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Tuesday, February 28, 2012

Post-Industrial Aging

What they tell you:

"The decline of manufacturing is not only something natural that we needn't worry about but something that we should really celebrate.  With the rise of knowledge-based services, it may be better even for some developing countries to skip those doomed manufacturing activities altogether and leapfrog straight to a service-based post-industrial economy."

What they don't tell you:

"De-industrialization... has negative consequences for economy-wide productivity growth and the balance of payments.  A balance of payments deficit means that the country cannot 'pay its way' in the world.  Of course, a country can plug the hole through foreign borrowing for a while, but eventually it will have to lower the value of its currency, thereby reducing its ability to import and thus its living standard."

23 Things They Don't Tell You About Capitalism by Ha-Joon Chang

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