Japan-World Trends [English] The author of this blog will answer to your questions and comments. And this is the only place in the world where you can engage in free discussion with people from English, Japanese, Chinese and Russian speaking areas.

World Trends

May 30, 2008

Will monoculture economy prevail over industrialized economy? --higher prices on oil and grain

Monoculture economies revenge themselves on industrialized economies
But to the benefit of their own people?

Higher prices for primary goods (fuel and food) have become permanent. New economic giants like China and India will keep pushing up prices for primary goods while pushing down the prices for manufactured goods.
This poses a question: are we going back to the era when China and India were the “world’s workshop” producing more than fifty percent of the global GDP? Will pepper and tea again become far more precious than manufactured goods?

For the past 200 years the industrialized countries have been pumping the wealth from non-industrialized countries to themselves, first by exporting cheap mass-produced garments, and then by exporting intricate and accordingly high-priced electric appliances and automobiles. The terms of trade were unfair: favorable to the industrialized countries. Farmers in non-industrialized countries earned far less than workers in industrialized states, though they toiled even harder than the latter.

Now this picture is changing. The negative sides are that the oil price boom has generated parasitic and egocentric elites in oil producing countries, and that the masses in developing countries, hit by high commodity prices, have taken to the streets. The positive sides are that miners and farmers are far more at ease, and that their governments will be able to reduce agricultural subsidies, which might ease WTO negotiations.

Will this change be permanent? Probably only partly. Why?
Because the monoculture countries like Russia and Venezuela, now jubilant, are actually sitting on a volcano that is the looming high inflation accompanied by a higher exchange rate for their currency (inflation usually lowers a currency’s exchange rate, but in resource-exporting countries the opposite can happen: the so-called “Dutch Disease”). For such an economy the most rational way of living is to import everything, while paying for that with oil exports. The benefits of higher oil prices will not permeate the entire society, being monopolized by the elites and being reduced in value by high inflation.

The tempo of economic growth in industrialized countries might be reduced by the higher prices of primary goods, because the people will have less money for purchasing manufactured goods. But in general these countries are able to glide through the situation. Speculation will not be able to raise the price level beyond rational limits, and the manufacturers will shift the increased costs onto the prices of their products (this process will take more than one year). When they finally raise the prices, the whole thing will end up with a denomination of prices with only a slight correction in terms of trade in favor of primary goods.

Whether this will really work for the benefit of the people in monoculture economies depends on how their “maharajas” will handle the redistribution of their newly acquired wealth without spending it on luxurious foreign trips and $500 sushi dinners in Tokyo.


Author: chart tradeonix | May 24, 2016 2:24 AM

This is a excellent as well as valuable piece of info. I am just fulfilled which you contributed this handy facts here. Be sure to stay us updated similar to this.. chart tradeonix Thanks for expressing.

Author: wedding Videography | September 29, 2016 5:21 PM

Hi there, only notice your current blog site via Bing, and discovered it is actually insightful. I'm about to look for the town.. wedding Videography I will get pleasure from should you commence the following later on. Many people will probably be reaped the benefit away from your composing. All the best!

Author: reunion favors | August 18, 2019 6:59 AM

Tremendous things here. I'm very happy to look your post.
Thanks so much and I am having a look ahead to touch you.
Will you kindly drop me a mail?

Post Comments


TrackBack URL for this entry:

Listed below are links to weblogs that reference this entry.

ラジエーター ミニキャブ
Japan-World Trends [English]: Will monoculture economy prevail over industria...
» ラジエーター ミニキャブ