Trade and Industrial EDA
ECES905205 meeting 1
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Your lecturer
Krisna Gupta of Politeknik APP Jakarta & Deasy Pane of Bappenas (The Indonesian Planning Agency)
PhDs from Crawford School, the ANU.
Senior fellows at Ceneter for Indonesian Policy Studies.
KG do first 7 meetings, DP do last 7s.
Reach us thru email (see Syllabus).
Today’s agenda
- Housekeeping
- intro on trade & industry
About ECES905205
Trade has been conducted since before states even a thing.
similarly, trade & industrial policy has been used since the state itself created.
We will learn why & how these policies work.
This course however offer a bit more practical things.
About ECES905205
2 parts: theoretical & practical.
The theoretical use some papers & Krugman, Obstfeld & Melits (2023):
trade theory & policy
The new industrial policy
The practical uses various handbook & papers:
analytical tool like TCI, RCA, etc.
Real form of policies & empirics.
Priors
- Micro & macro are assumed:
- familiar with first & second welfare theorem
- market failure & imperfect competition
- growth theory in open economy
- Be active
- No coding practice.
- good if you took international economics.
Learning outcome
Understand the principle behind the gains from trade and industrial development.
Able to explain various tools for the government to achieve trade and industrial policy goals.
Understand tools for trade and industry analytics.
Check out the syllabus for more info.
Rules
Be active
Be quiet
No presence is required
Food & drink is fine
Please interrupt me at anytime for questions
Evaluations
| metode | coverage | (%) |
|---|---|---|
| midterm | meeting 1-7 | 35 |
| final | meeting 8-14 | 35 |
| assignment | all (kinda) | 30 |
Midterm and final are going to be a close book, no gadgets.
Slides will be enough to get an A, but optional reading is encouraged.
We’ll say more on the assignment later on.
Tools
Courses info can be found in krisna.or.id/en/courses/tradin.
- we’ll update regularly
Questions?
Knowing my class
- Let’s talk about your:
- name
- work / future work
- what is your expectation from this course
Introduction to trade & industry
Why trade
There’s gain from trade from specialization (aka comparative advantage)
Even if a country knows how to make everything, it’s still better for them if they trade.
Why? opportunity cost and resource constraints.
Trade is also the fastest way for developing countries to catch up. Leapfrogging even!
Why not trade?
Trade gain does not shared equally
- Economic transition often beneficial for 1 group at the expense of other group.
- Trade & industrial policy often created with a specific sectors in mind (may leave other sectors in the dust.)
There are other goals more important than economic efficiency.
Blaming foreigners is always easier (they don’t affect your election)
Policy makers don’t understand economics.
The global trade
Global trade trend
Some misconceptions
Trade surplus is “good” and “competitive”.
- BILATERAL trade surplus is “good”.
- SECTORAL trade surplus is “good”.
Deficit in current account must be counteracted with trade restriction.
Trade is easy to manage.
Weak exchange rate is “bad”.
Trend in Indonesia
Indonesia follows the global trend.
Tariff reductions mostly come from FTAs.
On the contrary, non-tariff measures rise.
Good thing or a bad thing?
Trends in trade & industry
Green energy & Climate change
Localization/downstreaming & friendshoring
Food security
Global current account imbalance
Course structure
Trade theory: the classic, the latest.
Industrial policy
Trade & industry policy tools
Analytics
Thinking forward
Use (dan empirics) untuk mendebat kebijakan.
- Remember, most policy’s justifications are market failure.
- analogy is powerful.
Keep policy objectives in mind.
- Does it interfere with other objectives? Any better ways to get them?
Policies are politics & administrative processes.
Some interesting read
Beberapa postingan di blog saya yang bisa jadi pengantar:
Next week
- Comparative advantage & Ricardian moddel