The Flip Side of the Trade Deficit
I originally got to this post at Carls Talk because of the cool map I put in this post. However, I was really struck by his lament that foreign companies won't sell into Norway because it is too small. Given that Norway has a trade surplus, you would think that given all the whining in the US about trade deficits that everything would be hunky-dory in Norway and that they would be thrilled that foreign companies wouldn't sell there. But check this out:
When seeing Norway's GDP in the context of this map, one realizes
why Norway often is one of the last countries U.S. companies consider when
expanding to Europe.Norway might be an unattractive market when considering expansion
because the market is so small and as a result there is little domestic
competition. This has enabled local players to
build monopolies or duopolies with substantial entry-barriers in many
industries. Furthermore, the government has sheltered the domestic
market against international competition by adding a hefty import tax
and inconvenient delivery methods on goods purchased outside the
country, rendering international online merchants at a disadvantage
when competing on price and convenience.On the flip side, if you manage to establish your business here, you
can overcharge your customers and get away with horrendous customer
service. The average Norwegian customer is not used to good service
and competitive prices. Online merchants are slow. Recently it took
four weeks before I received a book shipped to me from a local
merchant. On a recent trip I recently purchased shoes for our kids in
the U.S. The selection was superior, and the price: 1/4th of what the
local Norwegian merchant was charging.
Gee, you mean there is a price consumers pay for protectionism that might offset a few job gains in sugar growing and textiles?
