The Zig Zag

Trade and Aid

While it might sound a little callous to start thinking of the economic fallout of the Asian tsunami, its worth looking how dependent some of the affected countries are on tourism:-

India: 5.6% of jobs 4.9% of GDP,
Indonesia: 8.5% of jobs 10.3% of GDP
Thailand: 8.9% of jobs 12.2% of GDP
Maldives: 64% of jobs 74.% of GDP
Malaysia: 12.7% of jobs 14.7% of GDP

And of course the majority of these jobs are seasonal, poorly paid with workers relying on earnings in the high season to tide themselves over in the low. A lot of people are currently asking about where to send aid. Aid is obviously necessary to combat the risk of disease, feed the destitute and replace ruined capital. But the damage to human capital is perhaps as great if the disaster is followed by a sustained slump in tourism– an unemployed cook looses his skills if out of work too long and an established restaurant may be shut down if trade slumps. And once these go, they are often hard to replace and have spillover effects as they feed into social tensions.

So instead of (or as well as) sending that donation, how about waiting till we know which hotels are still ok and booking a holiday in one or near one of the worst affected areas – even if it is the off season. You also get the added benefit of learning how trade benefits both parties – without the pain of having it explained to you by some droning economist.