Trade and Development Blog

You may have heard or watched on TV  how "Watson," the artificial intelligence system developed by IBM, soundly defeated the reigning human Jeopardy TV show champions in recent contests. In the game of Jeopardy contestants are read an 'answer' and the first to guess the corresponding 'question' wins.  For example, in the 'Olympic Oddities' category Watson was the first to correctly say "What is a leg" given the 'answer'   "it was the anatomical oddity of U.S. gymnast George Eyser, who won a gold medal on the parallel bars in 1904."   Watson's impressive trouncing of humans that everyone considered highly educated experts has led many people to ponder whether we might not in fact be living through the eve of an impressive new technological revolution that may foist a radical new world upon us.  It seems only a matter of time before this kind of technology replaces all kinds of humans.    Until recently many economists w...

Free-Trade Pact With South Korea Still Not Finished - NYTimes.com The trade accord, an update of the one the Bush administration negotiated and signed in 2007 under so-called fast-track authority that has since expired, has languished in the Democratic Congress. Mr. Obama, though, has thrown his weight behind it — while calling for some technical modifications that would be more favorable to American automakers and industrial unions — and with Republicans soon to take control of the House of Representatives, he has a better chance of getting it through. ... The biggest sticking point involves auto imports. In Washington, the Democratic leadership has been pushing forcefully for lower nontariff barriers to American exports of cars to South Korea, and for eased restrictions on American exports of beef, which has been a source of controversy since an outbreak of mad cow disease in 2003. While the agreement would lower or eliminate tariffs on cars in both countries, the Obama administrat...

  We are a very oil dependent country, as Matt Yglesias points out .  Note also on the graph how much the US trade deficit improved with the recession:  when consumption falls, so does import consumption.

NPR's Planet Money  has posted a great new audible podcast and blog entry on The Cotton Wars  about US subsidies to Cotton farmers.   It's a journalistic investigation and a great introduction to the political economy of the issues and how trade agreements and WTO enforcement (or lack thereof) occurs in practice. The narrative follows the history behind a number of recent successful complaints that Brazil (a major cotton producer in their own right) has filed against and appeals to the World Trade Organization claiming that the United States is violating it's own previous trade treaty commitments because of the ways it implements these subsidies. Colorful characters on both sides of the debate are interviewed.  We will spend a considerable amount of time looking at the topic of Agricultural Export Subsidies, which is one of the main topics in Chapter 10 of the textbook. International organizations such as Oxfam claim  that US cotton subsidies do mo...

Liberal blogger Matthew Yglesias  comments on  a recent NBC/WSJ poll  that reveals that 53% of Americans believe that free trade arrangements with other countries have hurt US jobs, up from 46% three years ago.   Interestingly the poll reveals that [w]hile 65 percent of union members say free trade has hurt the U.S., so do 61 percent of Tea Party sympathizers.   Why such widespread sentiment against free trade arrangements?  The Stolper-Samuelson theorem predicts that (in a static world at least) there will be clear losers from free trade arrangements in the USA and that losses are likely to fall most heavily on lower-skilled workers and those tied to (specific factors in) declining (i.e. labor-intensive) industries.  It is perfectly rational for these individuals to oppose trade liberalization to defend their incomes.  But the same theory suggests others should gain, particularly better skilled workers. Yet puzzlingly (for this theory) the same ...

The BBC reports : Daewoo leased the vast tract of land - which is half the size of Belgium - for 99 years and hopes to produce 5m tonnes of corn a year by 2023. ...It will manage the plantations directly and use South African labour. My first reaction is "wow!" this could potentially demonstrate how trade and foreign direct investment can bring new technologies and agricultural practices to Madagascar that could help to raise local incomes. My second reaction however is, who did Daewoo lease half of the arable land in Madagascar from!? My understanding, from reading a few papers on the topic (such as this one ) is that while Madagascar is most certainly a land abundant country with very low productivity agriculture, it is also true that local communities have property rights claims to the land that they have used as farmers or pastoralists. Madagascar has in fact been supposedly recognizing and titling these claimants. The question then is from who did Daewoo lease this ...

Princeton University economist Paul Krugman was awarded this year's Nobel Prize in Economics “for his analysis of trade patterns and location of economic activity.” This topic and Krugman's work turns out to be incredibly central to the study of economic development, as we will be discussing in class precisely this week (in Eco 330) and next (in Eco 730). Here is Freakonomics blogger Justin Wolfers with more detail on some of his contributions, and his more recent public profile as a New York Times columnist : Krugman’s accumulated scientific writings amount to an astonishing contribution. As an international economist, he has been working the same intellectual fields as giants like Ricardo, Samuelson, and Ohlin. Before Krugman, it was hard to believe that there was a lot more to be learned about trade theory, and the profession had moved on to what many believed were more fertile fields. Krugman’s insights helped bring trade theory into closer connection with data on how t...