The Generalized System of Preference (GSP) is a program for boosting developing countries' economy by fostering exports to developed countries. The United States GSP program includes a preferential duty-free treatment for over 3,400 products from 129 countries.
In theory, this program was created to increase economic growth and development for the countries with low incomes. However, I don't think it is totally true, not for the developing countries actually. I agree the GSP program could help the eligible countries to boost exports for a short-run. But the problem is: what products these countries could export to industrialized nations? According to the comparative advantage theory, a nation should export product with a comparative efficiency. That is why I think the "eligible" countries would export raw materials and agricultural products mostly. So what will happen for a long-term? I believe the developing countries will eventually become the materiel providers for the industrialized nations. They could get some incomes in the beginning, but these countries could most likely suffer because of government corruption, lack of technology, and the gap between the rich and poor. So my suggestion is keeping a improved GSP and try to help the developing countries with other ways like education supporting, government improvement, and health cares.
The current GSP expired on December 31, 2010. Both houses and Congress have approved a GSP renewal until July 31, 2013. However, President Obama is still holding the final signature for authorization. It is probably because the federal government does not have a budget for this huge expense these days. Personally I hope President Obama will sign the bill soon, because it helps the lease-developing countries, although only for a short time.
No comments:
Post a Comment