Free Trade 19: Top Exporters by 2050

Citigroup released an interesting -- but not exactly surprising -- projections of the world's export heavyweights four decades from now. Out of the top 10, seven are Asian economies. The three non-Asians are the US, Germany and UK. Below is the list, lifted from Citigroup.

These 10 Countries Will Command World Trade In 2050

http://www.businessinsider.com/countries-leading-world-trade-2050-2011-12#10-uk-1

#1 China

Trade in 2050: $52.2 trillion

Percent of world trade: 18.2%.

China, which at $3.6 trillion currently accounts for 9.5% of world trade, will overtake the U.S. in 2015. In 2030, at $21.3 trillion, it will account for 17.4% of world trade.

#2 India

Trade in 2050: $25.7 trillion

Percent of world trade: 9%

India which doesn't make the top 10 countries by trade in 2010, is set to account for 2.8% of world trade in 2015, and 5.6% in 2030.

#3 USA

Trade in 2050: $19.1 trillion

Percent of world trade: 6.6%

The U.S. which is the current global leader in trade, accounting for a massive 10.7% of world trade, is set to account for only 8.2% of world trade in 2030. The U.S. is expected to lose ground to India and China.

#4 Germany

Trade in 2050: $9.9 trillion

Percent of world trade: 3.5%

At $2.86 trillion Germany accounted for 7.6% of world trade in 2010. While trade is projected to rise to $5.8 trillion in 2030, it will account for just 4.7% of world trade.

#5 Korea

Trade in 2050: $9.7 trillion

Percent of world trade: 3.4%

At $1.05 trillion Korea accounted for 2.8% of world trade in 2010. By 2030, this figure is set to rise to $4.7 trillion and account for 3.8% of world trade.

#6 Indonesia

Trade in 2050: $8.8 trillion

Percent of world trade: 3.1%

Indonesia makes the list for the first time in 2050, driven by trade with China, Japan and the European Union.

#7 Hong Kong

Trade in 2050: $8.5 trillion

Percent of world trade: 2.3%

Hong Kong, which didn't make the top 10 list in 2010, is expected to jump to the seventh spot in 2030 with $3.8 trillion in trade.

#8 Japan

Trade in 2050: $7.6 trillion

Percent of world trade: 2.7%

Japan which at $1.78 trillion accounted for 4.8% of world trade in 2010, is expected to slip in the rankings. By 2030, it will account for only 3.5% of world trade.

#9 Singapore

Trade in 2050: $6.8 trillion

Percent of world trade: 2.4%

Singapore will account for 2.7% of world trade in 2030 and its trade will total $3.2 trillion in 2030

#10 UK

Trade in 2050: $6.02 trillion

Percent of world trade: 2.1%

UK's trade is set to rise from $1.77 trillion in 2015, to $3.2 trillion in 2030 and account fo 2.6% of world trade.

Note also that in the top six, only S. Korea has a relatively small population. The other five are large population economies. Which proves once again that people are assets, not liabilities, and thus government-sponsored population control is bad policy, but I digress.

Small population economies like Hong Kong and Singapore are able to squeeze themselves in the top 10 for two main reasons: (a) they are a free trade economies. HK in particular has a unilateral free trade policy; no trade negotiations, no need for WTO perhaps, exporters from other countries can bring in their goods to HK so long as these are not among the regulated or prohibited products like bombs. And (b) they are financial centers in the region.

Regardless of the types of protectionism that many sectors would want to erect, like "to save the planet", people want free trade, free choice in sourcing the various goods and services they need. That deep desire for free trade, for free choice and free market, will keep world trade humming and rising in the years and centuries to come.

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Last June 06, 2011, I wrote this:

More on Free Trade

A friend commented to my paper, Econ for statists 7: Free trade and consumer surplus last May 27 this year. She wrote,

Aside from (rise in) consumer surplus, there's also loss in producer surplus brought about by price reduction with MFN (WTO) and preferential (free trade agreements) tariff reduction. But net effect, we do gain from free trade. For preferential trade, however, there's some trade diversion effect. For example (hypothetical, but i think this is true), Philippine imports sugar from Thailand rather than from Cuba even though cuban sugar is more competitive. Why? Because we have FTA with Thailand under ASEAN; we enjoy low tariffs from Thailand. That's trade diversion (this can be shown in the consumer surplus, producer surplus graph). Although, in effect, we can still gain from FTAs.

And all these surpluses, losses (consumer and revenue) are just static effects of free trade brought about by price reduction, induced by MFN and preferential tariff reduction. A country will appear to have gained more if we consider the dynamic effects -- economies of scale, technology transfer, FDIs, structural change and reforms, competitiveness incentives, depending of course on the agreements agreed by FTA members. Japan, EU, US, for example, would negotiate technical cooperation chapters. They usually offer plant and technology improvement (particularly for fish products in order to comply with SPS and TBT), technical assistance/capacity building (service sector, reforms in domestic regulations).

In general, we do gain from trade more than just on consumer surplus. The problem with FTAs is that we are now having this Asian noodle bowl, for example. Too many FTAs, overlapping, defeating economies of scale, confusing to traders. There's a study/survey (not sure if already released) that says preferential tariffs are, in fact, not used by traders because they're either confused or they don't know preferential tariffs exist. And some customs staffs also do not know all these preferential tariffs; some can't memorize, making FTAs futile, in particular, for trade in goods. -- Aiken

I thanked Aiken for her additional inputs. Hong Kong often comes to my mind when people talk about FTA, WTO, MFN, etc. HK does not need any of them. HK simply declared a unilateral trade liberalization, zero government to government negotiations, agreements and protocols. Unilateral free trade is unconditional opening of borders to foreign goods at zero tariff. The only imported goods that HK subjects to government regulations are perhaps guns, bombs, poisonous chemicals and substances, virus-infested food products, live animals that may bring in certain viruses, related items. In short, only when goods would affect public health and security, that government regulations come in. Otherwise, it steps back, no unnecessary bureaucracies and taxation. So that HK is able to efficiently utilize its bright minds. Away from trade politics towards actual trading and money-making.

Free trade simply means freedom to trade by the people. If someone needs a new laptop at his specific budget range and desired specifications, he does not care if that laptop will come from HK or Singapore or S. Korea or China or the US or Germany, etc. He does not need government to indirectly tell him that he can import from these countries but not from the other group of countries because of higher tariff and plentier regulations.

Or carinderia (cheap restaurant) owners -- there are tens of thousands of them nationwide -- want cheaper rice, cheaper onions, garlic, chicken, etc. because that is what their poor consumers want. So they do not care much if those raw food products will come from the Philippines or Vietnam, Thailand, Taiwan, China, US, or anywhere else. They just want cheap food for their poorer consumers and still make a good profit at the same time. So the FTAs that many governments negotiate, reject, renegotiate, revise, horse trade, etc. simply defeats the real spirit of what "free trade" really is.

Smuggling is a market signal, or consumer signal, that people do not want unnecessary taxes and regulatory bureaucracies that cause unnecessary rise in prices more than their free trade price. Smuggling is also an indicator that bureaucracies love protectionist policy because it allows them to extort money from traders and consumers.

That is why I mentioned in my earlier paper the possibility of WTO abolition. HK does not need the WTO or any of those bilateral and regional FTAs. It simply allows free trade to happen. If the Philippines will follow HK's unilateral trade liberalization policy, then there will be no need for our tax money to be used to send trade negotiators, trade lawyers and consultants for global junkets to negotiate "I bring down tariffs here, you reduce trade barriers there..." Worse, the trade negotiators that we send -- and sent by their own respective governments -- can only explain later why real free trade does not happen. It is easy to find someone else to blame while hiding the fact that they themselves carry protectionist sentiments and vested interests when they go to negotiate with other country representatives.

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See also:

Free Trade 14: Import Substitution, AFTA, China, January 08, 2010
Free Trade 15: Customs Bureaucracy, November 09, 2010
Free Trade 16: Price Equalization vs. Export Subsidies, May 03, 2011

Free Trade 17: Consumer Surplus and Human Rights, May 27, 2011

Free Trade 18: Regional Trade and East Asian Model, July 31, 2011

Lifestyle Diseases 10: Financing Healthcare vs NCDs

One of the tricky questions in dealing with non-infectious or non-communicable diseases (NCDs) is healthcare financing. If people will over-eat or over-drink or over-smoke, and they get various types of NCDs (diabetes, cancer, hypertension, high cholesterol, respiratory problems, etc.) that affect their productivity and by extension, an economy's overall productivity, who should shoulder the bulk of treating such costly and messy diseases?

There was a good discussion in The Economist four months ago but which I saw only today. It discusses the irony of poor economies in Africa and elsewhere which have some facilities against infectious diseases, but very lacking in treating NCDs and the latter are now the main killer diseases in the continent

http://www.economist.com/node/21530099

Chronic diseases in developing countries

Growing pains

Poor countries are developing the diseases of the rich, with lethal consequences

Sep 24th 2011 | KAMPALA AND NEW YORK | from the print edition

THE Uganda Cancer Institute is on a hilltop with a fine view of the verdant capital, Kampala. But most of its patients are too ill to stand. They have spent their life’s savings for a chance of a cure, but most die within weeks of being admitted. “They come too late,” says Jackson Orem, the clinic’s director.

Of Ugandans who die of cancer, 96% never see a medical practitioner. The country’s health-care system was designed to treat infectious diseases: the institute’s neighbour is a big tuberculoWsis unit. Non-communicable diseases such as cancer, diabetes, and heart and respiratory ailments have not been priorities. Dr Orem’s institute has the only cancer unit for the country’s 34m people. Kidney failure (a result of diabetes) is a death warrant. Uganda has only seven dialysis machines. The cheapest transplant (in India) costs $40,000.

Time was when people in poor countries were too hungry and hardworking to be obese, could not afford cigarettes and mostly died before the ailments of ripe middle age kicked in. Non-communicable diseases were a rich-world problem. Not any more. Affluence and urbanisation mean new kinds of unhealthy lifestyles. Developing countries already bear more than 80% of the burden of chronic illnesses. Their share will grow—at a time when older diseases are still ravaging the poor. In India over two-fifths of children under five are malnourished, yet obesity is mushrooming.... 

So here is a situation where supposedly poor people are dying of various types of cancer and diabetes, most likely due to being fat or huge intake of sugar, salt, alcohol, tobacco, and so on. And the WHO and other rich governments are proposing, often implicitly, that governments should take the primary responsibility in treating these kinds of diseases. Below is a chart from the same article above.

I would like to believe that if people have the resources to spend on heavy eating, or heavy drinking and/or smoking, and since they know, fully or partially, that excessive intake of those things will lead to some undesirable health outcome someday, then they should have resources also for future treatment, fully or partially. Now, since the prevailing belief is that "health is a right" and access to healthcare is a government responsibility, such provisions are often enshrined in various national laws if not in the country constitution itself, plus various international and multilateral health agreements, there is a tendency for many people afflicted with such diseases to feign poverty and expect or demand bigger government subsidies for their personal maladies.

Of course these people know that no one put a gun on their heads so that they should have higher than normal consumption of food, soda, alcohol, tobacco and other stuff into their body. They know that it was mainly personal choice for their lifestyle, including having a more sedentary living.

The best treatment against NCDs is preventive, not curative. These include, among others: One, restraint from regular high consumption of food, alcohol and related stuffs,coupled with a sedentary lifestyle. And two, getting vaccinations if such medicines are already available at a more affordable price.

A related measure, is for people to get or buy private health insurance, to supplement whatever health insurance that the government, national and local, will provide.

It is important to remind people that healthcare is first and foremost, a personal and parental or guardian responsibility, not government's. Government assistance and subsidy should better be limited to preparing for, or treating non-infectious diseases..
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See also:
Lifestyle Diseases 4: The UN on NCDs, September 24, 2011
Lifestyle Diseases 8: WHO and the NCDs, December 08, 2011
Lifestyle Diseases 9: Overeating and Food Poisoning. December 24, 2011

PhilHealth Watch 10: Hospital Bill Deductions

Two cases here from two patients who were hospitalized this month, and how much PhilHealth deductions were claimed at the respective hospitals.

1. Elle Marie Oplas, 5+ years old, Iloilo City

My daughter, 5+ years old Elle Marie, was hospitalized in Iloilo Mission Hospital (IMH), Iloilo City, Dec. 22-23, 2011. She was vomiting on the night of Dec. 21, possibly due to some food poisoning in a buffet lunch Christmas party that we attended that day. Anyway, here are the total costs of her hospital bill, in Pesos:

Professional fee (PF)	2,400	26.1%
Pharmacy*	2,396	26.1%
Room & Board, 1 day	2,390	26.0%
Laboratory	1,581	17.2%
Admitting and Info	330	3.6%
Billing Department	50	0.5%
Emergency Room	49	0.5%
Total	9,196	100.0%
				Laboratory, others	2,555
PhilHealth Deduction	4,200			Drugs & Medicines	1,145
Payable	4,996			Room and board	500

* Pharmacy (or drugs and medicines) is mainly for the intravenous (IV) fluid inserted in Elle’s hand to control her dehydration.

PhilHealth deduction here constituted 46 percent of the total bill and we paid the 54 percent balance, which is not bad. The consolation is that the hospital did not charge us two days room and board, Elle was transferred from the emergency room (two hours there) to her hospital room around 4am of Dec. 22, we got out 2pm of Dec. 23. The hospital staff forgot to deliver Elle’s breakfast on Day 1, maybe it’s their way of saying “Sorry” and charged us only 1 day instead of 2 days. Thank you IMH.

One thing I noted after we got out – staying for long in any hospital is not exactly a glamorous activity – is that PhilHealth share for laboratory (blood test for N, K; fecalysis and urinalysis) is larger by almost P1,000. I think they assumed the 3 small items there (330 + 50 + 49) plus P500 PF of the pediatrician. Or they paid only P1,555 of the P1,581 laboratory fee + P1,000 of the PF. I don’t know.

As I have written in the past in this blog, my beef against the PhilHealth system – or better yet, PhilSick – is that one can avail of its deduction or reimbursement if one is terribly sick that one needs to be hospitalized. For outpatient services, confinement of less than 24 hours, dental services, vaccinations, or annual medical check up, PhilHealth does not pay for any of these. You are not rewarded for staying out of hospital confinement, for preventive healthcare. You are rewarded instead for being terribly sick that you need to be confined for 24 hours or more.

I pay P500 per month (250 employer + 250 employee) or P6,000 per year to PhilHealth and I’ve been contributing to the system (first Medicare, then PhilHealth) for two decades now, I have not “benefitted” from its reimbursement system because I take care of my body so I won’t ger hospitalized. It’s the first time ever that I have gained some benefit from PhilHealth with its P4,200 hospital bill deduction.

One of the requirements to claim PhilHealth deduction in hospital bill is the submission of an updated member data record (MDR). More than a year ago, I experienced more than two hours queuing at PhilHealth office in Taft Ave., Manila, just to get an MDR. It was for my wife who gave birth to our second child.

Here in PhilHealth regional office in Iloilo City, I waited for only 27 minutes from the time I entered the office to the time I got out. It’s a good improvement. Maybe because (a) the regional office here is more efficient than the Manila office, or (b) there are fewer clients here, or (c) PhilHealth has instituted more efficient system for all its offices nationwide since last year, or (d) all of the above.

Whatever the reason is, it is important that PhilHealth should quicken its services and not hold back people from their other activities by making them wait for hours as if they are jobless people who have nothing else to do but endure long queuing. So a word of praise for PhilHealth here.

Additional Notes:

1. Contrary to common perception that drugs and medicines (d&m) constitute the single biggest item in healthcare, in this case it’s the PF. Or as I have noted above, it would have been the room and board if we were charged two days.

2. I am also thankful to IMH for a generally good service at lesser cost. I observe that their staff are friendly and courteous. Their ER fee is only P330 and it already includes the PF there. They did not charge the P330 extra to the total bill, only P49, I don’t know why. In other hospitals like Makati Medical Center (MMC), the ER fee of P500 is different from the P600 to P800 PF there.

IMH though is located outside of the main road, if you are commuting, you have to walk or ride a trisikad for about 400 meters. Its inner location makes the place quiet and peaceful though.


2. Joziah Enzo Villante Villacillo, 2 years old, Paranaque City

The son of a staff of my sister's accounting firm was hospitalized last December 26. The patient, "Enzo", 2 years old  (the mother, Gerlie, gave me permission to give her son's name) was rushed to the hospital ER due to high fever and flu.

The patient was later confined at the UHBI-Paranaque Doctor's Hospital last December 26, 2011. They stayed in the ward, 4 beds in a room, P650 per day per patient. After 1 1/2 days of confinement, the boy's condition has improved and was discharged. Here is their total bill.

	Actual charges	PhilHealth coverage	Due from patient
Hospital Charges
Laboratory	1568	500	968
Central supplies	1069	500	569
Room accommodation	975	500	475
Medicine	610	210	400
Emergency room	490		490
Sub-Total	4,712	1,810	2,902
Professional Fee (PF) pedia	3,600	500	3,100
Total, Pesos	6,312	2,310	4,002

Here, PhilHealth shouldered 36.6 percent or more than 1/3 of the total bill. The PF of the attending pediatrician bloated the patient's bill, PhilHealth paid only P500 out of the P3,600 PF. Since PhilHealth pays P500 per day for the specialists, they should have paid 2 days or P1,000 instead of P500, in order to reduce the costs to the patient's family.

The patient's mother, the PhilHealth member, is paying P300 per month (P150 employer, P150 employee) to PhilHealth or P3,600 per year.

In my case when my daughter was also hospitalized in Iloilo Mission Hospital also last December, PhilHealth shouldered 46 percent of the total bill. PhilHealth did not contribute to the PF's P2,400 charge, see my notes, PhilHealth Watch 10: Hospital Bill Deductions, December 24, 2011.

Moving away from PhilHealth, check the share of medicines to the total bill: P610 / P6,312 = 9.7 percent. This belies again the common notion that "drugs and medicines are the single biggest cost to hospitalization and healthcare." In my daughter's hospitalization, drugs and medicines comprised 26 percent of the total bill. The bigger items, as usual, are the PF and the hospital room, especially if one will stay in a private room, not the ward.
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On a related note, I wrote this last July 12, 2011:

Makati Medical Center's ER

My 2nd and youngest girl, Bien Mary, had a convulsion last week, I brought her to Makati Medical Center (MMC), the nearest hospital to our house. By the time we arrived at the emergency room, her fever has gone down a bit to 39 C. The ER staff gave her paracetamol, got her blood sample, brought in a portable X-Ray, other procedures.

After about 3 1/2 hours, we got out of the ER. CBC and X-ray results showed no infection. Fever went down, we went home. I paid a total of P3,952. Breakdown (in pesos)

1. Chest PA & Lateral XRay 900

2. CBC (complete blood count) 697.50

3. ER fee 630

4. Heplock insertion 315

5. Leukoplast 1 186.80

6. Valium amp 10mg/2ml 157.15

7. PF (pediatrician) 1,000

8. others

TOTAL P3,951.58

How are these rates compared to the rates of other hospitals? Say St. Lukes, Cardinal Santos, Manila Doctors, etc.

Take note that medicines comprise a small share of the total bill. It's the PF, hospital facilities and diagnostic tests, that can bloat the cost in emergency cases.

I really wish to see more private hospitals coming up to compete with each other. More competition means more choices to the public.

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See also:
PhilHealth Watch 1: Claims vs. reimbursement, August 25, 2010
Philhealth Watch 2: Contributions vs. service, September 24, 2010
PhilHealth Watch 3: Market failure vs. Government failure in health insurance, October 13, 2010
PhilHealth Watch 4: P110 B excess money, November 04, 2010
PhilHealth Watch 5: Healthcare and Civil Society, May 06, 2011
PhilHealth Watch 6: Bogus claims and robbery, June 15, 2011
PhilHealth Watch 7: Deregulate PhilSick, October 09, 2011
PhilHealth Watch 8: Alternatives to PhilSick Monopoly, October 13, 2011
PhilHealth Watch 9: Physicians talk about PHIC, October 16, 2011