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From Poverty to Power Green, Oxfam 2008 - weman

From Poverty to Power Green, Oxfam 2008 - weman

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FROM POVERTY TO POWERtheir comparative advantage. Thirty-five years ago, they wereprotecting themselves from imports of US steel in order <strong>to</strong> buildup a domestic industry. Today, it is the USA that seeks protectionfrom East Asian exporters. The reason: government policiesproduced changes in comparative advantage.CHINA AND THE FUTURE OF OTHER DEVELOPINGCOUNTRIESThe much commented-upon rise of China since the late 1980s hasprecipitated a tec<strong>to</strong>nic shift in the global economy. China is fastbecoming the world’s fac<strong>to</strong>ry:• The city of Shunde in the Pearl River Delta has a single giantfac<strong>to</strong>ry that produces 40 per cent of the world’s microwaveovens.• Shenzhen makes 70 per cent of the world’s pho<strong>to</strong>copiers and80 per cent of its artificial Christmas trees.• Three out of every five but<strong>to</strong>ns in the world are made inQiao<strong>to</strong>u, a dusty, dirty <strong>to</strong>wn in Zhejiang province that alsoships more than two million zips a day.China’s unique combination of massive scale, rock-bot<strong>to</strong>m wages,high literacy, highly developed infrastructure, and political controlover labour enables it <strong>to</strong> out-compete most of its industrial rivals.China has driven down the prices of most manufactured goods, <strong>to</strong> thebenefit of consumers the world over, but has undercut other developingcountryexporters in the process.With 150 million unemployed workersconstituting an effectively infinite reserve army of labour, China cancontinue <strong>to</strong> be the world’s fac<strong>to</strong>ry without approaching full employment(at which point wages rise and other competi<strong>to</strong>rs can enter themarket), leaving few crumbs for other developing countries.The impact of China may also be refuting the received wisdom thatgetting out of commodities in<strong>to</strong> industry is the route <strong>to</strong> development.Booming Chinese demand has reversed the long-term decline incommodity prices and in what economists call the ‘terms of trade’between raw materials and manufactured goods, sometimes presentedas the number of bags of coffee (or barrels of oil) needed <strong>to</strong> buy a188

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