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10
APR 10

More on the Postindustrial Fantasy




Yet more comment from the NZIER who at once state the obvious, miss the obvious and in so doing draw less than penetrating conclusions. That article is here:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10637445&pnum=0

The statement that some stuff has to be done offshore is obvious, there is a whole world of technology that has not taken root in New Zealand in large part because of past policy choices that have stood by as nascent industrial capability was nailed by an overvalued exchange rate.
 

The idea that production can be separated from the other activities is discussed here:

http://www.mea.org.nz/documents/421-globalising_value_chains_or_why_the_shiny_bits_need_the_dirty_bits.pdf

 

Our long run policy bias to an overvalued currency makes it artificially attractive to offshore activity; that offshoring further hollows out local capacity and capability forcing a second round of offshoring – a process that has seen embedded capability atrophy and ultimately fail in New Zealand.

This one from the Economist is worth a look:

http://www.economist.com/specialreports/displaystory.cfm?story_id=15793128

 

It is bloody daft notion that we can do without manufacturing on exports,  as a percentage of GDP New Zealand does more exports than China and UK but less than Germany. Manufactured good are currently 26% of exports, down from over 30% a years or two ago, but roughly the same percentage as primary production, processed primary and services, would anyone suggest we do without farming?


Largely it is only those who have never operated an international supply chain that see the idea of activity separation, and consequently policies that ignore that outcome, as natural and desirable. The less we do the less we are able to do, and doing less will less inform and less spur the process of innovation.


We might now be in the end game losing the capability to elaborately transform stuff we severely limit our options and have placed our destiny in the hands of others.


Over time an overvalued currency has stolen investment from the tradeable sector, productivity continues to fall, as we see more of the same money will become increasing expensive, as our currency be too risky for the speculators and bereft of a real economy what will step into the breach?

 

 



tags: postindustrial, nzier, monetary policy
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