 Wel, ddod i'r rhagoriaeth i mi yn las iddynt, ac yn mawr ffordd ar y bydd, mae'n gweithio'r ysbwrdd gaf. Ddiw yw arom yn mynd i'r felwyddo, ddod i ddod i'r rhagoriaeth i yn ffio yr unrhyw yng Nghyrch â'u gwneud, ddod i'r rhagoriaeth i mi yn dda i ddyfynu hyn o'n rhyw fath, astud rydyn ni wedi cael ei rhoi cerddiau hynny. Rwy'n gael 10 mwyn yn dweud, bwy fydd yn r Evansol sy'n ddweud yn 10 mwyn, Ond oeddwch yn ddweud hynny. Ond o'n ddefnyddio'n ddigonwyd a'r prilimnor ac yn ddigonwyd greu'r gwrthlennu. Dyna ddechrau'n ddysgrifennu o'r gwrth ymlaen gyda'r lleolau. Ond mae'n ddiddorol o'r ddweud o'r ddweud o'r ddweud o'r ddweud o'r ddweud o'r ddweud o'r ddweud o'r ddweud. Ond mynd yw'r rhaglen i mi ddysgu'r cyfnodd hwn. Ond i ddigon i ddim eich bod nhw'n eu lleol, ddïnedd yn gyllid â'r Talun a'r Rhaglen, i ddim ei ddim yn y gweithio, y cyfrifadeb yw ddwy'n gwybod yn bobl arall. A dyna. Ynbydd, mae angen i ni'r gwerthu tux yw'r cyfrifedd. Ac os yna y profi, esyn y cyfrifadeb o'r rhaglen i'r cyfrifadeb, y cofnodiad a'r cyfrifad, ddiogel gyda貴 yn ddweud. Efallai y ddweud o ydych chi'n cyflog am hoffio oherwydd ei ddim yn cyflog a cyflog wedi heb oherwydd ei geil a ddwy'ch i'r oedliegau cynnwydol i gael. Felly, mae'r rhagfer o millions of ddatblygu o'r cyflog wedi aru,'r cyflog o hoffiu boedd. So, mae'r rhagfer o hoffiu'r cyflog, ac mae hwn o'i ddweud o'r dechrau. Mae hyn o'r rhoi checko'r Minister i ddim yn eu cyflog a bod ydych chi o ddim yn cyflog. Mae'n fawr gwneud o'r cwestiwn i ddim yn ymdweud ymddangos y byddai'r ffordd o'r incwm ddweud ac yn ymddangos i ddweudio'r cyfnod. Mae ymddangos y ffordd yn ysgrifennu ymddangos ymddiadu gyfroedd, y ffordd ymddiadu ymddangos ymddiadu am y cyfroedd, yw'r unrhyw ymddiadu adonwch yn ymddangos ymddiadu. The point about trade is it allows you to consume and produce different bundles of goods or goods and services. So that allows specialisation, comparative advantage. It allows you to bring inputs into your production processes from abroad. It allows competitive pressures because one's engaging with people who are producing much further away. And also in terms of growth, it allows the following macroeconomic observation that governments seeking to grow can focus on their production side without worrying about whether consumption, the demand for the goods that are going to be produced by the growing sectors, are going to be demanded within the local economy. When Britain industrialised as the only supplier of industrial goods mid 18th century, it took Britain over a hundred years to double its income per head. Essentially, when you think about our theories of development which refer back to the role of agriculture, generating incomes to spend on industrial goods, demand and supply had to go up more or less together. There was no other market other than the industrial market in Britain. When China was developing in the last 30 years, it took China 13 years to double its income. Why was that? Because China could produce lots, sell it abroad without driving the price down. In other words, trade by breaking the production consumption link allows you, in a sense, to do things that were quite impossible in an autarkic economy. Just a very brief word, I had expected to speak more about this sort of theory. There are two ways we can think about the relationship between, I've called it openness though, and income. Why? One is the levels relationship that the relationship runs from openness to the level of income. The other is a growth relationship that openness affects the growth rate per se. It's theoretically interesting anyway to ask which of these applies. I will make a comment about its empirics in a second. The theory is actually quite a live area at the moment. There's quite a number of recent papers thinking about the way that trade and growth might interact. Indeed, a number of scholars are reviving more or less the near classical growth model with trade, looking at the way that trade affects accumulation, looking at the way it determines technological efficiency. The other sort of model that is used are essentially multi-central models, where we've got questions about are you in the right sector, sort of structuralist schools. There's the question about having a sector which actually undertakes innovation as a conscious process. That raises really quite important issues for growth, because the innovation sector will compete with other sectors of resources. When it's opened up to the world, it has a much larger scale, so it can sell great innovations around the whole world, but it also faces more competition. The first of those tends to increase growth, the second to decrease it. There is actually quite a lot of interesting theory. But the overriding outcome of the theory is ambiguous, we don't know. In a sense, it is, as Danny Roderick has said for 20 years, actually just an empirical issue. I wonder if it's going to do a little illustration of the difficulties of doing empirical work according to whether the relationship is a levels or a growth relationship. It really matters very much, but let me actually just sort of skip through this slide. We can think that an openness of trade liberalisation raises the growth path or makes the growth path steeper. You might think that if you've got a horizon of 50 or 100 years, it really matters if you're taking a step up or you're changing the growth rate even by a small amount. But given that changing the level of growth takes some time to adjust, we're going to have some path up to the new growth path like the dotted line, the broken line there, and if you've only got observations, real data, that sort of span the period over which that adjustment might be taken, empirically we are not going to be able to tell these apart. And the literature is extremely casual about which of these models it's working with and we are frankly, I think, completely unclear which of them applies. Okay, I want to make three points really about the empirics. First, it seems to me that we've had immense debate about causation. Danny Rodrick and Rodriguez really debunked all the literature up till about the mid-1990s. Since then, we thought we'd done better by instrumenting trade and putting it into growth equations. But very recent work by Sam Bassey and Michael Clemens, at least in my mind, has really thrown all of that up into the air. And the important thing about instrumental variables if you're using it is you want to be sure that the instrument can only, if you're trying to do a trade on growth relationship, you want to be sure that the instrumental variable that you've got can only affect growth through its influence on trade. The big problem with the way that we started to instrument trade with a gravity model was it relied very heavily on countryside and we can all think of dozens of relationships out there in the literature, in the respectable literature, which relate countryside to other things like FDI, innovation, education and so on, which then feed into growth. So the point really is if you want to use a sort of gravity model to instrument your trade to go into a growth equation, you have to say all that stuff about countryside and foreign direct investment, countryside and education, it's worth nothing, trade's the only link. You don't want to say that. So in fact, it seems to me we've taken quite a step back or we've realized we were wrong in the last few years. One major challenge for the future, getting causation. Causation is very important if you want to do policy. You can't do policy unless you've got causation. And so I think that is one of the big challenges. Let me say, however, that even if you can't do causation, you might still find that trade has a very strong permissive effect. The incentives to think about the splitting up production consumption as we grow for some other reason, we might still have disequilibria between consumption and production and trade is necessary to allow, as it were, that to happen. So even if we can't do causation, there are some useful things we can do, but causation is important for policy. Let me skip through other instruments that we might use. A second point to make is in a sense it's just a great arrogance to say there's only one model that clearly all our experience suggests there's some heterogeneity about the way that trade interacts with the growth process or indeed any other process. And there's some suggestion that low income countries maybe have gained less from their trade liberalisations that Africa has gained less. My own view is that that's still an open question. I'm not going to say anything more about it now, but it seems to me the second big frontier that we really do need to be thinking about under what circumstances is trade or possibly trade liberalisation going to help the growth issue. Now, what does it mean for policy? As scientists, as academics, we test hypotheses and unless we're really certain, 5% significance test, unless we're certain with 90% confidence that what we found could not have arisen by chance, we say we haven't found it. The policy makers problem is different. The policy maker has to decide. He has to decide tomorrow and therefore he's going to be interested not just in a 5% significance test, but he's going to be interested in things like what's the balance of evidence from some bits of research, from common sense, from what have you. What's the whole possible distribution of outcomes? What are the costs of being wrong at one end, wrong at the other? And what's the cost of uncertainty per se? So the policy maker has a different approach to this problem as the academic and it's something which frankly the academics have not realised and taken I think sufficient attention of. And just to illustrate this, this is a little study that looked at the increment that trade liberalisation's applied to the growth rate of countries and runs from lower than minus 2. Growth got worse after a trade liberalisation up to well more than a plus 8. If we take a simple mean of those growth increments in 47 instances, the mean is not significantly different from zero. As academics you would say trade has no effect or trade liberalisation has no effect on growth. But if you were a policy maker you really would want to see the whole of that distribution. You would want to observe that there are twice as many observations on the right of the red line of zero than on the left. You would want to observe that there are some very big positives and there are some negatives. You'd have to decide how much the negatives upset you. So when we're doing policy it seems to me third point we ought to be doing a rather different job as academics. The last point that we'll be here to say pleased to say is one of the really big strong results that we get from almost all the empirics is that trade liberalisation seems to be associated with increasing productivity. And ultimately we're interested in increasing productivity because that's the basis of higher incomes. There are reservations that we get from sort of the structural change analysis that you may have very efficient sectors but have everybody in the wrong sectors and certainly in the medium term that is something that we need to be conscious of. But in the end we live better now than we did 200 years ago because we're more productive. There are several possible mechanisms don't want to talk about this in great detail but we know we can have competition and selectivity models. We know that imported inputs and liberalisation of imported inputs seems to be hugely important. And we also have an active debate still going on about whether one really learns by exporting learns from the people you're dealing with. The point to make to scholars looking forward is the last 10 years I've seen a huge growth in our ability to use firm level data. We now have much better data on firms. Firms are where productivity occurs and increasingly in a number of countries we're now able to match those firm level data with international trade data from the customs authorities. So there's a whole field out there of trying to plot down exactly which bits of liberalisation exactly which bits of trade generate the shocks that move through to firms increasing productivity for sure you need to worry about the structural change but ultimately we do need to think about increasing productivity. So the fourth point I want to make is it seems to me there's an immense amount of work to be done going forward on productivity. And that's it. Thank you very much.