Gita Gopinath Quotes
GDP is a function of capital, labour and how productively you use both.
Gopinath, Gita. Press Briefing. World Economic Outlook, International Monetary Fund, 9 Apr. 2019.
This is a classic illustration of a quotation illustrating the problem that political discussions have with the issue of causality. Conrad is absolutely correct in stating that investment and innovation as the direct cause for most productivity. However, without the demand created by consumption (or the prospect of it) there will be little capital and effort at innovation. There is a causal chain and different ideological proponents argue for their preferred link in the chain tending to ignore the other links. Many liberals tout increasing consumption and pay little attention to the investment and innovation—an error of the opposite of Conrad’s.
This is a tension that exists in almost every nation. Money invested abroad, may have substantial benefit to the individual investor, but very little to his country. In the worst case, American’s invest in building manufacturing facilities in foreign countries, which then use foreign labor to make products that are imported back to the United States. These investors have not only sent the capital made in America abroad, but also exported American jobs with it. Some countries have made laws limiting the export of capital but this rarely works. In America, this would be unconstitutional. The best a country can do is to be sure its productivity is competitive with the rest of the world. Also to provide the confidence that money invested in America is safe.
Gita Gopinath is an Indian American economist who has been the Chief Economist of the International Monetary Fund since 2019. In that role she is the Director of IMF's Research Department and the Economic Counsellor of the Fund.
