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The Rise of China and India
Report

The Rise of China and India

Blessing or Curse for the Advanced Countries?

ECB, 2013

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Editorial Rating

7

Qualities

  • Analytical
  • Eye Opening
  • Overview

Recommendation

Not everyone believes that trade with emerging countries like China and India has been a good thing. Be it manufacturing auto parts, reading radiology scans or butchering chickens, no job seems immune to offshoring. Are advanced economies really better off trading with low-wage developing countries? Economist Livio Stracca crunches the numbers and offers some intriguing conclusions. While this statistically dense paper would have benefited from some editorial attention, getAbstract recommends it as a significant aid in understanding how trade between developed and developing economies affects employment and incomes in the rich world.

Take-Aways

  • Beginning in 2010, trade flows between advanced and emerging economies (“North-South trade”) have outpaced trade flows among the advanced economies themselves (“North-North trade”).
  • Conventional thinking asserts that trade always benefits both parties, but researchers have yet to understand fully the economic effects of the South’s imports, exports and competition on the North.
  • Chinese and Indian imports are generally good for advanced economies, leading to income growth, “while export competition is insignificant.”

About the Author

Livio Stracca is an economist and senior adviser at the European Central Bank.