Doug Irwin: evaluation

Transcript context

…As you know, containerization was a big breakthrough for trading a lot of manufactured goods. It made it easy to automate, lowered a lot of costs. But services are much harder to trade, along many dimensions. How optimistic are you about future series of technological breakthroughs — analogous to containerization but for services — that will make them much easier to trade and give us a fairly rapid trade boom in services? Not particularly optimistic because, unlike manufactured goods or agricultural goods or merchandise in general, each service sector has its own specific trade costs, if you will. Financial services — every country has its own regime, its own regulatory regime. A lot of services are regulated locally. Harmonizing those is very difficult. It’s not like you have one single transport cost or a tax at the border. It’s more the regulatory regime with regard to services. That’s why I think the WTO has actually — I wouldn’t say failed — but there is a GAATS, a General Agreement on Trade and Services. It’s a pretty, in my view, empty agreement. It doesn’t have a lot of deep commitments. It hasn’t stimulated a lot of growth in trade and services in my view. It has this vague language about nondiscrimination and what have you. Every service sector is different — airline services, banking services, insurance services. So these have to be addressed, not within one technology or one agreement, but it’s more piecemeal. There’s a phenomenon sometimes called premature deindustrialization. At times, it’s associated with the name of Dani Rodrik. That’s the claim that some parts of the world, possibly, for instance, Africa or some parts of South Asia, will never industrialize as, say, South Korea did because now manufacturing production is so automated and, as you note, it’s harder to trade services. So they may be stuck in a kind of permanent rut. They industrialize to the extent they do by buying things from factories elsewhere, and they won’t ever go the same path that parts of East Asia did. Agree or disagree?…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.