Friday, June 12, 2009

Putin Makes Every Economists' Day

What unites economists in their frustration at politicians? No doubt, it is their fixation on domestic production over free trade. The Obama fiscal stimulus plan features "buy America" provisions. Nobody doubts the intelligence of Obama or the qualifications of his economic advisers, but these policies seem to be a fixture in so many countries.

It is thus refreshing, and certainly surprising, to hear Prime Minister Vladimir Putin arguing recently:
But if we speaking in general about the economy then there is no reason to engage in import substitution if we can buy things more cheaply abroad. Because if we always just try to play catch up, we will always be behind.
Why the difference? Is Putin smarter? Or are western politicians subject to more political pressures?

1 comment:

Eric Wilhelm said...

It is very simple to see why Putin is standing behind free trade. He wants to increase the competitiveness of Russia's export industry. In fact, more than 60% of Russia's exports are generated by the gas and oil industry ( Also Russia has seen a -9.8% growth rate since Jan '09 ( It's not difficult to see why Putin would want other countries to support free trade; it would directly benefit his country's economy through increased competition in Russia's export sector.