The economist I decided to do some research on was Dani
Rodrik. The article is called “What Do Trade Agreements Really Do?”. While
reading the article, I found it interesting how economists knew that free trade
would create gains and losses but want to know how did the weight of the gains
and losses reach a judgement that the US citizens would be better off “on
average” (p.74). To me it seems
interesting because to me it seems like there is an easier solution to finding
that particular answer, but it is actually so much deeper than that. There was
a survey that concluded with the results that the US citizens would be better
off “on average” as the result of NAFTA. The first topic he talked about was
that TRIPs (Trade-Related Intellectual Property Rights) are a big part of an
advanced countries’ gains which are a part of the developing countries’ losses.
This is interesting because a TRIP can be a win-win for both parties but that
is not how it would normally go. The second thing he talked about was that ISDS
(Investor-State Dispute Settlement) procedures on how developing countries have
traditionally signed onto ISDSs in the expectation that they would compensate
for their weak legal regimes and help attract direct foreign investment. The
only problem with that is that this gives arbitrators too much power which
makes things difficult. The final topic he talked about was the pursuit of
harmonization of regulatory standards. The harmonization differs between nations
and also have dissimilar interests within consumer preferences or divergent
regulatory styles (p.78). This is important to know because this is at the
center of all trade agreements and want to know why we do certain things within
agreements. In summary, trade agreements are signed by countries because some
might be large countries and dominate the market or some are smaller countries
that want an entrance into the market. Or the countries can be like the WTO and
NAFTA where there is free trade among those nations that are part of an
agreement. But the overall point is that trade agreements serve to empower
special interests.
https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.32.2.73
https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.32.2.73
I think for this post, the 'advanced countries' are gaining when the developing countries make less well educated economic decisions, is an example in the world of big companies getting bigger and small countries get smaller because the the large amount of the market that is taken up by the bigger companies, but in this article it is the economies as a whole rather than a specific company. I agree with Alan in the fact that stricter regulations and more advanced trade agreements would allow the developing companies to grow more. This would in time make the economic markets balance out more because of more free trade between them.
ReplyDeleteLike Alan, I did not realize that so much went into the calculation to find how the weight of the gains and losses reach a judgement that a countries citizens would be better off “on average." This is an important calculation because the answer gives countries insight on whether they should enter into a trade agreement or not.
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