Ross Garnaut: Lessons to be learnt from his last major policy work ?
The Garnaut Report on Climate Change puts an economist in charge of determining matters best left to climatologist. Be that as it may, this may be a good time to determine the quality and consequences of Ross Garnaut's earlier policy work , the consequences of which Australians are only now beginning to slowly appreciate.
I am of course referring here to his "Australia and the North East Asian Ascendancy", a work which was within his area of competency.
His work was central to the Hawke government economic reforms of the eighties, which opened Australia to overseas competition and dismantled the protectionist measures around many Australian industries.
(http://www.abc.net.au/pm/content/2008/s2295098.htm)
Having said that his previous work was within his area of competency, the question to ask is; how competent was he in producing that work?.
Many argue that he has been responsible for directing the attention and resources of Australian businesses to the growing North Asian economies, particularly China, buit this is clearly overstating the case. Garnaut himself should agree that ultimately market forces ( in this case lower production and transportation costs) would have led Chinese clients to Australian resources regardless of whether Garnaut wrote his report and regardless of the Hawke government's economic reforms "which opened Australia to overseas competition and dismantled the protectionist measures around many Australian industries".
It may however have occurred without the exposure of Australian industries to Asian competitors who were often state-owned or state controlled corporations able to undercut their Western competitors without making any significant improvements in efficiency.
As Paul Krugman put it:
The newly industrializing countries of the Pacific Rim have received a reward for their extraordinary mobilization of resources that is no more than what the most boringly conventional economic theory would lead us to expect. If there is a secret to Asian growth, it is simply deferred gratification, the willingness to sacrifice current satisfaction for future gain.
http://web.mit.edu/krugman/www/myth.html
There was criticism of Garnaut's findings as early as 1990.
These are not freely available on-line, and hence I will provide here the conclusions of his critics , with references.
Accounting for Northeast Asian growth: Garnaut's limited ledger; J McKay, G Missen - Australian Journal of International Affairs, 1990:
Our basic argument is that Garnaut's account of rapid , sustained growth in North East Asia is fatally flawed, in that it is not based on a coherent theory of development. His free market , accounting theory of development is unable to take account of the specific historical, political and social factors that have been vital to the growth paths of each of the countries of North East Asia. By neglecting the international context in which these developments have taken place, and the central role of the state in managing growth, Garnaut ignores what for us are the most important lessons of the North East Asian experience. Until these questions are adequately addressed, predictions about the future development of the Asia-Pacific region, and Australia's place within the region, remain problematic.
I am of course referring here to his "Australia and the North East Asian Ascendancy", a work which was within his area of competency.
His work was central to the Hawke government economic reforms of the eighties, which opened Australia to overseas competition and dismantled the protectionist measures around many Australian industries.
(http://www.abc.net.au/pm/content/2008/s2295098.htm)
Having said that his previous work was within his area of competency, the question to ask is; how competent was he in producing that work?.
Many argue that he has been responsible for directing the attention and resources of Australian businesses to the growing North Asian economies, particularly China, buit this is clearly overstating the case. Garnaut himself should agree that ultimately market forces ( in this case lower production and transportation costs) would have led Chinese clients to Australian resources regardless of whether Garnaut wrote his report and regardless of the Hawke government's economic reforms "which opened Australia to overseas competition and dismantled the protectionist measures around many Australian industries".
It may however have occurred without the exposure of Australian industries to Asian competitors who were often state-owned or state controlled corporations able to undercut their Western competitors without making any significant improvements in efficiency.
As Paul Krugman put it:
The newly industrializing countries of the Pacific Rim have received a reward for their extraordinary mobilization of resources that is no more than what the most boringly conventional economic theory would lead us to expect. If there is a secret to Asian growth, it is simply deferred gratification, the willingness to sacrifice current satisfaction for future gain.
http://web.mit.edu/krugman/www/myth.html
There was criticism of Garnaut's findings as early as 1990.
These are not freely available on-line, and hence I will provide here the conclusions of his critics , with references.
Accounting for Northeast Asian growth: Garnaut's limited ledger; J McKay, G Missen - Australian Journal of International Affairs, 1990:
Our basic argument is that Garnaut's account of rapid , sustained growth in North East Asia is fatally flawed, in that it is not based on a coherent theory of development. His free market , accounting theory of development is unable to take account of the specific historical, political and social factors that have been vital to the growth paths of each of the countries of North East Asia. By neglecting the international context in which these developments have taken place, and the central role of the state in managing growth, Garnaut ignores what for us are the most important lessons of the North East Asian experience. Until these questions are adequately addressed, predictions about the future development of the Asia-Pacific region, and Australia's place within the region, remain problematic.
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