McKinsey’s article on productivity in Russia. Gains from protectionism?
McKinsey Global Institute published an interesting article on productivity in Russia. While the numbers are shocking – 15 to 33% of the US level, the article correctly points out to structural problems and other issues not directly related to human capital as one of the sources of so poor productivity.
For some reason, this article made me think that protectionism, in fact, may not produce any net gains. Protectionism just makes one industry more attractive, depressing other industries and leaving them starving for investments. Losses in depressed industies are less noticeable, because they are smaller comparing to gains in protected industries., because they are wider. It looks like a good subject for behavioral economists. Dan Ariely has a good chapter in his book “Predictably Irrational” on relativity.