 Welcome to the 9th Annual Undergraduate Economics Debate presented by the Department of Economics and the Undergraduate Economics Club. My name is Sanjay Singh. I'm a senior economics major graduating in May and I'll be the moderator today. So thank you all for coming and I hope you find the experience to be enriching. So the statement that's going to be debated this year is the following quote, developing countries should prefer open trade policies. So debating on the pro side of the issue will be the following undergraduate economics students. Isaac Bears, the year 2015, if you all can maybe raise your hand or smile, Samuel Jordan, class of 2014, Vic Mohanka, class of 2013, and Siddharth Bhattak, class of 2016. And debating on the con side of the issue will be the following undergraduate economics students, John Grocky, class of 2014, Zachary Rabel, class of 2014, James Santucci, class of 2013, and Ali Zaydi, class of 2014. And next I'd like to introduce the judges of today's debate. We'll be deciding on the winner. All judges are alumni of the UMass Economics Department, so I'll be announcing their name and year of graduation as well. First we have Chris Macyer, is a recent graduate of 2010, Bill Troy, class of 1976, and Martha Carroll, class of 1982. So lastly before we jump into this, I'd like to give a brief overview of the format of the debate. So the debate will begin with the pro side, having three members go one after the other. They have five minutes each to give their opening remarks. After that we'll have the con side, they'll have three members come to the podium for five minutes each. Then we'll have a five to seven minute deliberation period. And then we'll have rebuttals. So during the rebuttals team B, which is the con side, will go up. There'll be three members who make statements for three minutes each. Then we have the pro side, and they have three members who go up for three minutes each as well. After that we'll have a question and answer period with the judges. There'll be a total of three questions, approximately one per judge during that period. And after the question and answer period with the judges, there'll be a five to seven minute deliberation period where the judges will decide on the winner. And after that the winner will be announced and we'll have our closing remarks. So without further ado, we can begin with the pro side. Thank you Sanjay. My name is Sam Jordan. I'm a junior in the economics department. I'd like to thank all of you for being here, especially the judges. Thank you all for coming out. So today my team and I will be arguing in the affirmative of the resolution, developing countries should prefer open trade policies. After an extensive literature review, it has been concluded that economic success and development are determined by a myriad of economic factors. These factors include but are not limited to domestic policy, economic and cultural structure, the strength and flexibility of financial, legal, and monetary institutions. In a written argument, Justin Lin, the founding director of the China Center for Economic Development at Beijing University noted that a flexible and smooth industrial and technological upgrading requires simultaneous improvements in education, financial and legal institutions, and infrastructure. Individual firms clearly cannot internalize all of these changes cost effectively. In coordination among many firms to achieve these changes will often be impossible. For this reason, it falls to government to either introduce such changes itself or coordinate them. The government plays a huge role in facilitating the smooth coordination of industries within developing countries. A country's economic success is dependent upon many factors, the most significant of which are not trade policy. Trade as a single factor of economic success if properly executed will aid in growth and development. The distinction should therefore be made that detrimental economic outcomes observed in developing countries who have implemented open trade policies are not solely a result of trade. It is important for the purpose of this debate to clearly define economic progress or success. The metric we will use is dependent upon available data as well as academic prescription. The most common metric for economic activity is gross domestic product. Therefore the general goal of development in an economic sense would be increased economic activity measured in real GDP growth. Trade is defined loosely as the economic interaction among different nations involving exchange of goods and services that is imports and exports. The study of international trade rests on several integral theories, two of which being that of comparative advantage in mutually benefiting parties. Comparative advantage was first introduced as most of you know by economist David Ricardo and refers to the ability of a country to produce a good at lower marginal opportunity costs over another. In this way, even if one country is more efficient at producing all goods, that is absolute advantage over another, both countries still stand to gain through trade. A recent paper published in the American Economic Review last June by MIT economists Arnaud Kosseno and Dave Donaldson showed empirical evidence for comparative advantage by precisely predicting crop efficiencies using mathematics provided in Ricardo's theory and the study concluded that Ricardo's theory of comparative advantage is not just mathematically correct and non-trivial. It also has significant explanatory power in the data. Comparative advantage is not only a respected economic principle but as of late has significant imperial data to back the theoretical argument and assuming that comparative advantage exists at all leads to the possibility for properly managed trade to yield mutually beneficial results. Some of the challenges to trade especially when considered in the context of development are the structural changes as a result of the introduction of new technologies, new forms of competition, and shifting societal values and goals. The ability of a country's institutions to adapt to structural changes will be the key in the determination of the success of that country's trade policies. Developed countries are not exempt from these problems that trade poses but these challenges are more significant to developing countries as their economic structures are in a state of fluctuation. Despite these challenges we have found that the data shows significant increase in national productivity for developing countries that choose to pursue open trade policies. The following slides illustrate this fact in three case examples that of China, India and South Korea and Mr. Zach Baers will provide argument and explanation for those. Thank you. Hello everyone I'm Zach Baers and we're going to move on to the charts that Sam so graciously introduced. We have three charts of the change of real per capita GDP for three large developing nations from the early 1950s to 2004. Each of these charts shows the date that market reforms and the opening of trade policy occurred through a vertical line and also includes an extrapolation of the pre reform real per capita GDP growth trends shown as a dashed line. After these countries opened trade there was significant economic growth in terms of real GDP per capita. First the nation of South Korea saw stagnant real per capita GDP growth from 1950 to the mid 1960s. They opened up their trade policy between 1963 and 1965 liberalizing goods and services trade. As you can see through the trend line based on pre reform performance their growth in the second half of the 20th century would have been relatively stagnant in terms of real per capita GDP. But after trade reforms South Korea's economy outpaced the trend significantly creating an export led trade driven economy based on technology and heavy industry. South Korea has become one of the great modern economies in only 50 years. Second we come to the example of China. It's a classic example because it's now the second largest economy in the world but prior to market reforms in 1979 the nation again similar to South Korea experienced stagnant real per capita GDP growth which and these initiated liberalization began in 1979 and continued throughout the 1980s. The trend line based on pre reform performance projects real per capita GDP of only 1000 constant 2000 US dollars in the year 2004 but after trade reforms China's economy demolished the trend and real per capita GDP was over 5000 constant US dollars in 2004. Like South Korea China created an export led trade driven economy based on technology and heavy industry. In addition according to the World Bank poverty in China as measured by the number of persons living on under one dollar and 25 cents per day dropped from 84 percent in 1981 to only 16 percent in 2005. Over 600 million people were removed from poverty due to China's economic growth. Finally we move to India the largest democracy in the world. It went through a period of slow but steady real per capita GDP growth between 1950 and the 1990s but because of stagnancy in 1991 China instituted trade reforms as well similar to China and South Korea which in statistically significantly increased the trend line. Now we move on to an econometric analysis from Sinha and Sinha from the Soul Journal of Economics in 1999. This economic econometric analysis of the relation between openness and economic growth shows that growth in openness is indeed significantly positively related to growth in real GDP for 94 out of 124 countries as can be found on page 67 of their 1999 journal article. While the thesis that openness positively correlates with economic growth that existed for some time before Sinha and Sinha's analysis they previous studies had small samples and regional biases. The author's sample expanded to all countries with at least 30 years of economic data in the post war period after 1945 fully 124 countries. The B value measures the relationship between economic openness and the growth rate in real GDP. A positive value indicates a positive relationship between openness and growth. The median B value for all nations was 0.2050 and the OECD average was only 0.2051 however the Asian average was 0.2166 and the Sub-Saharan African average was 0.2511. In the Middle East oil let exports skew the numbers the average value is over 0.5 but in Jordan with little oil the B value is only 0.112. Finally from data on Africa Sinha conclude that at a lower level of economic growth free trade policies produce a bigger dividend. In addition using the World Bank index of development which has three categories developed less developed and least developed the B value for both less and least developed nations averages 0.24 higher than the global average of 0.250. This shows that the relationship between economic openness and the growth rate of real GDP correlates more positively in developing countries than in developed ones. Thank you. All right I'd like to thank Zach for his great conometric analysis or analysis of econometric analysis. Let's see. So one important distinction that we would like to make is the difference between open trade and free trade. Now when we define trade we'd like to talk about a spectrum. We aren't actually in favor of free trade but we like to look at openness of trade as Zach was showing and Sinha and Sinha use very similar terminology as the World Economic Forum for defining openness of trade. So we have a variety of factors that determine openness which are market access border administration transport and communications infrastructure and business environment. Interestingly two of the most common examples for developing countries that benefited from open trade policies are at the top of this list that the World Economic Forum made. These two countries are Hong Kong and Singapore. So in conclusion our team establishes that economic development growth and progress is not primarily determined by developing countries trade policy. For this reason we separate economic outcomes from trade policy. We can see from the econometric analysis that trade openness is correlated with GDP growth positively and we argue that this is a causal relationship. Because of the theory behind the benefits of trade which includes comparative advantage we find it undeniable that trade has the potential to be a force for more efficient and better economic outcomes regardless of the country that we are talking about. Nevertheless we would like to admit that in the real world we can't always have it our way. Trade has been used in certain contexts as a set as a one tool in a set of policy recommendations for what can be considered extractive or exploitative industries or practices. So sorry I lost my place. Let's see. So when we consider the economic welfare of the world as a whole trade has been a positive force for economic improvement. In the words of Paul Krugman in his book Pop Internationalism economics is not a dismal science because economists like it that way. It is because in the end we must submit to the tyranny of not just numbers but the logic that they express. In this case we've shown through econometric analysis that the numbers say that trade has led to GDP growth and thus we would recommend an open trade policy for developing country. Thank you. My name is John Grocky and me and my team will be arguing against open trade policy. Although under some conditions substantial benefits to open trade policies may exist for developing countries they should not discourage us from peeling back further layers and examining the distributive effects and other possible pitfalls that operate alongside overall economic improvement. In these countries striving for growth and development inequality has been used in open trade policy as a catalyst for economic success and can be analyzed through the relation of its two sub components equality of income and equality of opportunity. Economic openness thrives on inequality in that it causes too great of a differential between income levels and the skill levels of the workers who create the core of any economy. We'll maintain that increase in output and average wages look significantly less attractive when we take the immunization of the worst off developing countries into account. Poverty reduction has been a major goal as well as a controversial issue with respect to the growth of developing countries and it remains a crucial subject that has not been properly addressed by open trade policies. These policies may have increased output while reducing conventional measures of poverty such as the head count ratio and the poverty gap but the true level of poverty lies with those at the very bottom of the income distribution found in the rural sector which these standard measurements tend to disregard. These are the ones exploited in order to create the benefits of a higher standard of living. It is through lower tariffs increased demand for exports and thus bigger inflows of foreign capital that result in appreciation of exchange rate and a higher mobility of capital despite the fact that capital would then move throughout a developing nations economy and possibly into other global markets most likely resulting in short-term growth opportunity for production and income generation are then being taken from workers in industries that are generally correlated with lower-skill labor such as agriculture. As the relative wages of these workers then drop the level of rural rural poverty rises especially among the poorest families although it is to some extent necessary for some for some to be economically oppressed in order for others to reap the benefits of unequal income it is immoral and unjust to allow this large population of those already worse off to suffer even more as a consequence of growth. Close trade policy takes an adverse approach to the exploitive ways of open trade policy by using equality as its as its capitalist for economic success and development. More specifically it allows a more balanced incorporation of equality of opportunity and equality of income in an economy by gearing its incentives to to more natural and steady economic growth and prosperity that avoids such extreme differentials in the income skill and opportunity of its workers. With a more equal distribution of wealth opportunities will thus be more evenly distributed which allows larger swaths of the population to take advantage of the gains from trade and fosters growth within equity. In Taiwan for example a comprehensive land reform made the distribution of land ownership more egalitarian in the 1950s. The reform which equalized incomes in rural areas and created an equal opportunity for forming the foundations of the nation's developmental process and in turn made way for industrialization. Although developing countries in today's global economy may have much diversity in the income distributions the case in Taiwan supports the notion that those with some level of even income distribution can create much more opportunities having non regressive effects. We are not arguing for a strict closed policy that developing countries should adopt but rather we are opposing the many detrimental results that will arise from a more open trade policy. It is vital that developing countries shield themselves from a global market already stacked against them until they can compete on a non-exploitative playing field. With efforts directed towards a more equal economy developing countries will be able to enhance aspects other than simple other than simply income levels and growth such as standards of living and therefore become a more respected and competitive presence in both the eyes of its citizens and the global market. Thank you John. In developing countries developing countries have a host of problems in food security and income related through agriculture to food production due to international open markets. First developing countries when integrated in the open international market put themselves at great risk from food supply shocks due to liberalization through agreements with the World Trade Organization South Asian countries became more dependent on the world market for food provision and less dependent on domestic production. Food imports grew dramatically while domestic production fell. Even with high tariffs these countries cannot compete with cheap imports. South Asian countries went to international market equilibrium due to their competitive advantages. However these countries and other countries with low food production became more susceptible to international price shocks. As a large percentage of household expenditure is spent on food in many developing countries the population cannot adjust to shocks in the international market. The cost of competitive advantage specialization cannot always compete in crises of food production. To keep income volatility down and increase food security in developing countries protectionist food trade policy should be established to increase domestic capacity in food production so domestic produce is competitive with international prices until per capita income increases. Second in the absence of closed trade policies increased exposure to the international markets may reduce local agricultural income volatility as international markets absorb a large domestic supply and demand shocks in domestic markets in countries where price stabilization schemes are in place such as such as cocoa in Ghana and rice in Vietnam wider exposure to international markets may result in greater income uncertainty. So price stabilization in effect is effective in reducing uncertainty from both domestic and international shocks. In developing countries the invisible hand of the international market these many households and farmers depend primarily on a small diversification of food and cash crops like rice and coffee in Vietnam or rice and cereal in Peru. With little diversification crops are subject to high volatility in yield and in prices. Greater diversification may not even be enough to shield producers from large income fluctuations. Therefore government should provide commodity insurance for developing countries. Closed trade price stabilization and government intervention in conjunction therefore should be utilized by developing countries to absorb volatility of the market. Third and most importantly uneven distribution of income exacerbated by open trade can lead to famine. This is not necessarily due to a decreased or low supply of food but is the result of unequal distribution of the benefits of trade. In the cases in which those at the bottom of the income distribution are unable to command a share of the surplus generated by rising productivity in the industrial sectors macroeconomic income growth can be accompanied by the onset of famine conditions in the worst off groups. One instance of a boom famine was in the great Bengali famine of 1943 which had between 1.5 and 4 million deaths. In Bengal unequal distribution of wealth led to an uneven distribution of food. Those without wealth were unable to acquire food even though there was no food shortage. Those per capita rice availability increased during the two years of the famine. A wild upsurge in the price of rice did not match movement and wage rate and availability of rice followed a strong class basis. The worst affected by the famine were transport workers agriculture laborers and craftsmen. The least affected were peasant cultivators and sharecroppers. In these in this boom famine income inequality through open trade led to a decline in food availability for the lowest classes who are unattached to ownership of food production. When developing countries are exposed to the international market food security income are affected by international and domestic price shocks. The shocks lead to starvation along with income inequality. The income inequality can further lead to devastating famines such as in Bengal and closed trade policies should be followed by developing nations until they gain self-sufficiency in food production. Hi everyone I'm James Santucci. I'm going to talk to you about the environmental effect effects from open trade. One possibility in open trade regimes is the possibility of firms fleeing to countries with looser environmental regulations that firms will do so as the crux of the pollution haven hypothesis. However actual behavior may be much more concerning. A paper by Matthew Cole Robert Elliott and Perr Fredrickson attempted to roll back the analysis to how those environmental regulations were actually generated and they found some surprising results. The first and most important result was that the level of foreign direct investment in general did a good job of determining how strict a country's environmental regulations might be and that depending on how corruptible a country's political system is foreign direct investment influences on the strictness of environmental regulations act in different directions. In their model low levels of corruptibility or high levels of integrity however you'd like to think about it tended to increase the strictness of environmental regulations with increasing foreign direct investment while high levels of corruptibility tended to decrease the strictness of environmental regulations again with increasing FDI. Their date on corruptibility were from 1995 so they don't shed any light on what developing countries now prefer but the relationship was strong and robust across several specifications. The question then is to what extent developing countries are currently as a group more corruptible and thus whether developing countries should as a group expect increases in environmental degradation and decreases in the strictness of environmental regulation from increasing levels of foreign direct investment. As proxies for current corruptibility we use two data sets from the World Bank. The first is the national average for a number of meetings with tax officials per firm. As you can see the variability in this in this graphic is not not that significant but you can also see in the image that those countries where more frequent meetings with tax officials are expected are just concentrated in the developing world. However this does only reveal meetings and it is possible maybe that Kenyan firms people know where Kenya is it's over here really do need to meet with tax officials that much more often and that those meetings are about confusion rather than deal making. So we wanted another proxy as well. This set is informal payments from the private sector to the public sector which on its own doesn't reveal much but the description in the World Bank data set says that these are payments that these data represent rather the percentage of firms expected to make informal payments to public officials to quote unquote get things done with regard to customs taxes licenses regulations services and the like which is to say it's a perfect proxy for corruptibility. These such transfers are especially prevalent as you can see in the image in developing countries. Given that under conditions of high corruptibility we expect foreign direct investment to increase environmental degradation and that we apparently live in a world in which developing countries have more corruptible public sectors we can reasonably expect the developing countries that increase openness to trade and foreign direct investment will see loosening of environmental regulations and increases in environmental degradation. This approach to the effects of investment on the environment is significantly different from the more common environmental kuznets curve approach but the reason for that is that the body of evidence suggests that the environmental kuznets curve phenomenon is an illusion. Rising per capita incomes on their own are not a way to undo the environmental damages for early growth and economic output. David Stern's paper the rise and fall of the environmental kuznets curve traces the history of the curve beginning with its birth as an optimistic way to align conservation efforts with continuing business as usual and ending with a serious econometric decomposition of the relevant effects. Rather than a correlation between per capita income and environmental degradation that was at first positive and then later after a certain threshold of per capita income led to declining emissions he found that when you include a time variable which seems like a basic econometric idea you discover that per capita income on its own is strictly increasing as an effect and that time itself accounts for a fairly significant negative effect on more developed countries more developed countries environmental environmental regimes. The difference between high income and low income countries arose in the level of income at the beginning of the observation period and that income difference explained the entire difference of a kuznets curve effect. In large economies with high per capita incomes and slow growth the time effect dominates the per capita income effect. In small economies with low per capita incomes and high growth the per capita income effect on conservation or rather lack of conservation dominates the time effect. For this reason the per capita income growth associated with trade liberalization is unequivocally an environmental catastrophe unless technology in terms of emissions per unit of output can be increased simultaneously and there is no our priority reason to believe that open markets improve environmental conservation technology better than do closed markets. Thank you. So at this point each team or both teams will have five minutes to deliberate prior to the rebuttal section and during the rebuttals the con side will begin and there'll be three members of the con side will go up for a total of three minutes each followed by the pro side people go up for there'll be three members will go up for three minutes each as well. Okay and times up so con side you get three minutes per member and three members get to go up. Thank you everyone for coming. I'd like to thank the judges and my team members and our opponents as well. So what I believe our opponents were missing in their analysis of trade liberalization was the the sectoral and distributional effects that occur as real GDP growth occurs. Additionally they failed to talk about the underlying analysis of what happens to countries as income is not distributed evenly and growth is therefore thereby distributed unevenly as well and they we believe that they treated countries and their people and the effects as little more than receptacles for macroeconomic indicators which often happens in econometric analyses. So first I'd like to address the income inequality argument because development is uneven and because income growth is uneven some do better than others and like it is likely that they were better off to begin with and manage to survive the trade protection the loss of trade protection that occurs as economies open up. So those who don't benefit from the development development and income growth still pay the cost of rising prices. It's also not a costless transfer or transaction to switch from sectors so those who are impacted negatively from this uneven growth suffer further. Additionally food prices rise because national income increases and therefore food becomes less affordable to those in the agricultural sectoral sector of labor. Now I'd like to bring up some stuff from Anwar Sheikh, Lance Taylor, Stephanie Sugino and others. A fairly consistent pattern across countries has been an acceleration of productivity growth and traded goods falling liberalization with lower negative employment growth in the sector which can be traced to real appreciation in a shift in demand toward non-traded goods. Employment in non-traded goods went up or down according to relative strengths of higher demand and typically slower negative productivity growth. Of the 14 countries investigated that we're not in the old OECD only four managed steady growth of a period of a decade or more and nine went through financial crises even though they adopted macro and financial prudential policies. I'd like to continue with their studies and the results that they found that found that neoclassical trade theory has not really held historically and empirically. For unemployment and distribution output per capita in the traded goods sector grew less rapidly than labor productivity forcing overall employment structure toward less attractive jobs in the non-traded sector with a broad tendency toward real appreciation. This shift was opposite for successful export performances although there were only four. Thank you very much. I would like to address some of their economic data. Much of their economic data is from the World Economic Forum which is biased towards free trade they just they love it. Basically and no one really does it doesn't it's useless information academics look at it looks nice and just to see what you think you can do. They there are two countries that were ranked the top were Singapore and Hong Kong. You could argue that they had these countries in mind anyway when they started writing this this report and further when another issue that was brought up free trade can lead to bigger dividends at the people lower who have less income per capita for their GDP. However this can lead to this leads to more heavy environmental damage which can be if you were to try to fix it could cost more money to fix it but even if you the I guess you could I see that you can't it's some of this stuff will have long lasting damage to these developing countries which in the long run we just heard it. That's all to say thank you. Okay so to conclude I'd like to start with a level of ambiguity in in my opponents in my opponents framework there's toward the end of toward the end of Vicks speech he mentioned something about that growth is not termed by trade policy and that's probably true there's probably a broad spectrum of things that influences growth and then he followed that by saying immediately but there's a causal story between openness and growth and that's I if it's if it's not determined by I mean it can be it can be an influence but it's it's like they begin by they begin by dismissing its value as as a determinant of trade of growth and then immediately follow that by telling you that it's it's causing the growth like certain trade policies cause growth but other trade policies have no influence the absence of trade policy appears to be the relevant indicator here secondly I'd like to dispute a certain amount of openness on on the China on the China front first China is a well-known devaluer of its currency and I don't mean to attach any normative value to this they're neither good people nor bad people for devaluing their currency but it is at least a little bit non-open to to like completely manage your currency policy secondly another reason that China has been able to keep its currency devalued so much is that they keep income from flowing into the hands of their people through sterilization policies the per capita income in China could be higher in cases in which China weren't weren't keeping massive massive piles of foreign exchange from reaching the Chinese people they're currently sitting on legendary levels of forex in their central bank and the reason it stays there is because they can't have money flowing into the economy and actually raising people's standards of income and finally a condition for entering the Chinese market for a number of countries was technology transfer which was you weren't allowed to access to the Chinese market unless you were willing to give up the technology that that you were going to use in that market and that's again a pretty closed sort of trade regime so the the openness here is a little bit suspect and third the they mentioned as well that there is a broad spectrum of of influences including including institutional elements and determining a country's success I think when I when our team showed the graphic of a corruptibility measure from the World Bank you saw that that institutional failure is generally collected in developing countries so while they may be able to point to certain certain poster children among them China India South Korea this is this is the best free trade can do right and there are a number of countries and this isn't this isn't certainly to discredit anything those countries have accomplished in terms of in terms of economic growth but there are a number of countries that have that have opened trade that have been less successful and they're cherry picking probably the three most successful free trade countries doesn't say much about the institution of free trade in general we're not of course arguing for absolutely closed borders with everybody living in an autarkic dystopia but we think the we think the issues related to income distribution and environmental damage are an adequate reason to reject the prosides position thank you hello again everyone um I just like to make a quick note that we had one slide with data from the world economic forum and five slides with data not from that um but really the issue I have is that we're not arguing in favor of unlimited free trade liberalized capital account we're not in favor of just unlimited foreign direct investment in developing countries because that's obviously not going to work if these countries don't have responsible institutions and prudential regulations to prohibit exploitation and extraction their characterization of our argument is is pretty false we're in favor of responsible open trade policies because when implemented responsibly open trade can help growth now in terms of the taiwan case that they used well they said that it was a poster child essentially for close trade policy taiwan's uh economic growth was mainly export led so while nationalizing profits might be an indication of domestic fiscal state policy it's not an indication of trade policy I don't know if you've noticed the made in taiwan you know things on the things you buy but um also income inequality was one of their main their main points and income inequality as most people know is mainly a factor of domestic fiscal policy again a great a good progressive tax system can you know tamp down income inequality much better than trade policy because it's not the main factor that influences income inequality finally in terms of the food issue that they brought up that there could be structural issues in terms of the distribution of food a lot of that actually has to do with internal infrastructure again a domestic fiscal policy issue where most developing nations don't have the proper infrastructure to distribute food in an easily accessible way and finally I just like to say that under your scenario you basically are just instituting status quo policy while we're trying to institute open policies that will you know help countries grow and bring people out of poverty as is indicated by the case of china and south korea you advocate not solving any problems and essentially allowing those people in poverty to remain in poverty with no solutions thank you hello I would like to talk about a couple assumptions that we heard from the other team the first was that trade uh when a developing country trades that that is always an exploitative process um I don't know who said that but I remember it being said and there's a couple of issues that we have with that statement uh I mean the first one is that there are many different kinds of trade you know we see trade between developing and developed countries but we also see trade between developing countries and other developing countries if we look at alba to south american trade agreement we see that countries can find different terms of trade than the classical uh neoclassical neoliberal definitions of open or free trade in an international structure uh the second was that we were proponents of liberalization which was a set of policy recommendations that have been proposed in the past uh I don't know half century or maybe longer and that is not what we're trying to defend what we are saying is that we have to separate trade from other kinds of policies such as say financial liberalization which was recommended at the same time as trade liberalization and we want to separate those effects and try to look at simply the effect of trade openness on country's GDP growth I'm all set thank you hello everyone um my name is uh Siddharth Bhattak and I'm a freshman and um I would like to raise certain interesting points uh raised by our opponents and uh this is concerning their um their um issue of where they took up poverty um I would like to argue that it has been proven in recent years that standard applications of you know poverty tests cannot be applied to every single country because each and every country has different elasticities for example um there was this case study uh by the poverty action lab uh based out of MIT where they basically um showed and um listed an example um where people are living in rural China where they couldn't afford um basic nutrition when were given the amount of money uh to buy noodles to satisfy their hunger would would wait for more time and would in fact prefer to buy meat even though they could easily purchase noodles and um satisfy the hunger similarly people living in um Kenya and I think various African countries uh were shown that they prefer to spend money on goods like televisions phones rather than something which is more detrimental to their personal development uh and also um uh the uh the uh my opponent raised uh um sorry about that uh my opponent raised a point where they argued that closed trade policy allows equality of income um I would like to disagree with this fact and I would like to uh bring about the example of India the economy of India since its uh since its independence of in 1947 was basically uh extensively monitored by the state um it was uh the banks were nationalized and various companies the majority of the utility companies were all nationalized and the per capita income at the 1991 the year at which India basically started liberalizing its economy was uh 11,535 rupees and now in the span of 20 years where India has allowed a mixture of open trade and basically foreign companies to come in and invest in India uh the per capita per capita income has quadrupled to 41,500 uh rupees so uh at the end I would just like to stress upon the fact that our team argues that open trade is beneficial if it is monitored and set upon by various conditions which basically allow the goods of the uh open trade to outweigh the evils thank you so at this point we'll have a question and answer period with the judges after each question is asked by each judge there'll be a total of three questions after each question is asked the both teams will get one minute um to formulate a response in two minutes to make a response okay so if I can just ask everyone to um get quiet again so now the judges are ready to ask their questions so that question and answer period will begin now three things because we've talked about them theoretically but we didn't actually give substantiating data point what what is the measure's quality of standard of living what is measured the quality of income and how that's distributed and what is the quality of opportunity for countries you want to use to talk about those tactics you know you can everyone hear the question if you if future questions can be dictated in the microphone so so um for everyone who couldn't hear the question the question was what sorts of metrics are re-interested in for things like standard of living um inequality of opportunity inequality of income uh et cetera um and are there particular countries we want to point to one of the countries we wanted to point to uh was was taiwan which did an excellent job of collectivizing all the land which created a large degree of equality of opportunity because workers obtained ownership over their own output um so when there were rising prices in the economy it not only affected the prices everyone had to pay for goods but also affected the values of their endowments which that's where the equality of opportunity came from in taiwan so it's it's one's ability to take advantage of economic growth this is what we would look to for equality of opportunity um with respect to income inequality it's it's complicated because a lot of measures look at uh look at broad groups um and if you have a degree of income inequality through your middle class while your while your lowest class is getting left behind then we don't think that should count as a good thing right because your your groups outside of the lower class are all the lowest class rather are already better able to take care of themselves so our concern was the welfare of the worst off in society and if you look at uh one country that we did that we did look at that was mexico um was over the course of trade liberalization even though economy wide uh measures of output were growing the uh the real minimum wage was declining significantly and then the mexican state did absolutely nothing about this and the reason behind this is that with rising incomes you see rising prices and if wages don't adjust which with prices which they've in the past 30 or so years in this country and in a number of other countries if they fail to do that then the problem isn't that you know broad measures like the genie coefficient or the or the share of the fourth 20 percentile aren't keeping up because those those measures do you know a fairly okay job the problem is that the people who pay the highest cost for trade liberalization are the people who were already worked off in society and the pro side gets a chance to make a battle if you would like i guess i would raise the same concerns as our esteemed judge that that answer didn't actually include numbers or measures that we can look at over time and aggregate over a number of different nations and that's one difficulty that we had when we were trying to do this research because some of that stuff just doesn't exist which is why we had these what GDP per capita essentially um and our response to the the mexico example is that we i feel like there's the assumption made by the other team that uh all of the negative effects on wages were because of trade policy and that is fundamentally different than what our team is trying to argue what we're saying is that this trade policy in this one specific case wasn't handled perfectly by the mexican government sure but is that because of open trade or trade liberalization i don't think so and we have to look at the institutions within a country and how they interpret trade how they handle trade and how they assist with their populations while being during a change in trade policy thank you so the topic is pollution and wanted to ask a couple things first of all how are we measuring pollution in first of all this is for this team and second of all isn't it increasingly clear with the liberalization of media that the pollution does become addressed by countries when they get to a certain income point i would point out for example the united states had a major pollution problem up through about 1960 and the inflection point of so much pollution even with our open free trade we turned things around developed the environmental protection agency etc so at what point does income not help in an aiding pollution long term thank you sundry so the claim is is less that income that rising income doesn't help than that rising incomes as a sign of industrialization industrialization actually make things worse the issue one issue with us as an example is that everything that happens after say 1980 happens with a fairly stagnant median income right so unless unless there's some sort of mess ionic upper two income quintiles who are just working day and night to reduce pollution the income gain argument here is going to be i think a little bit difficult to sustain you know the measurement was the paper that i was that i was looking at still for emissions and another difference is that when you're talking about changes in income in particular you especially in development countries are moving from fairly you know low environmental impact subsistence modes of living to when you industrialize you you know you build things like factories you start you know people start moving around in cars instead of one foot and admittedly all of these things are related to standard of living but there's a serious question about whether the issue is that the development happens ahead of the technological improvement that made the decrease of pollution because that doesn't seem to get exported for some reason so if there were some way to use closed trade policies for instance requiring all incoming industries to have strict environmental environmental controls or like like putting a hiatus on the important importing of polluting industries until you have the sorts of environmental controls and technology to keep that from having significant environmental impacts like that would be pretty okay but those don't seem to exist so as much as we have this this kind of like sweeping institutional failure on the environmental front and as much as the other side has given us absolutely no reason to believe that they even notice pollution was part of the discussion it's um we think the concerns that we brought up are are fairly fairly serious i'd just like to make a few quick notes again in terms of this argument i think especially on the pollution front institutions and domestic policy are really the influencing factors on pollution in a nation as uh bill had said the EPA in the united states was not it's not related to trade whatsoever it's an internal institution that regulates environmental policy and regulates pollution to make sure clean air and clean water are clean so i mean if we if developing countries were to create environmental agencies to ensure that water and air were protected from foreign investors or domestic factories or any form of industrialization number one they already have a platform to do so based on currently developed nations and they wouldn't see the increased pollution that we had before we reached the tipping point where we had smog in our cities and really had to go after this problem because it had gotten so bad and also developing countries can take advantage of new technologies that are being created china is a green energy pioneer building windmills and solar panels and a multitude of other green energy sources particularly the three gorgeous dam a massive hydroelectric plant so obviously these developing countries aren't taking taking the same coal oil and natural gas based path to power generation and transportation that we are and finally we had the dirtiest technologies because we invented them and now that there are new technologies these developing nations will be able to take advantage of much greener energy creation than we were able to thank you okay so one final question here um this is for the team arguing that we should have open trade in developing countries so open trade will lead to trade based on current comparative advantages which in developing countries is typically based on unskilled labor and closed borders can provide protection necessary for developing countries to develop industry and products so how do you respond to the concern that the open trade can harm industries in their early stages hi again so thank you for the question the response is that yes that's absolutely possible that industries can be harmed in developing countries from foreign competition that's something that we brought up early on in our argument is that there are issues with trade that cause structural changes and these can come from new technologies these come from competition from foreign firms i guess that the argument that we have for that is that that labor is getting replaced by more efficient labor so ideally in the long run that's going to be reallocated to more productive means so yes there there can be detrimental side effects in certain industries but on a whole long run it's more productive to have people in more efficient industries so thank you okay so the consize is often not to make a rebuttal so at this point the judges will have five minutes to deliberate the winner and during that time there'll be awards handed out by lizzie thank you i'm elizabeth because it's guess i'm an academic advisor in the department of economics um while the judges deliberate before the winner is announced um we want to congratulate both teams on a very strong debate in the job well done and that's on jace that i'd like to also take this time to present both teams with certificates from the department of economics and this year's debate t-shirt and alex is going to help me jane's gonna teach you so uh i'd also like to use this time to thank uh carlos marantes who is the graduate student advisor to both teams uh i'd also like to thank uh nicole dunham who continues to run logistics behind everything we do with the econ department and then also i'd like to thank lizzie who has been um doing all the behind the scenes work for this debate and uh i believe this is our first event that she's been solely responsible for and she hasn't really shown that so uh round of applause for lizzie okay so i was chosen to be the one to have to make the decision and announce it um so on behalf of the panel uh we want to thank both teams they both did a great job um i know what it's like to be on that side of things i did it back in 2007 i did it on the health care system uh which still hasn't been reforms about i guess the debate uh hasn't been heard that that widely um that being said bill trey was uh one of the judges on my panel so i know how uh tough it is to look at him across the side but both teams did did very well they articulated uh their points very well they're very convincing very compelling uh we do have to make decision though uh so what really tipped us was the the data the backbone of um what's going on behind the arguments and to that uh the team that was advocating for open trade will be our winner this year so this concludes the ninth annual undergraduate economics debate uh for all economics students if you could just hang tight for an announcement a few minutes we have an event going on across the hall i'd like to thank everyone for coming out i'd like to thank all the debaters our judge our judges and also the alumni who came here for the economics um alumni advisory board meeting and we're able to make it from far and wide so thank you all