 to help its compliance with the requirements of the World Trade Organization, those I met were excited about growing into the world trading system. China was a rising power, most certainly not an enemy. How did they become an enemy, if indeed they are. In a word, Taiwan. But I can see nothing China has done to violate their agree with the US about Taiwan as part of One China. If China has become an enemy—a threat to the US—we are largely responsible in my opinion by raising doubts about our commitment to the One China policy.
This is not to say that China has always behaved according to the rule. I and many others were there to help them move in the right direction. Now we have pushed them backward for no good reason. Hopefully the Biden administration is beginning to recognize this and we will return to promoting China’s growth rather than repressing it. https://wcoats.blog/2022/10/23/competing-with-china/
Warren's space 