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The article makes the implicit claim that IKEA does a favor to Russians by selling them stuff and not Russians do by buying the stuff. I'm not saying the opposi

The article makes the implicit claim that IKEA does a favor to Russians by selling them stuff and not Russians do by buying the stuff. I'm not saying the opposite just that this is not as obvious as the article makes it sound. It says that they invested x billions of dollars. Obviously they are planning to make a profit, so on the net money will leave the country due to their presence. If I understand correctly they want to open retail stores not manufacturing plants. Did I miss some finer point ?

Retric 17y ago
In theory, trade only happens when it benefits both parties. I might hate the local Exxon selling soda for 2$ a bottle, but I can still buy it at other stores. The only reason you complain is they are charging you for the amount of effort they save you and not their costs. So, opening a store is a net gain, as is investing 4 billion in the economy. In theory.
- steveblgh 17y ago
  Of course state protectionism might help local furniture manufacturers to catch up and grow their own business and that might actually benefit the Russian economy even more. Perhaps the legal, administrative burdens are there with a purpose, or maybe I'm reading too much into it...
  - laut 17y ago
    Protectionism is bad. It doesn't benefit an economy. It can benefit the protected industries short term as well as the people they bribe to get the protection. But overall it is bad. See http://en.wikipedia.org/wiki/Comparative_advantage http://en.wikipedia.org/wiki/Comparative_advantage for instance.
- stcredzero 17y ago
  Trade happens when both parties think it benefits them. If one side gets fooled and screwed enough, it should stop. If that one side is the government, it may not, since it is paying with someone else's money.
krschultz 17y ago
And they pay rent in what country? Built buildings in what country? With materials and contractors sourced from what country? Have employees from what country?
- steveblgh 17y ago
  Sure, but on the whole they make a profit, so the money they take out of the country will be more than what they bring in the form of products, rents, wages, etc. or otherwise they would go bankrupt.
- rdtsc 17y ago
  So are you suggesting that IKEA is in the philanthropic business of propping up developing countries? At a loss, they will provide local workers with employment, will hire local construction companies to build unneeded crap just to help them out? Really? I know a large part of IKEA's corporate structure is a non-profit organization, but trust me, that is only to evade taxes. This is a giant corporate entity vs. a giant corrupt government. IKEA is complaining against the complicated bureaucratic nightmare that Russia set up so that it would be easier to extract bribes from companies like IKEA. _Technically_ IKEA is one breaking some local construction safety rules. Somehow I don't see Russians re-writing their crappy laws and regulations to suit IKEA. They might let IKEA ignore some of them... but that is exactly where the bribes come in ;-) So far IKEA is going about it the right way -- shaming Russia on the international level.
  - coyul 17y ago
    IKEA does not have to be "in the philanthropic business" to benefit the countries in which they have operations. The fact that they make a profit does not preclude other people (the landlords, contractors and employees in the post you replied to, among others) from benefiting. Economics is not a zero-sum game. Wealth can be created. More at http://www.coyoteblog.com/coyote_blog/2007/04/wealth_creation.html http://www.coyoteblog.com/coyote_blog/2007/04/wealth_creatio...

Retric 17y ago

In theory, trade only happens when it benefits both parties. I might hate the local Exxon selling soda for 2$ a bottle, but I can still buy it at other stores. The only reason you complain is they are charging you for the amount of effort they save you and not their costs. So, opening a store is a net gain, as is investing 4 billion in the economy. In theory.

steveblgh 17y ago
Of course state protectionism might help local furniture manufacturers to catch up and grow their own business and that might actually benefit the Russian economy even more. Perhaps the legal, administrative burdens are there with a purpose, or maybe I'm reading too much into it...
- laut 17y ago
  Protectionism is bad. It doesn't benefit an economy. It can benefit the protected industries short term as well as the people they bribe to get the protection. But overall it is bad. See http://en.wikipedia.org/wiki/Comparative_advantage http://en.wikipedia.org/wiki/Comparative_advantage for instance.
stcredzero 17y ago
Trade happens when both parties think it benefits them. If one side gets fooled and screwed enough, it should stop. If that one side is the government, it may not, since it is paying with someone else's money.

krschultz 17y ago

And they pay rent in what country? Built buildings in what country? With materials and contractors sourced from what country? Have employees from what country?

steveblgh 17y ago
Sure, but on the whole they make a profit, so the money they take out of the country will be more than what they bring in the form of products, rents, wages, etc. or otherwise they would go bankrupt.
rdtsc 17y ago
So are you suggesting that IKEA is in the philanthropic business of propping up developing countries? At a loss, they will provide local workers with employment, will hire local construction companies to build unneeded crap just to help them out? Really? I know a large part of IKEA's corporate structure is a non-profit organization, but trust me, that is only to evade taxes. This is a giant corporate entity vs. a giant corrupt government. IKEA is complaining against the complicated bureaucratic nightmare that Russia set up so that it would be easier to extract bribes from companies like IKEA. _Technically_ IKEA is one breaking some local construction safety rules. Somehow I don't see Russians re-writing their crappy laws and regulations to suit IKEA. They might let IKEA ignore some of them... but that is exactly where the bribes come in ;-) So far IKEA is going about it the right way -- shaming Russia on the international level.
- coyul 17y ago
  IKEA does not have to be "in the philanthropic business" to benefit the countries in which they have operations. The fact that they make a profit does not preclude other people (the landlords, contractors and employees in the post you replied to, among others) from benefiting. Economics is not a zero-sum game. Wealth can be created. More at http://www.coyoteblog.com/coyote_blog/2007/04/wealth_creation.html http://www.coyoteblog.com/coyote_blog/2007/04/wealth_creatio...