Feenstra and Taylor fail? (in context of big success)

I am using Rob Feenstra and Alan Taylor’s International Trade (Worth McMillan, 3rd ed) for my International Trade class.  It is a super book… they do trade exactly the way I have been teaching it.  So happy.

But you still notice all these little biases creeping into the text.  For example, chapter three on the specific factors model starts off by motivating the issue of trade and income distribution with a discussion of Bolivia’s exports of natural gas.  Their powerpoint slide (inelegantly) summarizes the argument:

The fact that some people are harmed because of trade sometimes creates social tensions that may be strong enough to topple governments. A recent example is Bolivia, where the citizens in the early 2000s cannot agree on how to share the gains from exporting natural gas.

In the text they write: “The difficulty of sharing these gains among Bolivia’s citizenry makes the export of gas a contentious issue.”  But, perhaps it was the multinational corporations who “could not agree” on how to share the gains?  And those multinational corporations were not “citizens” of Bolivia (the U.S. Supreme Court has not ruled yet that they are also citizens of Bolivia, thank heavens).   The gist of the paragraph is that the citizens actually overwhelmingly agreed on how to divide up the gains from exporting natural gas.  The losers were foreign capital owners.

It does not seem like just a lapse of even-handed, judicious, balanced point of view. The chapter opens with two quotes juxtaposed: the first from Evo Morales celebrating the nationalization, the second from John F. Kennedy decrying “self-defeating expedients.”  Was the reader supposed to draw the conclusion that nationalization was a “self-defeating expedient”?  If they do not like the nationalization, why not just out and say so?  In a different chapter, on FDI?  (In the small section on FDI, there is no mention of nationalization…)

Anyway, the example is a poor one, because the issue was property rights, not liberalization.  NAFTA would have seemed like a far better motivating example.

About mkevane

Economist at Santa Clara University and Director of Friends of African Village Libraries.
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