International economy The paradox of globalization
During the past 30 years of globalization, one cardinal rule under the World Trade Organization is that a country should not subsidize its domestic manufacturers and that global competition should be open.

America has been criticizing China for its "industrial policy", i.e. that China subsidizes its domestic manufacturers to become more competitive in global trade.

The recent legislation by America to subsidize its semiconductor industries has drawn complaints from European countries.

I wish to point out a paradox.

I believe that globalization will thrive better when a country is allowed to subsidize its domestic manufacturers. This is necessary to allow each country to mitigate the disadvantage from the higher wages in that country, ensure that there is sufficient jobs for the people in that country and keep essential production within the country.

My concept does not mean that international trade will be totally stopped. Many countries will still want to have international trade to get better quality products at lower prices.

However, the "protectionist" measures will ensure that some of the production and jobs remained in the country.

There is no need for there to be too much international trade. It is better to have a balance - some of the products are produced domestically and other products are imported.

Tan Kin Lian





 

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