Trade and Employment From Myths to Facts - International Labour ...

Trade and Employment: From Myths to Facts
like a “little push” than a big one and the idea that, in export promotion, small is
beautiful is also supported by the cross-country evidence in Lederman, Olarreaga
and Payton (2010).
Third, the export-diversification literature has focused largely on what is produced
rather than on how it is produced. Yet Acemoglu and Zilibotti (2000) developed
a model highlighting differences in production methods, themselves driven by differences
in the availability of skilled labour. Their work highlights that technologies
developed in the North are typically tailored to the needs of a skilled workforce and
therefore inappropriate for skill-scarce countries. If countries do not have the capabilities
to master the tacit knowledge needed to produce sophisticated goods, no
industrial policy will make them successful exporters. The most sensible policies are
then supply-side ones, in particular in education (think, for instance, of India’s gradual
build-up of a world-class network of technology institutes).
As a last remark, although one aim of the export-diversification literature is, ultimately,
to generate useful policy advice for developing countries, it sweeps under
the carpet an important historical regularity. Practically all latecomers in the industrial
revolution, in particular the big ones — France in the early nineteenth century, Japan
during the Meiji era, Germany at the turn of the twentieth century, China today, to
name but a few — have been aggressive imitators of the technology of more advanced
economic powers. All those countries expanded their basket of exports by plundering
technology, sometimes (often) with government assistance and with little regard for
intellectual property. This process was badly received in advanced countries, but it
was a major driver of the diffusion of the Industrial Revolution. We do not know
much about the policies that were put in place in the catching-up countries, and the
literature has been largely silent on this. No wonder: intellectual-property enforcement
is now widely taken as one of the basic good-governance prerequisites for development,
and encroachments on the intellectual property of advanced countries are now fought
more vigorously than ever before. But for countries that were yesterday’s imitators,
this might well be a modern version of Friedrich List’s famous expression, “kicking
away the ladder”.
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