China will keep door open to foreign investment, global industry despite trade tensions
As one door closes, another opens.
It is of concern because this open policy of international trade and investment has helped the U.S. to become the biggest economy in the past. Open doors help spur growth by encouraging foreign investment into domestic industries, allowing needed goods to flow in, and goods produced to flow out. The result is that countries can take advantage of their relative advantages in certain fields, allowing them to also reap economies of scale.
When doors are closed, things become inward-looking, and any development is limited by domestic resources. Also, it is harder to exploit relative advantages, and given the diverse domestic needs to be fulfilled, resources may be diverted to areas which are relatively expensive to produce domestically. Resource use is not optimized, and the result is slower growth and maybe even wastage.
Should we practise protectionism? Should we blame our domestic problems on others? Let us base our decisions on facts, not emotions. It is easy to jump to conclusions, but meticulous analysis is what brings the greater benefit.
As one door closes, another opens.
It is of concern because this open policy of international trade and investment has helped the U.S. to become the biggest economy in the past. Open doors help spur growth by encouraging foreign investment into domestic industries, allowing needed goods to flow in, and goods produced to flow out. The result is that countries can take advantage of their relative advantages in certain fields, allowing them to also reap economies of scale.
When doors are closed, things become inward-looking, and any development is limited by domestic resources. Also, it is harder to exploit relative advantages, and given the diverse domestic needs to be fulfilled, resources may be diverted to areas which are relatively expensive to produce domestically. Resource use is not optimized, and the result is slower growth and maybe even wastage.
Should we practise protectionism? Should we blame our domestic problems on others? Let us base our decisions on facts, not emotions. It is easy to jump to conclusions, but meticulous analysis is what brings the greater benefit.
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