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comparative advantage

Energy-intensive production is poor solution to rekindle growth

Flore de Préneuf's picture
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Hans Timmer, director of the World Bank Prospects Group which analyses the world's economic outlook, described recently a scenario in which only high-income countries would limit the emission of CO2 while developing countries would seize on energy-intensive manufacturing as a comparative advantage to rekindle medium-term growth.

"That is not a position a developing economy wants to be in," cautions Timmer. "Scarcity of energy supply had become one of the binding factors at the end of the boom that was suddenly interrupted by the global financial crisis. When you try to rekindle strong medium-term growth, you don’t want to be pushed into an artificial comparative advantage in energy-intensive production."