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February 13, 2008


David K

I think it's premature to say the domestic content rules worked, local suppliers for a domestic auto industry would have been inevitable. If China supplies manufactured goods for every other country in the world, why not for its own industry?

Per Kurowski

Danni Rodrik “Domestic content preferences are illegal period, regardless of whether they help a country industrialize and grow.”

That reads like a somewhat biased phrasing of the issue since it is not the role of the WTO to help a country industrialize…but to help along that fair play gamesmanship that helps everyone to grow.

There are actually also poor consumers in not-industriazable countries that could benefit from the production being allocated to where it is most efficient. They are frequently forgotten in this supposedly global world but that still acts mostly locally within their small geographical backyards.

Can Professor Rodrik help individual countries to maximize their growth while at the same time do the same for the world?

When an ED at the World Bank I repeatedly found reasons to state that the one with really no representation of voice at all at the Bank…was the world or little planet earth itself.


Under Unctad/Gatt trade regulations domestic value added content was strictly regulated, and OECD countries demanded(!) significant value added in order to qualify for trade preference of any type.

Not knowing the actual background of the Chinese case on spare parts for car manufacture ( it includes BMW and Mercedes!), initial reaction is that OECD argued as a bloc to undermine Chinese demand that they buy from local Chinese parts supplier.

Of course, this case can get complicated if and when the Chinese find out that western manufacturers are trying to stall the car industry platform which China is trying to domesticate.

The Indians had their case with Suzuki JV which, I suspect, was amicably settled by JV parties.

derrida derider

Pretty clearly there's a missing counterfactual here. Moving production, including components, to China and/or India was always going to be a nobrainer anyway, given the dual attractions of a rapidly expanding local market and low labour costs.

In other words, it's quite likely this all would have happened anyway and the actual effect of the restrictions was just to slow the growth of the domestic market a bit.

Donald N

Why is identifying the range of politically feasible alternatives beyond the purview of pure economics?


Which member is it that has the most WTO cases filed against it?

Oh, yeah.

mercedes parts

The WTO would rather impose double standards on economics: protectionism in the West but liberal markets in the East. That way, imports like mercedez benz parts would still be supplied to the periphery.


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