Paul Collier, with whom I enjoyed lunch on Friday, has a new book out titled The Bottom Billion. He says that the great Sachs vs. Easterly clash has overinflated the importance of foreign aid in the discussion of how to improve the lives of the billion people living in countries that, without massive changes, will not eliminate poverty through growth in the next few decades.

Drawing upon the US experience in helping rebuild Europe after World War II, Collier identifies four relevant mechanisms: (1) foreign assistance, (2) trade, (3) security guarantees, and (4) governance. His policy suggestions are original, interesting, and likely to spur debate. He recommends trade preferences for Africa (pdf) to give them an advantage against Asian developing countries benefiting from agglomeration effects. Perhaps most provocatively, Collier suggests that the West offer external security guarantees to some troubled states — he’d prefer that you think of the British in Sierra Leone rather than the United States in Iraq.

Check out this short article (pdf) for an introduction to the book’s ideas.

The latest issue of Foreign Affairs contains a number of articles related to the international economy:

Smooth Sailing:The World’s Shipping Lanes Are Safe. Those who worry about the vulnerability of the world’s oil shipping lanes should calm down. Oil tankers are more resilient than often presumed, and only the United States has the capability to seriously disrupt maritime traffic — which it will not do.

Ending the Trade War in Washington: Saving the Trade Agenda by Protecting Workers. Protectionist sentiment on Capitol Hill threatens to scuttle Washington’s free-trade agenda. A bipartisan consensus on trade could emerge, but only if the White House and the Democrats can reach a compromise on labor issues.

The End of National Currency. Global financial instability has sparked a surge in “monetary nationalism” — the idea that countries must make and control their own currencies. But globalization and monetary nationalism are a dangerous combination, a cause of financial crises and geopolitical tension. The world needs to abandon unwanted currencies, replacing them with dollars, euros, and multinational currencies as yet unborn.

Dani Rodrik is racking up a string of interesting posts in his first week in the blogosphere:

Can the wrong answer in the classroom be the right answer in public debate?…

[Greg Mankiw’s] position seems to be this: Look, these anti-trade guys don’t understand comparative advantage anyhow, and it is pointless to waste our breath trying to explain it to them. So let’s instead argue our case in “their” language and within “their” framework. Never mind that Professor Greg Mankiw would flunk us if we ever gave the same answer in Ec. 10.

I am not sure I like this stance very much. For one thing, it goes against the grain of what I think is the most important job of economists in public debate–to educate and not simply to be an advocate. Second, it is bound to backfire, and ultimately undercut the credibility of economists…

Many of my colleagues are of the view that economists should just stick to their bottom line, and not “confuse” the public with the caveats and limitations of their arguments. Moreover, since anti-market views have enough supporters out there, economists often see their role as one of unqualified advocacy of the opposite position. I tend to disagree with this, which is why I am often accused of “giving ammunition to the barbarians.”

More here.

Activity here at Trade Diversion has been light recently due to the fact that I am on holiday. Regular content provision will resume Wednesday.

rodrik.typepad.com

It may be too late for bold moves. Reuters:

Senate Finance Committee Chairman Max Baucus said on Friday he saw no need yet for the U.S. Congress to renew the White House’s trade promotion authority, which expires at the end of June…

“If there’s not a new pending agreement, whether it’s multilateral or bilateral, then there’s not going to be a need for TPA,” Baucus said after a speech…

U.S. Trade Representative Susan Schwab, at a briefing with reporters in New Delhi, said there was no “Plan B” for finishing the WTO talks without trade promotion authority.

Baucus is often regarded as very influential on trade policy issues, so his position may indicate that this round of negotiations is headed into deep freeze until the end of the Bush administration.

In case you’ve totally missed the Wolfowitz-Riza story, this FT editorial calling for the World Bank president to resign will catch you up.

I may quibble with the assessment of various details, but I think the Economist‘s summary is right: “America’s trade agenda seems headed backwards.”

I may quibble with the assessment of various details, but I think the Economist‘s summary is right: “America’s trade agenda seems headed backwards.”

I may quibble with the assessment of various details, but I think the Economist‘s summary is right: “America’s trade agenda seems headed backwards.”

The IMF is hosting a conference on China and trade today. Emmanuel provides links to plenty of reading. There are multiple papers discussing China’s export sophistication, something I have mentioned previously.