University of Papua New Guinea

International Economics

Lecture 13: Trade Policy – Challenges

The University of Papua New GuineaSlide 2

Lecture 13: Trade Policy – Challenges Michael Cornish

Overview

– Links for the Group Assignment

– Graph: Developing countries opening to trade

• Globalisation and low-wage labour

• Globalisation and culture

• Globalisation and the environment

• The WTO and national independence

The University of Papua New GuineaSlide 3

Lecture 13: Trade Policy – Challenges Michael Cornish

Links for the Group Assignment

• The Bank of Papua New Guinea Monetary Policy

Statements

– See:

https://www.bankpng.gov.pg/bi-annual-statement

s

• WTO, trade profile:

– http://stat.wto.org/CountryProfile/WSDBCountryPF

View.aspx?Country=PG&Language=F

The University of Papua New GuineaSlide 4

Lecture 13: Trade Policy – Challenges Michael Cornish

Links for the Group Assignment

• United Nations, trade profile:

– http://comtrade.un.org/pb/FileFetch.aspx?docID=

5393&type=country%20pages

• The World Bank, trade profile:

– http://wits.worldbank.org/CountryProfile/PNG

• ANU Development Policy Blog:

– http://devpolicy.org/papua-new-guinea-an-assess

ment-of-trade-performance-20141106/

The University of Papua New GuineaSlide 5

Lecture 13: Trade Policy – Challenges Michael Cornish

Links for the Group Assignment

• PLUS:

– Simply google “papua new guinea trade

policy” !!

– I found lots of good resources!

The University of Papua New GuineaSlide 6

Lecture 13: Trade Policy – Challenges Michael Cornish

Links for the Group Assignment

• Import cover:

– Sometimes called the import ratio

– It is the ratio of a country’s total imports to

that country’s total foreign exchange

reserves

– Also see:

http://www.economist.com/node/16793524

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Lecture 13: Trade Policy – Challenges Michael Cornish

Year of trade liberalisation:South Korea: 1962 China: 1978 India: 1991

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Lecture 13: Trade Policy – Challenges Michael Cornish

Globalisation and low-wage labour

• Low wages in developing countries

• Poor working conditions in developing

countries

– Exploitation or opportunity?

The University of Papua New GuineaSlide 9

Lecture 13: Trade Policy – Challenges Michael Cornish

Globalisation and low-wage labour

• Global negotiations for higher labour

standards

• Concern from developing countries (such

as Bangladesh) that this will be a form of

protectionism for developed countries…

– …because developing countries will

struggle to meet their standards!

The University of Papua New GuineaSlide 10

Lecture 13: Trade Policy – Challenges Michael Cornish

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Lecture 13: Trade Policy – Challenges Michael Cornish

Globalisation and culture

• The McDonald’s effect

• Cultural homogenisation

• Here in PNG?

– Cargo cults!

• But isn’t this just what people want?

Access to the same goods and services that

the rich world enjoys?

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Lecture 13: Trade Policy – Challenges Michael Cornish

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Lecture 13: Trade Policy – Challenges Michael Cornish

Globalisation and the environment

The environmental Kuznets curve

• Illustrates a theory that, when a country

initially develops, it damages the environment

• But when the country is developed enough, it

starts to allocate funding to environmental

protection

– I.e. reflects personal preferences for income

v. health v. environmental protection

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Lecture 13: Trade Policy – Challenges Michael Cornish

Beijing smog in the early evening...

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Lecture 13: Trade Policy – Challenges Michael Cornish

The environmental Kuznets curve

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Lecture 13: Trade Policy – Challenges Michael Cornish

Globalisation and the environment

• Problems with the environmental Kuznets

curve:

– Proximity!

• I.e. people do not seem to care as

much about places they cannot see

– Many environment issues are regional or

global, and need international

cooperation

The University of Papua New GuineaSlide 17

Lecture 13: Trade Policy – Challenges Michael Cornish

Globalisation and the environment

• Climate change and carbon tariffs

• Pollution havens

– The concentration of pollution-making

industries in developing countries, where

there are less environmental regulations

– An example from the textbook?

• Ship-breaking in Alang, India…

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Lecture 13: Trade Policy – Challenges Michael Cornish

Ship-breaking in Alang, India

The University of Papua New GuineaSlide 19

Lecture 13: Trade Policy – Challenges Michael Cornish

The WTO and national independence

• Benefits of membership v. loss of national

sovereignty

• Do the citizens have sovereignty when their

representatives hand over power to an

international institution?

– Is this democracy?

– Of course, there is still the right to

withdraw from the WTO…

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Lecture 13: Trade Policy – Challenges Michael Cornish

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Lecture 13: Trade Policy – Challenges Michael Cornish

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Lecture 13: Trade Policy – Challenges Michael Cornish

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Lecture 13: Trade Policy – Challenges Michael Cornish