Is Trump turning America into 1960s Brazil?
His determination to resort to import substitution and "make it in America" will only repeat the well-known economic mistakes of Latin America.
IN CHOOSING a cure to the United States' economic problems, president-elect Donald Trump seems determined to apply a well-known Latin American medicine, the strategy of import substitution. He is adamant about pursing an economic policy that gives strong preference to domestic production over buying goods from abroad.
Alluringly simple as this sounds, the validity of the concept has been disproven many a time. As emerging market countries, notably Brazil in the 1960s, found out, relying on such an approach usually only drives up costs for consumers and industrial end users, while doing little, if anything to improve a nation's productivity.
Moreover, most of Mr Trump's analyses (and hence prescriptions) appear to be based on competitiveness problems related to low wage costs and "currency manipulation" by China. Those factors, however, are no longer the …
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Columns
An overstimulated US economy is asking for trouble
Too many property agents? Cap commissions on home sales
Time to study broadening of private market access
China’s better economic growth hides reasons to worry
In AI-copyright battle, an existential crisis emerges
Europe shows diversifying from China’s economy is hard to do