invisible barriers to invisible tradeby brian griffiths

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Invisible Barriers to Invisible Trade by Brian Griffiths Review by: Keith Acheson The Canadian Journal of Economics / Revue canadienne d'Economique, Vol. 9, No. 4 (Nov., 1976), pp. 752-753 Published by: Wiley on behalf of the Canadian Economics Association Stable URL: http://www.jstor.org/stable/134283 . Accessed: 16/06/2014 22:57 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. . Wiley and Canadian Economics Association are collaborating with JSTOR to digitize, preserve and extend access to The Canadian Journal of Economics / Revue canadienne d'Economique. http://www.jstor.org This content downloaded from 188.72.126.108 on Mon, 16 Jun 2014 22:57:51 PM All use subject to JSTOR Terms and Conditions

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Page 1: Invisible Barriers to Invisible Tradeby Brian Griffiths

Invisible Barriers to Invisible Trade by Brian GriffithsReview by: Keith AchesonThe Canadian Journal of Economics / Revue canadienne d'Economique, Vol. 9, No. 4 (Nov.,1976), pp. 752-753Published by: Wiley on behalf of the Canadian Economics AssociationStable URL: http://www.jstor.org/stable/134283 .

Accessed: 16/06/2014 22:57

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp

.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact [email protected].

.

Wiley and Canadian Economics Association are collaborating with JSTOR to digitize, preserve and extendaccess to The Canadian Journal of Economics / Revue canadienne d'Economique.

http://www.jstor.org

This content downloaded from 188.72.126.108 on Mon, 16 Jun 2014 22:57:51 PMAll use subject to JSTOR Terms and Conditions

Page 2: Invisible Barriers to Invisible Tradeby Brian Griffiths

752

see what they expected or wanted to see. As Michael Frolic has noted, to study China is to 'view flowers from horseback.'

In this context the most interesting thesis advanced in the volume is Lardy's contention that the 1957-8 decentralization did not go as far as some Western scholars have thought. Moreover, the decentralization, combined with the accent on self reliance and self sufficiency (and the motto, 'don't look to the center, do it yourself'), has not resulted in the rich provinces and counties growing relatively richer, as had been surmised. Apparently relying largely on data obtained by Joan Robinson and Roland Berger, Lardy argues that 'more developed provinces [still] give up a disproportionate share of the revenues they collect while poorer provinces retain all of their revenues and receive additional subsidies [largely investment grants] from the center (111).' This thesis receives some additional support elsewhere in the book, although it is by no means thoroughly established. Lardy is then able to claim that, given China's pattern of resource endowment and present level of development, the decentralization raised flexibility and efficiency without sacrificing the central planners' control over patterns of production and income distribution. And well it may have. But this may also be a bit too good to be true. We don't really have enough direct knowledge of ranges of decision authority exercised at different levels of the Chinese planning hierarchy or of ultimate means of control. In particular, if central planners in China can surrender many decision-making rights and still retail control, why has the reform movement in the USSR and in Eastern Europe encoun- tered so much trouble?

R. CARSON, Carleton University

Invisible Barriers to Invisible Trade by Brian Griffiths. London: Macmillan, 1975. $31.50

Many students, weaned on tortuous comparative advantage examples in- volving guns and butter or wine and cloth, will be surprised at the quantita- tive importance of international transactions in invisibles. These trans- actions, which include travel, shipping, banking, insurance, and private and governmental transfers, represented about one-quarter of the dollar value of world trade in 1971. This proportion had grown since 1960 despite the apparently greater relaxation of barriers to visible trade in that period.

Griffiths's book provides a clear account of the importance of invisibles and illustrates the nature of barriers to the further growth of such trade. The author argues that international liberalization of invisible trade would be better pursued through the formulation of a code of conduct, similar to the OECD'S codes governing current invisibles and capital movements, rather

This content downloaded from 188.72.126.108 on Mon, 16 Jun 2014 22:57:51 PMAll use subject to JSTOR Terms and Conditions

Page 3: Invisible Barriers to Invisible Tradeby Brian Griffiths

Reviews of books / Comptes rendus / 753

than a bargaining procedure modelled on the GATT tariff rounds. There is no sympathy shown for the UNCTAD view that the international arrange- ments ought to encourage 'artificially' the development of the capacity to produce these services in the LDC'S.

The weakness of the book is that it is not really a book but a couple of competent survey papers on the topic, disguised as a book. No component of invisible trade is dealt with in detail. No one country's or one industry's barriers to such trade are exhaustively researched. An admittedly unsuccess- ful questionnaire survey is the only original empirical work. There is no analytical structure designed to explain why invisible trade barriers differ from tariff barriers in their complexity and why countries have apparently been more reluctant to liberalize invisible transactions.

The endorsement of the OECD code approach for the world as a whole rests on a cursory and, in my opinion, overly optimistic assessment of OECD

experience. The poorer members of the OECD (Greece, Turkey, Iceland) have exempted themselves from the current invisibles code, which hardly makes one optimistic that the UNCTAD countries, in general, will embrace a similar code. Canada does not adhere to the capital code, and the United States does not adhere to the shipping section of the invisibles code. These are formal exceptions. More interesting, perhaps, is the extent to which the code is followed by members that ostensibly have accepted it, and there is little information on that topic provided. The book tells us, in general terms, what should be solemnly written on stone but not how to make these pro- nouncements alter international behaviour. Unfortunately the gaps in our knowledge are greater in the latter area than in the former.

The author recognizes that there is a great deal to be done in improving our understanding of invisible trade and regrets that his study is 'a non- official exercise supported by limited resources.' The publisher has, how- ever, chosen to charge $31.50 for the 110 pages of text. The mind boggles at what the charge would be for an official exercise supported by ample resources. At this price, Griffiths's book is unfortunately destined to be an invisible addition to most people's library. However, if it is possible to borrow it, I recommend the book as an introduction to an important area of international economics.

KEITH ACHESON, Hoover Institution on War, Revolution, and Peace

French Economic Growth by J.-J. Carre, P. Dubois, and E. Malinvaud. Stanford: Stanford University Press, 1975. Pp. xviii, 581. Index. $22.50

This book is one of seven studies of economic growth in industrialized coun- tries, to be published under the editorship of Moses Abramovitz and Simon

This content downloaded from 188.72.126.108 on Mon, 16 Jun 2014 22:57:51 PMAll use subject to JSTOR Terms and Conditions