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We propose to analyse determinants of FDI in Chinese provinces to test the above hypotheses. Second, the inefficient system of state investment planning leads to mismanagement of public enterprises, increasing 'insolvency-induced FDI'. First, the Chinese financial system allocates resources to the least efficient firms - state-owned enterprises - while denying the same resources to Chinese private enterprises, forcing them to look for a foreign investor. Specifically in the Chinese case, enterprises may look for foreign investors, being constrained in their activity due to distortions in the state-dominated system. Incoming foreign investment provides additional sources of capital. Such workers won’t be going back.This paper tests the significance of FDI as a way to alleviate credit constraints. However, forced unemployment gave a significant number of Americans a chance to discover both that they really disliked their jobs and that they can manage financially without them, even without special government aid. Many others, perhaps millions, learned to do something different - namely, not work at all.Ī vast majority of workers idled by pandemic restrictions will go back to work - mainly out of sheer necessity, but also because for many, work is a source of meaning in their lives. “You’re still muted” remains a common phrase, but in my experience, anyway, no more than “I’m sorry, could you please speak up” was in live meetings.Īnd remote work wasn’t the only thing many Americans learned to do during the pandemic. And many, though not all, of these changes are likely to stick: Even with the vaccines, many individuals and businesses won’t go back to the way things were before.Īnd we have, of course, all gotten much better at using the tools of remote work - just like Hamilton’s industrialists, who he expected to get better at manufacturing after a few years’ experience. What does this have to do with Covid-19? The pandemic produced some extreme forms of de facto infant industry protection, forcing millions of Americans to work differently from the way they had before. But the idea that sometimes temporary protection for an industry makes it competitive in the long run clearly has a lot to it. Economists then proceeded to spend the next 220 years arguing about whether and when infant industry protection is actually a good policy.
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industry and give it time to become competitive. So Hamilton called for, among other things, temporary tariffs to protect U.S. industrial base would become self-sustaining. industry would be able to compete with British industry if domestic manufacturers were given the opportunity to gain experience - that once Americans had seen that industry could be profitable, once they had had the chance to gain manufacturing experience, a U.S. (Sorry, I just pulled a muscle patting myself on the back.)īut will the post-Covid economy look the same as the pre-Covid economy? Probably not - for reasons originally laid out by none other than Alexander Hamilton in 1791.
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In fact, we seem to be bouncing back quickly, as some of us predicted we would. Many analysts expected a sluggish recovery at best - similar to the sluggish recovery from the 2008 financial crisis. After all, by slowing the spread of the virus, we didn’t just avoid overwhelming the health care system we also bought time for the development and dissemination of vaccines, so that tens of millions of Americans who would have been infected without the lockdowns ended up dodging the bullet.īut there was a huge initial cost in terms of reduced employment and, to a somewhat lesser extent, reduced G.D.P. This was, in retrospect, a wise policy that should have been followed much more thoroughly. economy went into what I described at the time as a “ medically induced coma”: We shut down much of the economy in an attempt to limit the spread of the coronavirus.