Welcome back to the channel if you haven't yet make sure you subscribe to stay up to there with all the latest content at this point we've pretty much got content going out every 48 hours so don't stay stuck with your training business and if you want to get in contact with me to either schedule a call or ask me some questions visit the description below and you'll be able to get in contact with me directly there. So today I want to talk about the the excitement the boom the just the the thrills that at the moment is is happening in the state of Florida okay and more specifically in the city of Miami but that is going to touch as well different parts of the United States and that is the signing of of Messi arriving to Miami and more specifically arriving to the MLS okay now over the last couple of weeks or few weeks ever since the announcement was made that that Messi was going to be coming to the MLS I've noticed a couple of things happening within the soccer industry in North America okay now again this is a massive massive positive for soccer in the US it's a massive positive for the soccer training industry in the US and also I feel that with not just Messi's arrival not just with a Copa America coming to the US next year but also the World Cup coming in 2026 that the industry of soccer training and just the industry in soccer in general is going to grow and explode in the next two to three years especially in the US okay so when whenever a huge name arrives to a country okay it creates excitement within the the market okay so obviously Ronaldo Ronaldo Messi these two are really powerful huge brands in the soccer world okay we've seen the excitement we've seen how much the the Ronaldo brand has grown in the Middle East with his move to the Saudi Pro League now we've got Messi coming to North America and my prediction is that it's going to create the same type of buzz and it's going to create the same type of excitement and what what's going to happen is that a lot of eyeballs are now going to be placed on soccer which is a fantastic thing because the more eyeballs the more interest that we get in our game the more people want to participate and the more participants we have playing our sport the more the private industry in terms of training is going to grow okay so there's a couple of things I see and I speak with a lot of coaches who are based in South Florida Miami is a massive hub for soccer training if you are in Miami at the moment okay make sure you set up your business correctly and make sure you get in the game because it's a it's going to explode right not just because of the arrival of a massive name to the state of Florida but as I mentioned we've got the Copa America coming to the US soon and we've just had the gold cup where where Mexico were crown champions and then we've got the World Cup and also in between those those tournaments there's also going to be the new format of the FIFA World Club Cup which is going to go I think they're going to go for with 32 teams for the first time ever and that's going to be played in the United States as well so there's going to be loads and loads of huge events coming to the US which means there's going to be lots of coverage of soccer coming very soon which is great because that can create interest for from kids who don't typically play soccer okay and something I know in the US is a lot of kids don't watch the sport but they do play the sport so hopefully with the arrival of Messi with the arrival of the Copa America with the arrival of the FIFA World Club Cup with the gold cup just gone with the world world cup coming soon in 2026 hopefully we can now move players into becoming viewers of the sport because that's only going to increase their interest and also help with development as well because if you are solely just playing the sport that's fantastic but what we need is we need our clients to now be watching the sport and if there's major events or if there's a powerful brand like Messi playing in the MLS that's just going to attract more and more kids to watch the sport learn okay and also you as a trainer so fantastic opportunity to set your clients if you don't do already homework right go and watch Messi play in the next MLS game and make a detailed analysis report on how he did how did he get his team playing or how did he do individually how many shots on target did he have how many complete passes did he make what was his movement on and off the ball okay so these are all things that you can get your clients to do when they're not with you right and the growth of a massive brand like Messi creates so much opportunities for you as a private trainer if you are if you are based in South Florida or if you are in other parts of the US okay because it creates excitement it creates a buzz and you're gonna start to see more kids now maybe wearing into Miami shirts there's going to be more interest in the sport some kids who are playing other sports might see this massive buzz that's creating in the MLS and they might just start watching soccer and then as they start watching soccer they might find it exciting they might start to love it and they might say do you know what I want to leave baseball and I want to go and move into soccer and I want to try it because it sounds like a fun sport so when a huge player like that and this is similar to what happened in in Saudi Arabia with the arrival of Cristiano Ronaldo in that region is it just it creates a buzz it creates higher participation levels because players now want to be Ronaldo they want to wear his shirt they want to be like him they want to start to play on teams they want to start to train like him okay because you know these massive air companies start showing footages of him training with his team of him in matches and that inspires kids to want to train more to want to play more okay and that is good for your business because it creates when there's a buzz there's going to be more interest for players and parents looking for additional and supplemental training for their child okay so if you are in South Florida at the moment take advantage of this moment we are we are currently going through it's gonna be huge if you're in Miami make sure you're in the game now because you know that the industry in terms of soccer training it's already huge in South Florida but it's going to get even bigger with the arrival of this massive brand global brand okay and also if you're in the United States as I mentioned you've got loads of these huge tournaments huge events coming up very soon and that's going to create a lot of buzz create a lot of excitement for kids and hopefully that's going to increase the participation level of kids and they may want to transition from one sport into soccer which is going to be great for you and your business because it's going to create more opportunities for you to work with players and work with with clients as well okay so if you want more help with any of the things I've talked about or you want to get in contact with me to talk about your business visit the description of this video below okay number of ways you can do that reach out to me and if you haven't yet make sure you subscribe to the channel to stay up to date with all the latest content


Good afternoon. Good morning, depending on where you're joining us. My name is Bonnie Tuña, and I'll be leading this session where we'll wrap our minds around a very important question. The synthet that you've just watched, painted a very clear picture of where we are as a people, as a planet, as a community. And what we try to do this morning in the next few hours is try to reimagine our future. Now, there's been people who've had an excellent job of trying to paint this picture for us in the name of the SDGs. We all know about them. We all are working hard to achieve them. However, there still remains a lot of hindrances in getting there. I'll paint for you a picture of one big hindrance. It's in the name, in the shape of a number, that is 3.7 trillion. That is a financing gap that currently exists in achieving sustainable development goals by the year 2030. Now, this is not to say that work is not happening. There's a lot of work that is happening. However, what we'll try to do for the next hour or so is to come together with brilliant minds and trying to figure how do we then go around ensuring that we get to this goal a lot faster than we hope to do that. And we'll be trying to do that by questioning a few of the innovative approaches that have already been put in place, but also trying to imagine what could be the future by tapping into what already has worked and will be referring to very useful papers that have already been put out there to try and mitigate it. So that is where we are going. Without much ado, I'd like just to get you to who will be speaking with me in this session. But before that, for all the people who are joining on this call, remember, you can be part of this by asking questions, sending your comments, your concerns, your views, and your thoughts. And here's how you do this. You go to your screen and you click on the top open and you will find the slide link there. And that is how you'll be able to communicate with me. I'll try to get in as many as your comments as possible throughout the session. Great. So let's get this show on the road. Like I said, there's already a lot of work that is being done to try and meet these. There's a lot of work trying being done to try to make this all the better place to live in. However, challenges do exist and that's what's trying to mitigate it. First off, let me introduce my panel. I'd like to introduce to you Ms. Claire Kousta, who's a global head of ESG for fixed income and currency at the Deutsche Bank. Welcome, Claire. Also, I'd like to introduce, forgive me for this, my French is terrible, but Amwaz Fiyol, who is the vice president for the European Investment Bank. I hope I got your name right. And last. Fantastic. There's hope yet. I'd like to also introduce Ms. Priti Sinha, who is executive director of the United Nations Capital Development Plan, the UNCF. Welcome, ladies and gentlemen. So obviously, there is a lot of sense that already has been set and all of you represent a lot of work that has already been put in place to ensure that we get to this. But let's start off with a 3.7 trillion elephant in the room. And I'd just like to off as the opening remarks, I'll start with Claire. Where do we go from here now that the picture has already been painted in terms of the need? And it's a huge one. Where do we go from here? Sure. Thank you. I mean, when you say in that scale of numbers, it obviously seems huge, but I think it's important to step back and see where we've gone in terms of the markets. And you talk about 3.7 trillion of needs. I'd like to frame that in the context of the overall global sustainable markets. If we look at where they've gone over the last 10 years from zero to at the end of the second quarter, almost two trillion devoted to global sustainable development, yet emerging markets still is a tiny fraction of that, around 235 billion. Right. So I think what's been interesting to see, especially over the last 18 months or two years, is the massive influx of funds that have gone towards sustainable causes in the capital markets as well as the financial markets. And increasingly, we're seeing that flow coming into the emerging markets as well. And what I mean by that is really investor interest, both in terms of realigning their existing funds towards sustainable purposes, as well as new funds being raised to greener sustainable purposes for emerging markets growing. Now, where do we go from here? And I think that's the key to the discussion, right, is twofold really. One, I think we still see a lack of kind of viable projects being put forth by the emerging markets. And when I say this, it's both, for me, the sovereign markets, which have always played a critical role in being the first mover in their countries to raising green and social funding for four projects. So it's really getting those sovereigns to establish the right projects, putting those projects in a way that banks and capital markets investors can analyze them, but also setting up the right framework within their countries to mobilize private sector. So that means the right legal framework, the right regulatory framework. And then lastly, for me, having spent most of my last 18, 20 years working in the emerging markets before I stepped into a specific role on the ESG side, is really working more closely in partnerships with the development banks to leverage the capital that's coming in from banks and capital markets investors. And that can be done in various different ways, which I think is not fully utilized now. So really an encouragement of developing markets to leverage the private sector more to galvanize more funds towards emerging markets. And I think that's a good first step in bridging the gap. Fantastic. And thanks for your submissions, Claire.  And off the back of the question that I asked, Claire, where do we go from here? I'd like to just give you some bit of context. Let's add in COVID into this perspective. The pandemic has had perhaps the biggest impact on all faces of life, as we know it the past two years. I think the world and the human community has faced unprecedented challenges from where you see it, of course, looking at the impact of the pandemic. How does that complicate efforts? And how then and what then would you recommend as mitigation measures? Well, thanks a lot for the question. And I must say that I, actually, I very much agree with what Claire said. But it is true that we start from the point where the COVID crisis is not over. And actually, it is not over for also one reason, which is that vaccination is making great progress in the North and not in the South. And it's not only a question of solidarity. It's a question of level of ambition for development, for the SDGs to be achieved, to make sure that vaccines are also getting to the South. And that's one good example that I would like to mention. We have been very active in an initiative that is called COVAX, that is done with GAVI, the Global Alliance for Vaccines. And with COVAX, what we are going to do is to do a big loan to EID to GAVI for GAVI to provide an equivalent of one billion euro of doses in sub-Saharan Africa and the neighborhood of Europe. And that is actually quite important also for very reasons. It is important that people get vaccinated all over the world. It is also important that we find innovative ways to finance that. And this is very innovative because what we are doing basically is monetizing commitments of countries who are going to give money for providing vaccines, but they need a lot of polarization from the parliament, etc. And what we are doing with our friends from the European Commission is to pre-finance that and to take the risk that it is not going to happen on time or in full. And that is a very important initiative, also provides solidarity with our friends in Africa and Europe's neighborhood. And that is the basis for making sure that the next step comes, which is recovery and getting closer to the SDGs. And what I would say also is in this, there is also something very big that has changed. Well, actually on COVAX, one last word, it actually touched upon five of the SDGs also. And so it is not completely unrelated to SDGs. What I would like just to end with is never forget that the recovery and getting closer to SDGs will not happen if we don't provide a green recovery. And developing green projects, green investments, making sure that we can have financial institutions in emerging countries, also developing green bonds as it is the case in advanced economies. This is the kind of projects that are going to make us closer to the SDGs. Fantastic. And we'll revisit some of those interventions that you've mentioned here briefly. Let me just bring it into this conversation. We've seen, like I said, COVID has had unprecedented impact on efforts. But from where you see the development was, could you paint a picture of how many steps this has taken you back? And what kind of interventions do you propose? Thank you, Mane. So let me add to my fellow panelists by saying, yes, the COVID does make the fact that this could be a lost decade for development. So we have to fight harder. We have to do more even to make sure that the destinies remain in the hands of the countries. So in that context, let me just say that the UN Capital Development Fund, we look at the 46 of the least developed countries. So within the emerging markets, where my colleagues on the panel are working, we specialize in the 46 of the least developed. And there we continue to work harder to make sure that we can overcome these impacts of COVID. And the way we work is we are a hybrid development agency and a hybrid development finance agency. And this is needed in these markets. So what we are doing is we provide an investment continuum. And we developed the pipeline of deals that Claire talked about. So I would say at the moment, we would have about a billion dollars in deals to offer in these countries. And we work for the UN, we are really working with our member states, with the countries to provide those deals. And when I mean the investment continuum, we start with grants and technical assistance in sectors like digital and local infrastructure, municipal infrastructure, to make sure that there are deals and pipelines being developed. And we help seed those projects and those companies, those entrepreneurs. And then we go on to giving them loans and guarantees from our own balance sheet so that then they can enter the credit markets, the domestic and international credit markets. And finally, we have partnered with funds such as bamboo impact fund for an SME fund, blended fund that we've created in Luxembourg that will invest in the LDCs, the least developed countries, and with other partners like Meridium out of Paris, where we will invest in municipal projects into these countries. During the time of COVID, we accelerated our work. So we've created in technology systems that can issue sort of challenge grants. And that will bring more entrepreneurs into our system. And we made sure that we continue to provide funding and assistance to the entrepreneurs during the time of COVID, sometimes helping them look at their business models, sometimes helping them with special needs, such as making sure that the women entrepreneurs have access to funding from us and from others. So very much, it's a very key time to look at these markets, make sure that that equality is established with Ambrose mentioned, because we won't get over COVID unless there's equality and development across the world. Right. Thanks, thanks pretty for that. I mean, and from just listening to you, obviously, there's a whole lot of work that is still ongoing. But also what comes to my mind is that on because of the onset of the pandemic, it means that we have to recalibrate. We need to relook at some of the goals we had and some of the ambitions that we had and try to reposition them, obviously in the wake of the fact that we are hoping for a post pandemic world. Let me bring back Claire by asking this question then. Claire, what are some of the changes you want to see? Or we could call it leak calibration or refocusing our ambition in terms of the quest to achieve the SDGs on account of all that has happened. What is this change that you're seeing? Yeah, sure. I mean, I talked a little bit about that and I think pretty goes to the heart of it, right? There needs to be sort of a front end work done with the governments, with the infrastructure of the country to put in the right framework to mobilize, especially private sector capital. That's something that usually takes a long leak time. And really, we usually look very much to the development institution to get that work done. And I think that scale and mobilize. I think there's still a bit of a gap in terms of many emerging markets understanding about how to access capital in the new environment where there's so much focus on raising capital in green or social use of proceeds format and setting up your framework to access that capital. We've seen through the net zero banking alliance and other commitments that the banks have made the insurance and pension agencies a very strong desire and the mobilization of capital towards that, but not the follow on of the frameworks that are in place to actually allow the private markets to deploy capital to these purposes. I think that really needs to happen. I think in addition to that, what Preeti touched on and Amboise touched on as well is the innovation and the tools with the development agencies to help the private sector mobilize capital. So things like guarantees, whether they're full guarantees, partial guarantees, things like joint blended financing where you might see the commercial sector taking the short end of the curve because that's more suited towards their regulatory capital requirements, their credit score cards and development banks lending at the back end, first loss guarantees, etc. I mean these are tools where you enable the private sector to come in and that is extremely important because once the private sector comes in, once the private sector does analysis on the sovereign, they look at it from a market position, they establish credit limits even if it's partial guarantee or fully guaranteed structure. The limits and the understanding is now at that institution and then the first steps are there to catalyze a more aggressive risk taking in the future. So that's what I'd really like to see. Right and I've had a lot of talk about partnership in what you were saying and let me just step on that a little bit and perhaps I'll bring in Preeti and then I'll have Amboise respond to this as well. Yes, there's a big push for PPPs on the developing world as a solution to some of the problems that we're currently facing. However, we constantly and we need to agree that government needs to take the leading role in this. Preeti, from where you see what are some of the challenges that are standing in the way of government leading or convening some of its efforts? Wani, first let me kick off by saying that the World Economic Forum calls it the great reset. So the COVID might actually make us think about our capital markets just coming in to the previous comments and really talk about how that 400 trillion of the private capital can come into the development markets into the emerging markets to partner with the 150 billion of ODA. So in terms of the countries, this is really opportune. I'd like to invite everybody to join us on 23rd where we are hosting UNCDFA sovereign boroughs conference which is exactly about getting rating agencies, banks, experts into the room to say how can countries do reform so that they can get ratings, improve their ratings and be part of the capital markets. So hopefully that will address being ready fit for purpose for those flows of private capital that Claire mentioned. So in that sense, the role of government is to think about reform, to think about rating, to start building capacity so that they can be part of the global capital markets. And we try to work with them to help them do that, at least bring experts together, make sure that they have some access to that. The countries also would like more of that. The least developed countries we work with would like more advice on how to be part of the regulatory aspects for global capital markets. So we really work with the sovereign level and then we do another thing is to go down to the local government level. We feel the SDGs won't be achieved unless we look at municipal financing as well, because there you are closer to the problem.  And so municipal financing is another big area that we are focused on and subnational financing, but they have the same roadmap as the sovereigns that they need to reform, have the regulations so that they can play a role in the global capital markets. Right.  So obviously, we're seeing like it's a three thronged approach that needs to happen here with this government, this private sector, and this participation from the developing world. We've talked quite a bit about the government and the fact that they need to take the driver's seat. But let's talk about the private sector, because that's where the money really is. How do we catalyze this? How do we motivate them? How do we incentivize them to be part of it? Well, actually, as Preeti and Claire said, there is a lot of money that's divided. But it is a question of risk-taking capacity often with financial institutions. It is a question of also project development, as Preeti said at the beginning. And you need to put everything together if you want to be successful. And what we do at the Bank of the European Union actually last week, we have launched the creation of an entity that will be much more specific branch of the bank in developing development and in developing countries, because we think it is absolutely essential if you want to be successful, is a combination of things where you can bring the private sector. And let me just give you three examples. One, we do as Preeti and Claire made examples on this. But we at TAB, we have the partnership and the catalytic hole in our DNA. We never finance more than 50% of the project. So you need to find other 50%. And these can be public institutions like our development partners, but it also is a very open private sector. And what we have done, for example, in a project called CULIMA, CULIMA means Promoting Farming in Malawi, is to make a combination of along the supply chain of agriculture, of financing farmers, financing technical assistance to make sure that they can benefit from the best practices that can be found in the agriculture, and also providing risk sharing capacities to financial institutions, African financial institutions, so that they can develop also much more risk in this activity. Another example that I have in mind is an innovative facility that we have found with IFC, with Amundi, a European asset manager, to develop what? To develop green bond issuance by African and actually elsewhere in emerging markets financial institutions. So these financing institutions could facilitate the financing and issuance of green bonds because you have green projects there and they could be financed by green bonds and that can also enlarge the market for green bonds. So it's a lot of things that you can do to try to provide more capabilities for the private sector, and it's financing to make sure that they can increase the supply of money for financing projects. Right. Thank you very much, of course. And we just have a minute to go, so I'll afford each of you 20 seconds. And back to the question that I started at the beginning when I said, where do we go from here? And I said, I want you to answer, but perhaps in three words or anything that you could repeat in 20 seconds. Let's start with Claire, where do we go from here? I don't think I'd say in 20 seconds. I'm actually going to say one more thing before we close off is because I think we haven't touched on that, is the role of the regional banks and insurance companies in getting us to the next step as well. So I think we've seen entities like Africa Trade Insurance, like ISIC, which is part of the Islamic Development Bank, also supporting the catalytic movement towards sustainable funding. And I think, support whether it be through grant financings from the likes of EIB and other public institutions and the partnership with the private sector has also been key in sort of mobilizing capital towards the emerging markets. So I'd like, again, see more than I think where we're going from here. It is hopefully greater partnerships between private and public sector to help mobilize capital to EM. Fantastic. Ambrose, in three words? In three words, one word, partnership. More partnerships. Fantastic. Pretty. Human development and planetary welfare in the capital markets. We need to see capital markets of value and shape and the prices into the markets. Great. Fantastic. And we will be getting back to those thoughts, discussing them at a deeper level. I thank you very much, my family, for being so candid and sharing your thoughts with us.  And the question I have for you, because I want to get a poll on this, is right on the screen. Will the world achieve the SDGs by 2030? That is a question. And I believe we already do have some sort of answer. Let me just run through that very quickly. Maybe if we scale up our efforts, that's 71% of you. There's optimistic 14% that says yes, but only in a few regions. There's 25% to say no. The challenges are too overwhelming. And nobody actually says just yes. So we still have quite a pessimistic lot. But thank you very much for participating on that and continue sharing your thoughts with us, continue sharing your feedback on the chat box. Thank you very much for everybody who's written in. We do see the responses and the team here will ensure that we respond to all of them.


Welcome to the discussion series on free trade and liberalisation as part of the 1991 project at the Mercator Centre. I'm Shruti Rajagopalan and in this conversation series I will be talking trade with Professor Arvind Panagariya, who is the Director of the Deepak and Neera Raj Centre on Indian Economic Policies and the Jagdish Bhagwati Professor of Indian Political Economy at Columbia University. In the past, he has served as the first Vice Chairman of the Niti Ayog in Government of India and as Chief Economist of the Asian Development Bank. He's the author of a number of books, but for today's conversation in particular, we will focus on his recent book, Free Trade and Prosperity. Welcome Arvind. Hi Shruti, very pleased to be back with you. Thank you for joining us and talking trade and reforms. I wanted to talk today about a few aspects of protectionism as a continuation of our conversation last time. So in the last episode, you detailed some of the common arguments against free trade and for protectionism, especially in developing countries. Now I want to come to one of the most, to me, it's one of the most annoying arguments in favour of protectionism and against free trade and I am yet to see the economic logic of it, even though I've thought about it for a long time. There seems to be this implicit bias against imports and there is a bias towards exports, right? So everyone wants that we should import nothing and we should keep exporting, right? That's the idea and this is driven by some, I don't know, some kind of like basic misunderstanding of trade deficits. This idea that trade deficits are this terrible thing in any economy. It's going to tank the economy. We need to keep trade deficits low and always be insurplus. So that's one part of the argument and this keeps coming back. I mean, a very large part of this make in India movement which is going on right now. I mean, with 30 years post-liberalization and these arguments come back with a vengeance. So this just doesn't go away. I don't understand the economic logic that supports it or the fascination with it. So what exactly is this argument? And what is the merit if any? Why isn't this case closed once and for all? Yeah, no, no. This is absolutely right that this may, you know, so when you say what is the argument, there is no argument. So the answer is difficult to give. But one can try to explain why there is not an argument, but we can also come back to why. I think partly why it keeps coming is that somehow you think that when imports come in, they displace my products, that whatever is imported, I would be producing. And so then we can also, this is also the sort of fallacy, same fallacy runs through the import substitution argument as well, to which we can come in at the end, you know. But I mean, that's the sort of thing going on here. But to see how fallacious, how wrong that argument is, just think of the two options. One is that the country can import whatever it needs without having to export anything at all.  It would be amazing. It would be fantastic. So there's one option. You got the second option where the country kind of sends out exports and receives nothing in return as imports. So you can even think because you think that exports are good, imports are bad. So you say, all right, I don't want any imports, but I want to export. Well, put your goods on the ship. Let them go halfway into the ocean. Dump all the goods there. Let them come back. Now, on your books, these have been exported. So your exports would look very, very good. And you didn't want any imports in return anyway. So what does it matter if the goods got dumped into the ocean? You can see how foolish that would be. And no country would actually do that. And that's the point. That this whole idea somehow that exports are good and imports are bad is totally conquered because in the end you want to export so that you can import. The whole idea ultimately is to be able to export so that you can import. Imports is what you are seeking. And we always say in trade, we say that if you get a higher price for your exports, which will mean that for any given amount of exports, you get more imports. That's better. That's an improvement in your terms of trade. I work for Columbia and if Columbia raises my salary, that's a good thing for me. It's not a bad thing. I want more and then I can spend more. It's the same thing that if we can get a higher price for our exports, then we will be able to import more for that money, for those dollars that we get in return. So Milton Friedman once famously said, and he wrote it out, but somewhere in speech 3, this video exists somewhere and I remember watching it. He said that, look, exports once sent are gone. We can't eat, but imports we can eat. So he said we can't eat exports because they're gone, but we can eat imports. So once gone, they can neither be consumed nor used to produce any other products, but imports allow you to produce other products or it can be directly consumed. So that part, somehow this notion of exports are good and imports are not. It's totally wrong. I mean, is this because we used to have terrible capital controls? So the foreign exchange problem was really bad, which means the only way you could import anything was if you earned foreign exchange. So they tried to reduce the number of people who were spending foreign exchange and therefore encouraging people who were earning foreign exchange. In the Indian context, that seems to be the only sort of like, recent logic I can trace. It's very illogical. It's a bad autarkic system of a closed economy, but that's the only place I can even understand why someone would suggest something like this. On every other margin, I simply don't get it, but I have a few more specific questions here. So the first is you give this wonderful example of yourself, right? You are earning, you are in a perpetual trade surplus with Columbia, right? You sell them your services, you buy very few services from Columbia and you're in a perpetual trade deficit with West Side Market or Fairway, which is the grocery store in your neighborhood, right? And because you are constantly buying things from there every single day. Now, this is not a problem for you at all. In fact, the larger your trade deficits with restaurants and grocery stores, in a way, the happier you are because you're able to buy more. Why does this seem so logical at the individual level, but completely loses the plot at the country level? Why are we talking about trade surpluses and deficits at the nationwide level? That part of the argument, I don't understand. So now you are actually talking not about the aggregate trade deficit or surplus, but you're talking about the bilateral ones. So you switch to the bilateral ones. Before I come to that, something you said earlier, I just want to comment about how this in the Indian context, love for exports and hate for imports arose. But if you dig a little deeper, it is precisely because you're wanting to import that you want to export. They were encouraging more and more export because it was inability to import. So somehow anybody translating that to, oh, exports are good, imports are bad. I mean, you're right actually in literal sense. You're absolutely right. That's how it is sort of drilled into the citizenry. But it's really actually the deep down it's being drilled down because of the fact that you really desperately want to be able to import because even your normal production capacity doesn't get fully used because you're not able to import certain raw materials, inputs, components, etc. And so there was always excess capacity in production in India during the 70s and 80s because of the trade constraint. But it was not because imports were bad, imports were incredibly valuable. So now come to the... The bilateral versus aggregate, you are not in an aggregate trade deficit. But you are in bilateral trade deficits quite frequently depending on who your trading partner is. We don't seem to translate this individual logic that I just explained in your specific case. We translate it in a very bizarre way at the country-wide level. We want to reduce our imports from China seems to be the latest clarion call. So can you just walk us through what is going on here? And why is this a terrible argument? It's so harmful to have this bias against imports because imports buying components, buying cheap technology, having access to global production technology is what enables us to be happier consumers but also better, more efficient producers because it'll be an input in our output. So actually, import bias I find very harmful for the economy overall. So can you just put this in context for us because I just don't understand this. So I think things are getting mixed up here. You see what happens is that a specific case of India-China even perhaps what I'm going to say applies to the US-China because US-China is the same deficit problem with China. Well, first actually take back a little bit before I come to this argument. First of all, at the aggregate level you do care about the deficit because that's largely what defines your current account deficit and you don't want overly large current account deficit because that would mean that you're accumulating foreign debt at a very fast pace which can, if you're foreign exchange reserves are not good, if you're export are not vibrant, somewhere can create a crisis. Means there's a kind of 1991 balance of payments crisis we have had. So but nowadays after the 1991 crisis, this Reserve Bank of India has been very cautious and we have accumulated vast amount of reserves and all and it runs the current account quite conservatively. Anytime it goes beyond 2%, current account deficit goes beyond 2%, the RBI really kind of begins to worry about the exchange rate and all. So aggregate is fine. So therefore the issue is only the bilateral one. First of all, why this is happening? Certainly one part of this, the analogy of my personal life of surplus with Columbia University and deficit with everybody else is clearly applicable to the countries as well first of all. Because the whole idea of trade is that you buy your goods from the country that sells you the cheapest and you sell your goods to the countries that give you the highest price for your goods. That's how you do it.  It's the same. Generally they'll be different. So therefore you would run surplus with somebody and you'll run deficit with somebody and the central bank RBI will ensure that on aggregate your deficit is contained to a couple of percentage points of the GDP. So there is an optical illusion here obviously that you are complaining about the bilateral deficit with China but you're not complaining about the you're not seeing the fact that you've got a bilateral surplus with the United States.  I mean at the end of the day, RBI is going to worry about that keep it to one to two percent of the GDP. So that's not going to aggregate deficit is not going to change. You reduce imports, your exports will ultimately somewhere get impacted. But that we don't see. Now I think part of the political issue here is that there is a lot of protectionism is embedded in this that you see if the United States is having too many imports from China India is having too many imports from China those who are producing import competing goods they see that this is an opportunity to seek some protection against it. So that everybody if these large countries are importing so much from China without exporting them something is wrong in China. So it's the vested interest in the import competing sectors which would make the greatest noise that China is dumping. That they are dumping these products on us. They would not and then nobody this existence of subsidies etc. is very hard to verify. And China in any case is also you know after all it's a communist country. So you make these allocations oh they are subsidizing their exports and all and this is how they are competitive and etc etc. But of course you know if the subsidy was the really reason then you could have challenged them in the WTO those you know any kind of output or export subsidies that impact trade are challengeable in the WTO but we are not doing that. But even though basically if the Chinese government is subsidizing my t-shirts sitting in India I am not too upset about that. That's a separate point. But that's not the producer. That's not a producer concern that's fair. The producers couched it as dumping what is in fact very well and competitively priced goods. Yeah I mean the thing is that China is exporting that to the United States and to India because they are much more competitive in these products. I mean that's the point. But when there is this very large volume of imports coming from one country into India and into the United States also then you say oh there is something wrong in the Chinese economy that they are doing something you know which is unlawful. And so that becomes the you know then you start focusing. Now that's one part of the story. The other part of the story of course is that any country seeking concession with the country trade concessions with the country that is exporting a lot to it is in a good position. I think it gives you a handle.  I mean that's what the United States says. They even start fixing the actual quantitative targets that you know this is like the voluntary exporter. You know voluntary sort of incentives to import more from the United States. Yeah and also other aspects which are not trade related like intellectual property and things like that. You also have better position to negotiate other things you may want. Human rights or you know better safety codes and you know treatment of workers or intellectual property when you're a very large importer from one single country. So what do you mean? So to some degree this bilateral deficit gives you a handle. That part is okay. So if India wants to use this it's leverage of this large trade deficit with China to get some concessions out of China. That's okay. I think you know that countries do that. That's a strategic. That's a more strategic move and taking advantage of it. But as far as economics of it is concerned beyond this strategic advantage you want to exercise I don't think there's anything wrong at all with the bilateral deficits with one set of countries and bilateral circumstances with another set of countries. No but I mean why is the unit of analysis always the producer and not the consumer. This is a very big problem I have when we talk about this bias against imports. So the bias against imports is really only talking about two out of three parties. One party that it's talking about is the producer. The second party it's talking about is the exchequer because they want larger revenues that come in if there are higher tariffs. There are very few producers usually in any economy the very large number of consumers and this import bias enormously disadvantages consumers. So if you have 20% tariffs on cheap Android Chinese phones it's going to really impact Indian consumers and it's going to impact the poorest consumers the most and this just seems to be missing from the overall discussion. Usually the arguments that economists like you and I give is yeah it's going to disadvantage this group of producers but cheaper inputs means that other producers have cheaper components and cheaper inputs and they can be more productive. But what about the consumer that's all of us. Trade economists always actually take the side of consumers I would contest that that's what we do. Trade economists are the only players in the game who appoint themselves actually to speak for the consumer. I don't just mean trade economy. I meant sorry I should have been I should have clarified I meant the people who are peddling this import bias. Yeah I mean that goes back to the political economy of it that producers are better organized consumers are almost unorganized completely. So therefore the consumer interests are not represented. Otherwise I think I probably said this before Henry George wrote it the best. He said that look we are calling this protection but who are we protecting here? The buyer wants to buy it the seller wants to sell and then the government steps in say I'm not going to let you buy who is being protected here. The seller is not being protected how is this protection you know. So but this is the age old problem you know that the fact that in the political process consumers producers are always much more dominant players than the consumers are. So which is why as I said you know the trade economists are the self-appointed representatives of the consumers and they are the ones who go and play for you know a very good example on the Indian context which also somewhere I mean I said before but is the mobile revolution that took place in India during the 2000s you know. If India had high protection high degree of protection that mobile revolution you know within a span of eight or ten years produced a billion mobile phones in the hands of the Indian citizens would have never happened never happened. So in that case it's very visible very visible and certainly you know the protectionism we are doing right now against the smartphone for example that would impact the access to the smartphones you know so many people who would buy low-end smartphones would stay for a while with the feature phones. But you know even more basically the import bias being more about the producer than anyone else a few years ago I was in Mumbai during the Ganpati festival right and you know there is a demand shock for Ganpati idols during that time because every home will get one and then they will of course dissolve it you know in the sea and that's the ritual. I everywhere you go in Mumbai shops will have these Ganpati idols and that year I asked them who is making these and they said ma'am they're all imported from China right. The Chinese entrepreneur is aware of this highly local cultural festival is able to make these idols that can actually satisfy human taste is able to do it better and cheaper and most Mumbai families at this point apparently have access to a Ganpati that is produced in China right. To me this doesn't seem there was some outrage over it while I was there but to me this doesn't seem like it's hurting anybody right like in general one would assume that the more families who could afford a Ganpati idol simply to dissolve in the sea a few weeks later the better if it's too expensive fewer families might be able to engage in it. So this is the sort of thing that I always think about as an example where if the importing sorry the exporting country from which India is importing can actually make something so culturally specific better and cheaper then perhaps we should let them do it. Well I mean I wouldn't say that nobody is hurting right because the producers who could produce otherwise those idols are the ones who are hurting right I mean so it's again goes back to the producer interests consumer interests are better served obviously by the imports I mean it's not limited to the Ganpati statues there are Raki is there a kite you know Patan you know there all this which are all cultural products but but we have to sit back rather than slap these anti-dumping duties etc on the import from China we need to sit back and say what are we doing wrong and that this is happening you know why are our producers not able to compete I mean what it is about. What are the relevant constraints that we can't produce at scale and produce so cheap. The moment you say I'll provide protection then basically you have said okay you know you have a handicap but live with the handicap I will just smooth out the highway for you but simply not letting anybody else enter on the roads. Now related to bias against imports but a separate argument in itself is import substitution right this is the big one when it comes to trade protectionism for developing countries and import substitution policies were you know absolutely the mainstream prescription especially post-world war 2 for developing countries so you know free trade is a luxury that only developed economies can engage in and afford and developing countries must have import you know substitution policies and this was sort of the idea. Now what is the reason that this became the orthodoxy post-world war 2 and now you are seeing import substitution arguments return right anytime there is a crisis like the global financial crisis or now the Covid pandemic crisis import substitution just comes back in a big way in all the arguments you know in policy circles and newspapers and so on. So can you tell us a little bit about the original argument as a prescription for developing countries in the 50s and 60s and is there any merit in returning to import substitution policies as India is attempting to do now? Okay so you are absolutely right this is a very omnipresent kind of issue you know historically or contemporary wherever you look you know this in one form or the other it keeps coming back. Of course the older argument was as I discussed mentioned earlier you know resulted from this export pessimism that the primary products is what these countries will export and you know but that argument is now out of the window because the Koreans in Taiwan showed us that you know you can export manufacturing products the labor intensive manufacturing products from the beginning you don't have to and there is no elasticity pessimism issue associated with that so that was primarily academically at least when India's context was very different which we will come to in some future episode right you know so I will not touch on Indian context which is actually quite dramatically different. Now you know the arguments that why this has such such an appeal one is of course that you know when you are importing something demand is important that it's there you know when for example even today when smart phones are being imported or future phones are being imported you know that there is domestic demand for it and so there is no uncertainty anything you know you don't know where who is going to buy this there but here you know that you got your buyers here and so that makes import substitution attractively you know why are we importing we can produce it at home so it also insights nicely with the nationalistic kind of you know that why are we the examples you mentioned Ganesha statues all things like Iraqis etc even more kind of in that direction that these are our cultural goods you know why should we so there is that demand certainly which is very important also I think you know ministries like to demonstrate success and what is the easiest thing to do to demonstrate success well if demand is there you know just keep out the keep out the imports you can easily demonstrate success I mean you know even in the Indian context I remember I'm sure you also must have noticed that our previous minister for the IT Ravishankar Prasad love to go out and say that you know I have created this new 200 many or some very large number of manufacturers of mobile phones right so there was a he would sell it as a huge success you know but I've never heard anybody you know bragging about export success that they have produced in the Indian context I can't I can't think of anyone where you would say you know export successes are not defined by the policy guys the export successes are our IT you know software very early success that happened that was not the success even the government said that we actually created that success I'm sure government played some role somewhere but largely we always see that as you know success with entrepreneurs etc but import successes we all claim auto industry we make a claim you know because we provided the protection so for ministries right also it finds traction politically because the damage that import substitution does and this is you know old point made by Frederick Bastiat you know where he said that the good that protection does is apparent to the naked eye but the harm it does is spread throughout the economy and can be seen only by an expert I mean and so you know this reduced exports which inevitably happens when you reduce imports is too indirect for others to detect so you only see the benefit side of it you don't see the cost side of it and in fact the cost side is higher than the benefit side and therefore cost benefit analysis is against import substitution but you just don't see that cost side and so that also makes the import and I mean the politicians is also this belief that they can simultaneously reduce imports and expand exports is also then this also gets size into you know imports are bad and exports are good etc. but you know we all know if you look at the data that there's no country that has reduced imports and did not reduce exports I mean it may happen but if you look at the long term trends export and import series move together take any time period any country you know this isn't kind of practically practically iron clad role and the flip is also true the more you export the more you must import import yeah I mean I sometimes say that you know they if you compare India and China for example in the 2000s and later India's export response was much weaker than the export response that is happening in China they often said this that look part of India's problem is that the import response has been very muted that when we open to trade we went from complete prohibition on trade almost I mean you know effectively right in a prohibitive barriers to relatively open right by 2007-08 the top tariff rate had come down to 10% with some exceptions and yet imports didn't expand as much yeah you know and if had the exports imports expanded simultaneously exports would have expanded as well so I often attribute actually the muted export performance to muted import response import response so but these are the factors you know which explain why the import substitution remains an attractive thing and even you know people who otherwise believe in trade often you know fall for it they fall for it and now historically if you look at it you know what is currently happening in India is to some degrees similar to what happened in the 1970s in South Korea right you know the economy imports grew because exports grew imports grew and by 1973 imports had become large enough that the policy makers said that yeah we can produce these things at home why are we importing and with us it is similar thing has happened now that imports did grow I mean at peak imports had become about almost 30% of the GDP compared with 10% in 2001 yeah and so policy makers thinks that oh this is a large amount why am I importing I can produce them at home and they also think that this is a net addition to GDP whatever I do because they don't see the negative effect that simultaneously happens on exports and that is the problem so they just think that by adding this I am actually adding to the GDP there is no subtraction happening it's only addition that is happening and it's that kind of and they confuse the political entity with an economic entity right the economic process is global it's deeply intricate right it's highly decentralized who is producing what how they are competing on price how there's a new producer an entrepreneur in a new country who might suddenly provide you something cheaper but the national entities remain the same so the way the policy makers think about it is us versus them in a country sense without thinking about producers and consumers as just you know individual firms or individual entrepreneurs who might be doing a very intricate global social cooperation in some sense right right right but you know there is another sort of fallacy that goes which enhances this import substitution and that is not understanding the massive protection the import substitution of financial providing and so let's take this example you know this goes back to our old idea of the effective rate of protection as opposed to the nominal rate of protection and so I want to take a little example and explain you know exactly how this kind of this protection gets so under stated actually when you look at the tariff rates right so think of the mobile smartphone you know some smartphone let's for simplicity think of this that it costs 100 dollars to import it right and the smartphone sort of is made of large number of components which account for about 90 dollars part of its cost so you can if you import this under free trade let's say if you import smartphone you can get it for 100 dollars and components themselves if you were to import only components that will cost 90 dollars so then any local manufacturer who can assemble the components for 10 dollars or less can effectively compete with the imported smartphones right so there is this margin of what 10 dollars for assembly per smartphone that is available to those and anybody who can carry out that activity can compete now suppose the government says that well you know there are all these massive large number of smartphones being imported why can't you manufacture them at home so let's give some modest protection to the domestic producers and say we'll give you know we'll impose a 10 percent custom duty on the imports of smartphones right so it may look like okay 20 percent there's not such a big deal you know but just think what happens now the price of the imported smartphone has gone up to 120 dollars yeah smartphones can still be imported at 90 yeah so the margin between the 120 and 90 has now gone up to 30 dollars yeah so now previously under free trade you had to be so efficient as to assemble the smartphone in just 10 dollars per unit of cost yeah now you can do up to 30 dollars yeah right so the protection is now 20 percent protection on assembly activity is 200 percent it's a 200 percent protection and so you are encouraging massive inefficiency here that anybody you know so no it's no surprise that when you do this kind of derivative very large number of manufacturers come in you know anybody I mean look you know even you and I could sit down and assemble a smartphone for that kind of margin right you know you got 100 percent advantage over the best competitor so and so you are not going to get these super efficient and super predictive assembly manufacturers you are going to end up with actually all these inefficient guys you know think that as long as the protection remains we can survive yeah and so this is the damage right and now that's the one that's the one problem right but it compounds because so the mobile industry becomes vibrant it comes in and all and then at that the politicians and the government all of them have the look you know we created a mobile industry that hardly existed we have done it and so now we have to increase the success so now which means let's have more value added so let's you know extend protection to maybe half of these components right so you say I'm just taking an example so you take half of the components you say slap a 50 20 percent duty on these components now the 10 percent duty on those components ends up adding about what $4.50 to the cost yeah so what was importable for $90 now becomes $94.50 well I have cut the no sorry it's 20 percent duty right so it's $9 it's $9 of duty so from $90 you go to $99 well $99 and $120 the gap is now reduced to $21 yeah what will happen to all those assembly fly by night assembly manufacturers whose cost was between $21 to $30 for mobile phone they are all gone either that or you increase the protection to the final mobile import usually the latter because they lobby for it well so and once you are becoming a manufacturer you become more credit or you create an employment right I mean that if you if you don't do that then you will create an employment so the government is also sympathy is okay 20 percent will go to 30 percent so this cascading happens and then more components are protected more protection at the top level at the final stage so either this cascading or so you are really adding all these costs now very I mean this this obsession also with value added for units is so misplaced right so misplaced because now if you do this this kind of protectionism and increase the value added you think that finally assembly finally assembled smart phone will be competitive yeah even here you will have to you know raise just to offset the impact of this 20 percent duty on half of the component imports by 9 percentage points so 20 percent will have to go to 29 percent so the mobile phone your domestic guy is producing mobile phone at 129 dollars and then if the other components are also done then you have to read it put another 29 percent and so it goes to 38 percent and so $138 who is going to buy in the global marketplace what is available for $100 for $138 you will never capture the global marketplace you are never going to do that so this obsession with high value added per unit is so misplaced because anybody can manufacture entire 100 percent value added product of anything you can produce an aeroplane 100 percent domestic value added but it's only the captive buyers at home who can buy it you will never capture the global marketplace you have just described the Indian auto industry start to finish it is exactly they can't so this is why the 1 percent they hardly have even 1 percent share in the global marketplace my favorite example here is particularly with respect to this this obsession with value added per unit I mean look at China iPhone supposedly 1600 different parts to it current supply chains are spread over about 200 different firms which are spread over 43 different countries and China has total value added in its iPhone of about 10 percent yeah but it's 100 million plus iPhones yeah that's a lot of total value added you can produce the 100 percent mobile phone smartphone in India all parts components everything homemade but how many buyers are you going to get not many so total value added is constrained by your domestic market which is also domestic market at that very high price yeah even domestic price at $138 for a $100 smartphone will shrink yeah and you'll never get the global marketplace so what did you achieve total value added along total value added you lost out whatever you gained on per unit value added now this problem actually has now become much more serious than it was perhaps in the 60s and 70s because the transportation costs were high yeah right so you had a comparative advantage in let's say clothing and so you could have the entire including fabric or including fiber etc maybe you could produce because price crossing you know that importing fiber importing fabric etc will add to your cost because transportation costs are so high yeah but today transportation costs have really plummeted yeah and then production processes have become more complex also yeah but at the same time it has also become much easier to break up the production process into many more I mean this breakup existed before and you gave the Adam Smith example of the you know making a needle etc so this specialization along different parts of the existed before but today it's much more yeah so this breakability of the production process put together with the very low transport costs has meant that the suppliers have got much more spread out each activity is undertaken by the one who can do it the best and that one takes most of the global market yeah so you so you don't work on value edit per unit but you act on total value edit even if it's in very small number of components there is what you need to do so if you know today India's comparative advantage largely lies in labor intensive activities they capture all the assembly activities for example or capture some very labor intensive things that can maybe services whatever it is and get the labor intensive exactly and spread it and take over the entire global marketplace rather than doing everything more value edit now whether it's true I have not verified but like our PLI scheme the production link incentive scheme at least somebody was telling me so I have to check this but if it is true then it is really fatal because saying that you get this incentive if you produce 80% of the value added domestically that's a surefire recipe that this anybody who takes advantage of that subsidy is not going to be competitive in the global marketplace I mean it's a double whammy for the country because also this subsidy in many cases is being provided for highly capital intensive industries so if you do find some takers what you are doing is you are massively kind of moving capital which is a very scarce factor relative to labor into these highly capital intensive sectors will create no jobs actually there is more I think it's triple whammy so you are providing these subsidies at the cost to the taxpayers that's one problem the second is the Indian consumer pays far more for a car or something that has similar protection then they would pay if they imported that car or compared to the global consumer and the third is the Indian manufacturer which has been completely coddled into becoming not competitive and is not able to export in the global market so it's multiple whammy it's not just double whammy and the scarce capital being utilized so there is so many distortions that are being created this is actually an incredibly incredibly helpful exposition on the import so there is something in India called phase manufacturing program PMP it is a favorite of our bureaucrats and this created massive problems I gave you earlier that tube light example that was exactly the phase manufacturing program that will give you license to produce provided after four years you also source the components that go into tube light from home from domestic suppliers this is the PMP and it didn't succeed at all actually what happened was the quality of those domestic tube lights only went down because the local guys whatever quality parts they manufactured the fellows had to buy and so therefore the quality of the tube lights that were manufactured was very poor also multiple failures of that program that happened but that has been not resurrected you can hear Piyush Goyal talking about phase manufacturing program you could previously I remember the Hasmukh Aadiyah who was the revenue secretary was talking about this phase manufacturing program as if 20 years 30 years passed and we are completely over asleep and suddenly woke up and say oh we have to do phase manufacturing program again it's it's tragic I mean no and it keeps coming back this is actually by I can't even imagine how frustrated you are having worked on trade your entire career but for me each time I read these arguments in popular press or when ministers are talking about it I just I just feel so like frustrated and annoyed because it feels like this is settled we understand this as economists but we haven't managed to communicate this you know more generally and of course there are all these political economy issues of consumers not being able to collectivize and organize and producers being able to do that and you know so on so forth you know on frustration let me say no frustration here because there are so few of us who are making that case and yet it's not so bad we didn't actually score pretty good success it also means our jobs are not going to be obsolete or substituted any time in the near future for sure if protectionism doesn't go away then trade economies will not have to go away that's true but I think one needs to see some successes and I think you know we have scored quite a bit of success actually these reversals do happen will happen and all and sometimes you know you get a big win which cuts through the seen and the unseen problem you know like the big bang liberalization that happened in 1991 you can really see everybody can see the benefits of that kind of opening up so there are these nice wins that sometimes become very seen and can you know help propel other arguments right but not just 91 continued very similar actually very similar mutually reinforcing the insolvency in bankruptcy code the GST third your labor law reforms and fourth your corporate profit tax knocked down to 17% and 205% for the rest these are very mutually reinforcing reforms you know it could be really the benefit could be multiplied yet more if we also work on trade side because and also streamline those reforms right GST can be streamlined that's happening a lot of IBC also needs to be some streamlining and all but that's a constant the whole big thing has happened there will be bumps on the road you have to clean those up I mean GST the bumps for example have been cleaned up which is why you are seeing this massive expansion tax revenues the GST platform was working very poorly earlier but that has been sorted out and people like you know the public finance experts going there he says that you know this GST revenue will go up a lot more I actually think the revenues will go up the more we simplify the GST structure you know this rate proliferation that has taken place for various political economy reasons I think that needs to you know really come back down I recently there is also outstanding issue bringing the petroleum products into the GST but look you know India is a very difficult country and today of course you know we have seen from what they had to finally be back down on the farm law reforms you see they agreed to repeal them so the reforms don't have a linear path they go so I want to move on next to this idea of coordination externalities right this is one more externality argument in favor of protectionism if I understand it correctly this is basically Rosenstein and Rodan's work this is mostly in Eastern Europe but it argues that the government needs to engineer production of many items simultaneously rather than focusing on a single item and here there is a question of externalities that can propel processes not just the goods so this is the rough model of course this is in the context of while Soviet Union and then transition economies some of these models what is this coordination externality argument and does it have any merit for having any kind of trade protectionism? So Shruti you know this is one argument where there is absolutely no validity to it for protection it may be validity conceptually for some kind of intervention but for protection it has zero validity and it's very simple I'll tell you take a very very simple example it's a very simple example that you need to brush your teeth you need brush and you need toothpaste now suppose I can make a toothbrush but it will sell only if you produce toothpaste if you don't produce toothpaste then my brush is no good but of course if you produce toothpaste and I don't produce toothbrush then your production of toothpaste is no good it's not going to get anything so there is a coordination failure problem and if the government steps in and incentivizes each of us to produce it promises that if there are any losses I will recover I will cover all your losses then each of us produces and there are no losses that are happening and the government really actually doesn't have to spend any money on covering either your losses or mine and the problem is solved right but not think about the possibility of interaction trade if toothpaste can be important I can go ahead happily produce toothbrush and toothpaste will be imported and problem is solved so in fact protection will precisely be the wrong thing to do in this case because it is going to hamper it will in fact what can be coordinated internationally will fall out of coordination so that argument was actually originally Rosenstein Rodin made it was entirely in the context of a closed economy and to apply it in an open economy is actually completely the wrong argument so this argument Danny Rodrick again here is the one leading the charge and he makes this argument in the context of South Korea and Taiwan and all that coordination problem is what the Taiwanese South Korean government solved in the 60s and 70s now first of all for that he has to really assume that there are certain activities that require coordination that were non-traded that simply trade was not possible so certainly then it can't be an argument for protection because if you are assuming that the product itself is completely non-traded which is the only context in which coordination failure can happen then it's it's not a trade issue in the first place so the protection it certainly it may be argument for any kind of intervention it cannot be an argument for protection coordination in fact trade actually is what helps you solve the coordination problem I mean you know if you go back I'm old enough to remember the development literature was coming through and we had this literature the same kind of issue but in terms of balanced and unbalanced growth and balanced growth guy saying that so they was always worried about the demand side of it and all very much the Rosenstein and Rohnan style that look you know if you do certain activities all together then there is demand therefore for each other if you do a big shoe factory then you will pay these workers higher wages than what you are paying them in agriculture but what are these what are these workers going to spend these higher wages on because they can buy only a small fraction of the shoes that they are producing but on the other hand if you could make a massive investment and invest simultaneously in shoes, clothing other consumer products then they will have demand for each other's products and therefore you will clear the market that was Rosenstein and Rohnan's original argument but obviously it's assuming the existence of very large scale economies so that each of these activities has to be done on a certain scale because if they run on scale economies then there is no reason any entrepreneur could come in and produce because production costs are constant so you can produce all these different products in one one entrepreneur could do it and have a diversified basket of production and so it will automatically market will solve the problem. Today in any case with very large investors the big business houses even in the Indian context like the Ambani's and the Tata etc. very big business houses so they can actually solve the coordination problem right I mean in their context for example you want to produce an automobile now you need auto parts and you need all sorts of othercillary products which contribute to the manufacturing of the automobile. Of course if trade is possible then in any case you can import these but even if trade is not possible you know they get a piece of land which is 100 acres and then they put up everything that they need in one place so they manage to today large investors can solve but you know I have a more fundamental question here Adam Smith very early on in the wealth of nations right he tells us that the division of labour and the degree of specialization is going to be limited by the size of the market right so when he starts talking about the division of labour in the pin factory he's very clear that people are going to dedicate themselves to pulling out the wire in a pin factory 12 hours a day, day after day and engage in that kind of division of labour and specialization only if they are able to purchase everything else that they need right so if they can't you're not going to get that kind of division of labour so in this Smithian open economy free trade model you will get a lot of diversification if the trade is very limited right that is each person needs to produce multiple things and coordinate if the trade is relatively frictionless open and the size of the market is large then you can get very high degrees of specialization so to me it seems like it's endogenous to the model right there isn't an exogenous quantity of optimal specialization in any economy and therefore coordination right the assumption is I'm going to spend all my time making toothpaste only if I'm confident that we can purchase toothbrushes right otherwise the toothpaste won't be forthcoming in the first place what am I missing in this kind of Adam Smith you know free trade which endogenizes the degree of division of labour and specialization vis-a-vis these models that you just talked about where we're talking about coordination failures which need to be engineered I just don't understand why so maybe I'm missing some step or some assumption yeah I think you know basic point comes across in what you're saying right that you know if I'm an open economy then in fact I don't need to coordinate and I in fact want to specialize I don't want to you know and particularly if I'm not only open but I'm also a little bit small right and every developing country no matter population wise how large whether it was India or China in the 1950s it's a very small economy I mean if you look at till 1980 or so or the GDP in India was smaller than the GDP in South Korea and we used to sort of you know smugly talk about South Korea as being a quite small relative to us but the fact of the matter is the GDP of South Korea exceeded our GDP today things have changed you know after we opened up and also started growing so really if you're a relatively small economy which as I said all developing countries are when they start off then you don't want to undertake too many activities precisely for the reasons that Adam Smith very clearly laid out that you know you want to take advantage of the specialization process and you know import what inputs you don't produce and that is what really even allows you to begin to industrialize right if you're starting with assembly then you can import components and still assemble and get going so absolutely you know so this coordination argument is very strictly look I mean you know it's not a coincidence that Rosenstein Ronan was the one who kind of first wrote it out because he was a Polish economy. These are closed economies these are centrally planned economies where now instead of the market process you need an engineered process to do everything that the market would have naturally done endogenizing the solution to most of the problems that they've highlighted so this is actually as far as protectionism is concerned this is the weakest argument in fact it's not even an argument really you know well I'm happy we still went over it even though it doesn't have much merit in the literature because my problem with protectionism is these arguments never seem to go away you know every decade they come back in some random you know completely made up context in some industry gathering or some op-ed article and then everyone is gaga and say yes we are normally all for free trade but for the purpose of diversification or for the purpose of coordination you know now we need some kind of intervention actually this is a good point to set up our next conversation which we will start talking about India finally you know I think you've been very patient with us in explaining and laying the ground for arguments in favor of free trade and sort of walking us through the merits mostly demerits of arguments in favor of protectionism so starting in the next episode it will be great if we can now focus on Indian political economy and the history of Indian protectionism you know starting in colonial times and then continuing through Indian socialism and then of course the liberalization so hopefully we can continue this conversation in that direction and also touch upon the more recent reforms that you just mentioned we shall do that yes thank you so much as always have a nice day take care and I will see you in the next video bye


Hi everyone, Joe for jaspyscasebrakes.com coming at you with 2021 Bowman Chrome Baseball Hobby Edition 12 box hobby edition pick your team number six from jaspyscasebrakes.com all card ship a lot of great stuff in here Big thanks everybody right here Got into the action on a Thursday night Number break eight sold out Before six and seven just FYI we're six and seven are about to happen pretty soon See a little rooftop next to your name that means you won that spot in a filler So congrats to the winners. Thanks to Dan with last bot mojo Phillies 70% of the time last spot mojo hits a hundred percent of the time here is the case Bowman Chrome hobby Thanks everybody for getting in is there anyone here in in this break watching live There have not been a lot of cheers or jeers In the chat to the previous break. I feel like The people actually in this break are not here. All right, so there's four boxes here four boxes there And the 12 boxes right over here Good luck. Oh Dan's here. All right, Dan. Welcome. Good luck. Now Chad Da was Asking me before I started this video What teams I think are gonna end up With nine or so games left who makes the playoffs in both leagues. That's a pretty tough tough question These are pretty tight. Let's go. Let's go to uh standings mlb.com slash standings wild card Oh, yeah, this is we're getting pretty close here So the red sox look pretty comfortable with a wild card spot with the main wild card spot They'll be as it stands now They'd be playing for the they'd be playing the Yankees which would kind of be a cool wild card game, but right behind them Are the uh Are the Toronto Blue Jays a game beyond a wild card spot and the hot seattle mariners Who won seven out of their last 10? And five in a row sweeping the a's to overtake them in the wild card spot Now there's just two games back What do you think's gonna happen there everybody now Chad's a Chad dot is a mariners fan He uh, so I know what he wants So Toronto, I think they're starting a series against the twins The Yankees are playing the red sox all right And the mariners are playing the hapless angels And dano is looking for an alex bomb Big boys 007. Yeah, this is kind of an old school crew, right? Joe p was here too. Yeah, dano Joe p rex So we went back in time a few years all right Good luck everybody. Well any any thoughts on the al wild card? I mean the mariners happy that they're they're playing a divisional rival who might want to play spoiler, but Angels are not very good. Oh, this is very good. Pedro leon 29 out of 99 green chrome autograph astros Burke thomas got the astros in the filler Rated number one prospect in the international class That's pretty strong There's nick york speckle to 299 Now all card ship Ladies and gentlemen, so this goes to the red sox Burke thomas. It's got the red sox straight up Just in the interest of time I know i'm kind of sweeping through these a little quickly, but all cards will ship if I happen to miss anything Don't worry. All cards will ship I'll try to catch as much as possible out of 250 purple shimmer Yoelki cespis. Yoenis is half brother That's for the white sox joe christian And there's another Pedro leon Wow astros box right here for berg thomas Number one international prospect That's why the astros are priced the way they are It's alex thomas refractor to 499 for the diamond backs chris maxwell And box one in the books And i'll do an autograph recap at the end of the break And big boys LL 7 has the giants in this break big dave your giants Pretty pretty good Stun Far hands i80 definitely did an excellent job with that squad My cousins are giants fans And I got a couple cousins aren't pretty close who are giants fans They're uh They're enjoying it no one has thoughts on the al wild card I gotta think Okay, so chatting joe the blue jays play the yankees that started next week So prime opportunity for the m's to make up some ground Yeah, if the mariners can take care of business against the angels Yankees and red sox playing this week and they'll beat up on each other And if toronto stumbles against minnesota, that's that's a perfect window for the for the mariners To put themselves in a good position and then when they play the yankees the following week that should be huge Uh, who like what's going on who's doing it for the For the blue jays, I guess blad grow juniors been playing well Getting some I guess getting some decent starting pitching Or I mean for the m's that's the blue jays, but who's doing it for the for the mariners that is It's just team effort Yeah, toronto schedule looks pretty tough the rest of the way There's brandon shoemaker shimmer Kyle seager's hitting bombs There's tucker bradley for the royals That's for joe who won the royals in that team random hobby six Wow, kyle almost hit for the cycle the other day There's hasu sanchez to 50 Hasu sanchez for the fish that's going to be for joe parisi different joe p Mariners bullpen is pretty good, right? I don't know about their starters, but I know their bullpen is pretty strong speaking of the mariners. There's a refractor milcar pares For mark baset and the m's Yeah, m's bullpen's incredible saying chad That's what I mean that definitely helps Big boys all those seven things it'll eventually be the yankees. So I guess that yankees mariner series next week will be Will be the really exciting one to keep an eye on i'm sure that'll be on like mlv network For out-of-market teams a lot There's miguel belise For the red socks berk There's matt chatman to 499 speaking of the a's Rex would root for the giants just just because he wants to see chris bryant win a ring before free agency Or and or anthony rizzo Wants to see see some former cubbies Win some rings So i'm chad saying starters chris flexin Logan gilbert are great starters marco gonzalez has kind of figured it out I'm sure the major league baseball and the tv networks want to see boston and and the new york yankees in a one game wild card But I wouldn't mind seeing seeing toronto or seattle in there Yeah, I thought usai was going to be a bigger bigger International prospect for the mariners, but the last just hasn't really done it the last couple seasons Yeah, he had a rough start today too, I think So who do you start in a one-game playoff chad chad's a mariners guy In a one-game playoff who's who's on the bump? mariners deserve to make up for 2001 says rex Uh, I mean they'd have to win the whole the whole damn thing There's alexander mojica magenta shimmer or pink shimmer to 199 It's like major league. Well, I guess there's only one thing left to do What's that when the whole effing thing? I bleeped it out It's a family friendly show folks. There's Gregory Santos for the Giants big boys 007 and his Giants number 21 Giants prospect And there's jordan alvarez to 150 blue chrome for the stroze berk Chad says Chad says, uh, it feels weird to say but he would put chris flexin out there on a one-game Playoff have him start He would say logan gilbert, but he but he's still yeah, he's like he's a rookie. He's a kid. It's a big pressure spot I would start with a little more experience as well and then lean on the Lean on clutch hitting And that bullpen. Oh nice. This is the first dawn of glory auto. I've seen 66 out of 99 Daniel Mon, uh, montano. That's an on-card autograph. That looks really sharp Uh, that's nick with the rockies nick new in that's pretty sweet That's 66 out of 99 So a lot of a lot of uh, very pleasant colors back there.  There you go, david Yeah, you don't have to watch on tv. You don't have to watch showbook I actually don't mind joe buck doing football But I don't know this baseball just doesn't do it for me golf. Definitely not Sometimes he'll do the sundae golf For the us open maybe something No, not masters us open Yeah, I mean do the yankies have such had such a weird year. Do they even Do they even deserve A playoff spot.  I've had this conversation before I've had this conversation before and and I've had had some st. Louis cardinals fans say well joe buck's okay, but He gets a longer leash because of because of uh, who his dad is All right next box There's logan gilbert. We're just talking about him shimmer for mark and the mariners Yeah, I don't think yeah, joe if it's like a joe buck john smoltz combo in the booth Yeah, they don't they don't like the Dodgers. There's nick fraso Jorge mirror with the blue birds You know Dave david, I'm actually oh I'm actually more okay with a rod in the booth than I thought I'd be I think he's actually okay 11 at 25 clark schmitz speaking of the yankees donald with the bronx bombers My colleague thomas here at the shop big yankees fan He's been agonizing over that team all year There's brennan shoemake For the brave that's for vincent and the bravos purple chrome to 250 here in hobby picker team number six And there's a rainer santana for big boys 007 david With my rivals the giants number 27 Giants prospect And there's a louise rodriguez 136 out of 150 color match Mark beset with my Dodgers One of their big prospects coming up the ranks Deemed top venezuelan prospect among the 2019 international class This guy's supposed to be pretty good, too I mean, they're all prospects. It's bowman. We're we're prospect hunting. Who knows what any of these players are going to be like Even the more hyped ones But this is why we collect Well speaking of the Dodgers um What do you think is going to happen the the Padres helped out the Dodgers today Dodgers won an extras the Padres beat the Giants an extras the Dodgers are only a game back of the uh Of the Giants for the nl west Can the Dodgers win the division? I hope so Dodgers are playing if I mean Dodgers have to take care of businesses against the diamond backs They've got them for the next three or four games Giants are going to colorado And the Rockies actually played the Dodgers pretty tough. So maybe they're finishing the season strong that would be helpful And wacky wild and wacky things can happen in colorado the Giants drop a drop a couple Dodgers win a couple I could this that could be That could be one of those things where It'll come down to the last game. I could see that happening pretty easily Or it'll come down to the last game to see who wins the nl west Now the Dodgers or the Giants would be pretty locked into that top wild card spot um But who gets the second wild card spot man the cardinals have been just destroying lately they've won 12 in a row And they have got a four and a half game lead ahead of philadelphia five and a half game lead against Cincinnati six games ahead of the Padres Those guys aren't getting close unless st Lewis just completely goes goes oh for the rest of the season oh for their next nine or ten games So I guess st. Louis is locked into that second wild card spot It's kind of scary Or are they peaking too soon? What does everyone think there's a guilberto selestino react to me Anyone familiar with lee hacksaw Hamilton?