SCRIPT CHAPTER 6

International Trade Theory

Intro

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Câu 1: Mercantilism is a bankrupt theory with no place in the modern world. Discuss?

Ý chính: Trả lời:

●​ Elements of mercantilist thinking Mercantilism, which emphasizes accumulating wealth through trade surpluses and protectionist policies, is often considered
persist in modern economic outdated. However, elements of mercantilist thinking persist in modern economic strategies.​FasterCapital
strategies.
●​ The resurgence of tariffs under For instance, the resurgence of tariffs under President Donald Trump's administration reflects mercantilist tendencies. These
President Donald Trump's tariffs aimed to protect domestic industries by imposing import duties, thereby encouraging local production. Such policies have
administration. led to trade tensions and economic uncertainties globally.
●​ China has been accused of
manipulating its currency to
make exports more competitive.
●​ The challenge lies in balancing
national interests with the
benefits of free trade and global
cooperation.​
Moreover, countries like China have been accused of manipulating their currency to make exports more competitive, a strategy
aligned with mercantilist principles. This approach aims to maintain a trade surplus by boosting exports and limiting imports.​
 While mercantilism as a comprehensive theory may be considered obsolete, its core ideas continue to influence contemporary
trade policies. The challenge lies in balancing national interests with the benefits of free trade and global cooperation.​

Câu 2: Is free trade fair? Discuss.

Ý chính: Trả lời:

●​ Its fairness is a subject of ●​ Free trade promotes efficiency, innovation, and consumer benefits by allowing goods and services to move across
debate.​ borders with minimal restrictions. However, its fairness is a subject of debate.​
●​ Proponents argue that free ●​ Proponents argue that free trade has significantly contributed to poverty reduction. Between 1995 and 2022, the
trade has significantly percentage of individuals in low- and middle-income countries living in extreme poverty decreased from 40% to under
contributed to poverty
 reduction. 11%, partly due to increased trade openness.​World Economic Forum
●​ In India, economic
liberalization led to increased
income inequality.
●​ Therefore, while free trade
offers overall economic
advantages, ensuring its
fairness requires policies that
address its uneven impacts.
●​ Furthermore, the benefits of free trade are not always evenly distributed. In India, economic liberalization led to
increased income inequality, with the top 10% of the population holding 77% of the total national wealth by 2022.​
 ●​ Therefore, while free trade offers overall economic advantages, ensuring its fairness requires policies that address its
uneven impacts, such as social safety nets and workforce retraining programs.

Câu 3: Unions in developed nations often oppose imports from low-wage countries and advocate trade barriers to protect jobs from what they often characterize as
“unfair” import competition. Is such competition “unfair”?
Do you think that this argument is in the best interests of (a) the unions, (b) the people they represent, and/or (c) the country as a whole?
 In this context, "unfair" competition refers to trade practices that, while not necessarily illegal, create significant disadvantages
It is unfair for domestic workers. This includes situations where imports from countries with lower labor standards and wages lead to job
displacement and wage suppression in developed nations.​
1. Job Displacement Due to Imports
1. Job Displacement Due to Imports
2. Wage Suppression
●​ Between 1999 and 2011, increased imports from China resulted in the displacement of approximately 2.4 million U.S.
3. Disproportionate Impact on jobs, predominantly in manufacturing sectors. ​
Low-Wage Earners
2. Wage Suppression
Impact on Unions, Workers, and
the Country ●​ Trade with low-wage countries has exerted downward pressure on wages, especially for workers without a college
degree. Estimates suggest that expanded trade reduced the annual wages of a full-time American worker without a
(a) Unions​ four-year college degree by approximately $1,800. ​

●​ Unions support trade barriers

to protect workers from
import competition.​

●​ This helps preserve jobs and

wages in the short term.​

●​ However, it may reduce

overall economic efficiency.

(b) Workers Represented by Unions

●​ Trade barriers can offer
short-term job security for
workers in import-impacted
industries.​

●​ Consumers, including those

workers, may face higher 3. Disproportionate Impact on Low-Wage Earners
 prices due to less competition.​
●​ Low-wage workers have been hit hardest by trade with China, experiencing wage decreases twice as large as the
●​ Protectionist policies can average American worker for each $1,000 increase in Chinese imports per worker.
trigger retaliation, harming
other sectors.​ Impact on Unions, Workers, and the Country
●​ Retaliation may lead to (a) Unions
additional job losses in the
broader economy. Unions aim to protect their members' jobs and wages. Import competition can lead to job losses in certain sectors, prompting
unions to advocate for trade barriers. While this may safeguard specific industries temporarily, it can also hinder overall
(c) The Country as a Whole economic efficiency.​

●​ Higher Consumer Prices (b) Workers Represented by Unions

●​ Reduced Economic Efficiency
●​ Retaliation and Trade Wars For workers in industries directly affected by imports, trade barriers can provide short-term job security. However, consumers,
including these workers, may face higher prices due to reduced competition. Additionally, protectionist policies can lead to
retaliatory measures, affecting other sectors and potentially leading to job losses elsewhere.​

(c) The Country as a Whole

While protecting certain industries, trade barriers can have broader economic consequences:​

●​ Higher Consumer Prices: Tariffs increase the cost of imported goods, leading to higher prices for consumers.​​

●​ Reduced Economic Efficiency: Resources may be allocated to less efficient domestic industries instead of more
competitive sectors.​​

●​ Retaliation and Trade Wars: Other countries may impose their own tariffs, affecting exports and leading to broader
economic disruptions.​

Conclusion
From the "unfair" competition perspective, there is significant evidence that imports from low-wage countries have led to job
losses and wage suppression among certain groups of workers in developed nations. While trade barriers can offer short-term
 protection for these workers, they may also result in higher consumer prices and reduced economic efficiency. Therefore, a
balanced approach that includes support for affected workers, investment in competitive industries, and engagement in fair trade
practices may better serve national interests.

Câu 4: What are the potential costs of adopting a free trade regime? Do you think governments should do anything to reduce these costs? Why?

Adopting a free trade regime offers numerous benefits, such as increased market access and economic efficiency. However, it
Potential Costs of Adopting a Free
also presents several potential costs that can impact various sectors of the economy.​
Trade Regime

1. Job Displacement and Potential Costs of Adopting a Free Trade Regime

Industry Disruption
●​ Free trade increases 1. Job Displacement and Industry Disruption
competition from foreign
producers, risking job losses Free trade can lead to increased competition from foreign producers, potentially resulting in job losses in certain industries. For
in specific industries.​ example, the North American Free Trade Agreement (NAFTA) has been associated with job losses in the U.S. manufacturing
sector as production shifted to countries with lower labor costs. Studies by economists David Autor, David Dorn, and Gordon
●​ NAFTA is linked to U.S. Hanson estimate that competition from Chinese imports cost the U.S. as many as 2.4 million jobs between 1999 and 2011.
manufacturing job losses due
to production moving to
lower-wage countries.​

●​ Economists Autor, Dorn, and

Hanson estimate Chinese
import competition cost the
U.S. up to 2.4 million jobs
from 1999 to 2011.

2. Wage Suppression
●​ Import competition can lower
wages, especially in industries
 exposed to global markets.​

●​ Displaced manufacturing
workers who shift to service
jobs often face wage declines
of 6% to 22%.
3. Economic Inequality

Should Governments Act to Reduce

These Costs?

Yes, governments should implement

measures to mitigate the adverse
effects of free trade.

Recommended Government
Actions:

●​ Trade Adjustment Assistance

(TAA)
●​ Investment in Education and
2. Wage Suppression
Skill Development
Increased import competition can exert downward pressure on wages, particularly for workers in industries exposed to
●​ Environmental and Labor
international competition. Research indicates that displaced workers from manufacturing who find jobs in the services sector
Regulations
suffer a wage decline of between 6% and 22%.
●​ Social Safety Nets

3. Economic Inequality
While free trade can contribute to overall economic growth, the benefits may not be evenly distributed. Large corporations and
certain sectors may gain disproportionately, leading to increased income inequality within a country. The Economic Policy
Institute has claimed that free trade created a large trade deficit in the United States for decades, leading to the closure of many
factories and costing the United States millions of jobs in the manufacturing sector.
 Should Governments Act to Reduce These Costs?
Yes, governments should implement measures to mitigate the adverse effects of free trade. Such interventions can help ensure
that the benefits of free trade are more equitably distributed and that vulnerable populations are protected.

Recommended Government Actions:

●​ Trade Adjustment Assistance (TAA): Programs that provide retraining and support for workers displaced by trade can
facilitate their transition to new employment opportunities. For instance, the U.S. Trade Adjustment Assistance program
offers benefits such as job training, income support, and job search allowances to eligible workers.
●​ Investment in Education and Skill Development: Enhancing workforce skills can improve adaptability to changing
economic conditions and reduce unemployment resulting from industry shifts.​​

●​ Environmental and Labor Regulations: Implementing and enforcing standards can prevent a "race to the bottom" in
environmental and labor practices, ensuring sustainable and fair trade.​​

●​ Social Safety Nets: Strengthening unemployment benefits and other social programs can provide a buffer for
individuals affected by trade-related disruptions.​

Conclusion
While free trade can drive economic growth and efficiency, it also poses challenges that require proactive government policies.
By addressing job displacement, wage suppression, and economic inequality, governments can create a more inclusive and
resilient economy that maximizes the benefits of free trade while minimizing its drawbacks.​

Câu 5: Reread the Country Focus “Is China Manipulating Its Currency in Pursuit of a Neo-Mercantilist Policy?”
a. Do you think China is pursuing a currency policy that can be characterized as neo-mercantilist?
b. What should the United States, and other countries, do about this?
a. Is China Pursuing a a. Is China Pursuing a Neo-Mercantilist Currency Policy?​
Neo-Mercantilist Currency Policy?​
Neo-mercantilism involves strategies where a country seeks to achieve a trade surplus by promoting exports and limiting
Yes, China has at times pursued imports, often through state intervention, including currency manipulation.​
policies that can be characterized as
neo-mercantilist, especially in the Trade Surplus:
past.
●​ In 2024, China recorded a merchandise trade surplus of approximately $992.2 billion, marking a record high.
Trade Surplus

●​ In 2024, China recorded a

merchandise trade surplus of
approximately $992.2 billion,
marking a record high.
●​ A significant portion of this
surplus, $361.03 billion, was
from trade with the United
States.

Currency Management:

●​ China's foreign exchange

reserves stood at $3.2 trillion
in December 2024.
●​ The U.S. Treasury didn’t label
China a manipulator but
flagged its currency policy as
lacking transparency.

b. What Should the United States

and Other Countries Do?​

●​ Enhanced Monitoring and

Transparency
●​ Trade Policy Measures
●​ Multilateral Engagement ●​ A significant portion of this surplus, $361.03 billion, was from trade with the United States.
●​ Domestic Economic
Strategies
●​ Diversifying Trade
Partnerships

Currency Management:

●​ China's foreign exchange reserves stood at $3.2 trillion in December 2024.

 ●​ The U.S. Treasury's November 2024 report did not designate China as a currency manipulator but noted concerns about
the lack of transparency in China's foreign exchange policies. ​

⇒ While China's substantial trade surplus and managed currency policies exhibit characteristics of neo-mercantilism,
the absence of recent evidence of persistent, one-sided currency intervention suggests a more complex economic strategy.

b. What Should the United States and Other Countries Do?​

1. Enhanced Monitoring and Transparency:

●​ The U.S. Treasury should continue to monitor China's foreign exchange practices and advocate for greater transparency
in its currency policies.​
 2. Trade Policy Measures:

●​ Implementing targeted tariffs or trade remedies in response to unfair trade practices can be considered, as seen with the
recent U.S. tariffs reaching up to 145% on Chinese goods.

3. Multilateral Engagement:

●​ Engaging with international institutions like the International Monetary Fund (IMF) to address concerns about currency
practices and promote fair trade standards globally.​​

4. Domestic Economic Strategies:

●​ Investing in domestic industries, workforce development, and innovation to enhance competitiveness and reduce
reliance on imports.​​

5. Diversifying Trade Partnerships:

●​ Expanding trade relationships with other countries to mitigate the impact of trade imbalances and reduce dependency on
any single trading partner.

⇒ By combining vigilant monitoring, strategic trade policies, and domestic economic initiatives, the United States and
other countries can address challenges associated with China's trade and currency practices while promoting a fair and
balanced global trading.

Câu 6: Reread the Country Focus “Moving U.S. White-Collar Jobs Offshore.”
a. Who benefits from the outsourcing of skilled white-collar jobs to developing nations? Who are the losers?
b. Will developed nations like the United States suffer from the loss of high-skilled and high-paying jobs?

a. Beneficiaries vs. Losers Good afternoon, everyone.

●​ Beneficiaries​
 In recent decades, the belief that free trade benefits all participating nations equally has come under serious scrutiny.
Multinational firms &
shareholders​ During the 1980s and 1990s, we saw industries like textiles, footwear, steel, and electronics relocate from developed
countries to lower-wage economies. At the time, it was still widely assumed that high-wage, knowledge-intensive jobs—such as
■​ Bank of America: offshored software development and computer design—would remain anchored in places like the U.S.
~5,000 IT jobs → $100 / hr →
$20 / hr​ But that assumption is no longer valid.

■​ Flour Corp.: engaged 200 Major U.S. corporations have increasingly outsourced white-collar roles to emerging markets, where labor costs are
engineers in Philippines ( < $3,000 significantly lower.
/ yr ) → 15% project‐cost
reduction​ For example, Bank of America relocated thousands of IT positions to India, where the same tasks are now performed for
just $20 an hour compared to $100 in the U.S.
■​ Zoho Corp.: 20 U.S. staff vs.
>1,000 in India​ Companies like Infosys and Wipro now handle mortgage processing and radiological interpretation remotely for major
U.S. institutions. Even startups like Zoho adopt this distributed model from day one—employing just 20 staff in California while
○​ Developing‐country maintaining a workforce of over 1,000 in India.
professionals​
This trend presents serious challenges to advanced economies trying to preserve or grow high-skill employment.
■​ Infosys: 250 engineers
developing IT apps for Bank of
America​
So, who benefits, and who loses in this process?
■​ Wipro: radiologists interpret 30
The first beneficiaries are multinational corporations and their shareholders.
CT scans/day for Massachusetts
General Hospital​
They enjoy significant cost savings by relocating high-skill tasks offshore. For instance, Bank of America saved millions by
transferring 5,000 IT jobs to India. This enhances their global competitiveness and boosts profits.
■​ Bangalore chip designers:
~$10,000 / yr for Texas The second group of winners are workers in developing nations.
Instruments projects​
They gain access to jobs that pay far above local averages. Infosys engineers, Wipro radiologists, and Bangalore-based chip
Losers​ designers now earn far more than they would in local industries. Even architectural drafters in the Philippines and Poland are
now part of global projects.
○​ U.S. white‐collar workers​
 But not everyone wins.
■​ ≈5,000 IT layoffs at Bank of
America​ The losers include displaced white-collar workers in the U.S.

■​ Displaced software engineers, They experience job loss and increasing wage competition. In Bank of America’s case, nearly 5,000 American IT jobs were cut.
radiologists, drafters​
Also affected are domestic communities that relied on these jobs. These regions face economic decline and reduced tax
○​ Domestic communities​ revenue as high-skill employment moves abroad.

■​ Regional economic
contraction​
Looking ahead, the outlook for developed economies raises several concerns:
■​ Reduced tax base and
public‐service funding​ First, there's a risk of talent erosion.​
When knowledge-intensive roles are consistently offshored, countries like the U.S. weaken their capacity in fields like software,
finance, and advanced engineering.

Second, wage growth is under pressure.​

b. Impact on Developed Nations As companies substitute onshore jobs with cheaper offshore labor, domestic salaries stagnate or even fall.

●​ Erosion of high‐skill Third, some regions experience economic hollowing.​

employment​ Cities and communities that depend on white-collar industries lose a key driver of growth, creating long-term social and
financial impacts.
○​ Knowledge‐intensive roles
relocate offshore → Finally, reinvestment offers only limited relief.​
domestic talent pool Even when companies reinvest cost savings into R&D, it rarely offsets the immediate loss in local, high-value job creation.
shrinks​

●​ Wage‐growth suppression​

○​ Onshore salary benchmarks

undercut by lower‐cost
alternatives​
 ●​ “Hollowing out” regional
economies​

○​ Concentrated losses in
service/tech hubs →
community decline​

●​ Partial mitigation​

○​ Some cost savings reinvested

in R&D​

○​ Emerging hybrid/reshoring
models, but immediate
job‐creation gap persists

Câu 7: Is there a difference between the transference of high-paying white collar jobs, such as computer programming and accounting, to developing nations, and
low-paying blue-collar jobs? If so, what is the difference, and should government do anything to stop the flow of white-collar jobs out of the country to countries such as
India?

Distinguishing Between From now on, I’ll begin by distinguishing between blue-collar and white-collar offshoring—two forms of global labor
redistribution that carry very different economic implications.
Blue-Collar and White-Collar
Offshoring Blue-collar offshoring involves the physical relocation of manufacturing tasks that require factories and machinery. These are
not easily transferable without major capital investments.
●​ Blue-collar work requires
factories and physical In contrast, white-collar tasks, such as programming or medical diagnostics, are increasingly digital. Once broadband
investment; it's not easily infrastructure is in place, these tasks become highly tradable and no longer tied to geography.
transferable.​
While manufacturing offshoring created sudden and concentrated labor shocks—like those observed during the China
●​ White-collar work is Shock—white-collar offshoring tends to generate more fragmented and smaller-scale disruptions.
digitizable and tradable across
borders via networks.​ Because service tasks are often divisible and spread across occupations, the economic impact appears more like “ripples” than
 “waves.”
●​ Labor market impact:
Blue-collar offshoring causes
large, concentrated shocks;
white-collar offshoring leads
to smaller, more dispersed
disruptions.​

Labor Market Effects and

Consumer Benefits
●​ Blue-collar workers face
serious job loss, difficulty
finding similar wages, and
regional wage decline.​

●​ White-collar offshoring
lowers entry- and mid-level
salaries but creates domestic
roles in management and
supervision.​

●​ Consumers and firms

benefit from lower costs and
greater access to diverse
services and products.​

Should Governments
Intervene?
●​ Most OECD countries do
not restrict service offshoring
due to digital enforcement
challenges and
competitiveness concerns.​

●​ Strict restrictions could raise

business costs, reduce
innovation, and harm national
productivity.​

●​ Risk of retaliatory actions

and disruption to global
service networks.​

Alternative Solutions
●​ Strengthen social safety nets
and invest in lifelong
learning, especially in STEM
fields.​

●​ Support reskilling in areas

like data analytics and digital
project management.​

●​ Case studies: Cambodia and

Sri Lanka promote
formalization through
 business support, simplified
registration, and extended
social protection for informal Labor Market and Consumer Impacts
workers.​
In terms of wage and employment effects, blue-collar workers have typically suffered steep wage declines and limited
opportunities for comparable reemployment.

White-collar offshoring, however, mostly affects entry- and mid-level salaries. But it can also create new domestic roles in
Strategic Trade Policies & management and oversight, which partially offsets the job losses.
Conclusion
From the consumer and firm perspective, both types of offshoring reduce costs.
●​ Strategic trade policy:
targeted subsidies to support Just as offshored manufacturing lowers retail prices, offshoring services expands the availability of affordable software, design,
domestic service sectors; and back-office support. This increases both corporate profitability and consumer choice.
promising but controversial.​

●​ Conclusion: White-collar
offshoring poses unique,
long-term challenges. Blanket
bans are not effective.​

●​ Best approach: a balanced

mix of worker support, skills
development, and selective
industrial policy to maintain
competitiveness and job
quality.
Should Governments Intervene in White-Collar Offshoring?
Let’s now address a key policy question: Should governments intervene to restrict white-collar offshoring?

Currently, most OECD countries do not impose direct restrictions on service offshoring. Regulating digital labor flows is
inherently difficult and may even weaken competitiveness.

By contrast, policies in the goods sector—such as tariffs or export subsidies—are more established. But there’s no direct
equivalent for white-collar services.

Broad restrictions, such as penalties or bans, could backfire. They may increase business costs, suppress innovation, and
reduce the broader efficiency gains from global trade.

Even more concerning, such measures could lead to retaliation from trade partners and disrupt globally integrated service
networks.

Alternative Policy Responses

Instead of blocking offshoring outright, alternative approaches focus on adaptation.

International bodies recommend strengthening social safety nets, expanding lifelong learning programs, and improving
STEM education to help workers transition.

Subsidized training in areas like data analytics or digital project management can reduce adjustment costs more effectively
than protectionist measures.

We can also draw lessons from countries like Cambodia and Sri Lanka, which have integrated formalization goals into their
national employment policies.

Cambodia simplifies business registration, while Sri Lanka extends social protections to informal workers and offers evening
schools, apprenticeships, and subsidized vocational training. These steps help workers shift into formal, sustainable
employment.

Strategic Trade Policies and Final Thoughts

Some economists have proposed “strategic trade” policies—selectively subsidizing domestic service firms to help them gain
first-mover advantages.

While promising in theory, such interventions remain rare and politically sensitive.
 In conclusion, white-collar offshoring introduces unique challenges—not as visible or abrupt as blue-collar job losses, but
potentially more systemic in the long run.

Rather than blunt restrictions, the most effective policy response is a balanced mix:

●​ targeted skill development,​

●​ enhanced social support,​

●​ and selective industry incentives.​

This approach allows economies to retain high-value employment while still capturing the benefits of global integration in
the service sector.

Câu 8: Drawing upon the new trade theory and Porter’s theory of national competitive advantage, outline the case for government policies that would build national
competitive advantage in biotechnology. What kinds of policies would you recommend that the government adopt? Are these policies at variance with the basic free trade
philosophy?

1. Introduction – Theoretical Next, we will discuss how government policy can help build national competitive advantage in the biotechnology sector.​
To frame this discussion, we draw on New Trade Theory and Porter’s Diamond Model.​
Foundations New Trade Theory tells us that industries like biotechnology, which involve high fixed R&D costs, benefit from
economies of scale and first-mover advantages.
●​ New Trade Theory:​
→ Biotech requires high
R&D investment → benefits
from economies of scale and
first-mover advantages.​

●​ Porter’s Diamond Model:​

→ Four pillars of national
competitiveness:​
 ○​ Factor Conditions
(talent, infrastructure)​

○​ Demand Conditions
(sophisticated home
market)​

○​ Related &
Supporting
Industries (CROs,
suppliers)​

○​ Firm Strategy,
Structure, Rivalry
(domestic
competition drives
innovation)​

2. R&D and Innovation Policy

●​ Support R&D:​ ​
Meanwhile, Porter’s Diamond highlights four key determinants of national competitiveness—factor conditions, demand
○​ Expand conditions, supporting industries, and firm rivalry—all of which are highly relevant to biotech.”
performance-based
tax credits and
research grants (e.g.,
clinical trials, R&D and Innovation Policy
infrastructure).​
“To begin with, targeted innovation policies can reduce entry barriers and accelerate commercialization.​
●​ Public–Private Governments can expand performance-based tax credits and translational research grants to underwrite
 Partnerships:​ clinical trials and infrastructure development.​
Public–private partnerships, or ‘moonshot’ initiatives, also play a vital role.​
○​ Launch “moonshot” By pooling risks between national labs and private firms, these programs can de-risk early-stage biotech research
programs to de-risk in cutting-edge areas such as synthetic biology.”
early-stage biotech
R&D in areas like
synthetic biology.​

3. Human Capital
Development
●​ Invest in STEM education
& postgraduate fellowships
(e.g., genomics, regulatory
science).​

●​ Talent attraction policies:​

○​ Implement fast-track Human Capital Development

visas and retention
programs for global “Next, human capital is the backbone of biotech innovation.​
biotech talent.​ To maintain a globally competitive workforce, we must invest in STEM education, and support postgraduate
fellowships in fields like genomics and regulatory science.​
Additionally, governments should implement fast-track visa programs and retention policies to attract and keep
international experts—ensuring a continuous pipeline of specialized talent.”

4. Infrastructure and Cluster

Development
●​ Biotech clusters:​
 ○​ Co-locate
universities,
startups, CROs,
manufacturing in
subsidized innovation
zones.​

●​ Digital infrastructure:​

○​ Develop national
clinical data
platforms and
standardized
bioinformatics Infrastructure and Cluster Development
systems to boost
innovation via “In terms of infrastructure, governments should promote the formation of biotech clusters—co-located zones
network effects.​ combining universities, startups, CROs, and manufacturing labs.​
Shared wet labs, pilot-scale facilities, and subsidized land can lower entry costs for firms.​
Moreover, establishing national digital platforms—like anonymized clinical data repositories—will enable
network externalities and facilitate data-driven innovation.”

5. Intellectual Property and

Regulatory Reform
●​ Faster time-to-market:​

○​ Institutionalize
fast-track approval
for breakthrough
therapies.​

●​ Harmonized IP protections:​
 ○​ Align IP laws with
major export markets
to secure long-term
innovation returns
and boost investor
confidence.​

6. Demand-Side and Trade

Measures
●​ Domestic demand creation:​

○​ Use public
procurement
guarantees (e.g., for
vaccines,
diagnostics).​

○​ Introduce
outcome-based
reimbursement
(reward treatments
with long-term
value).​

●​ Export promotion:​

○​ Support trade
missions, export
financing, and
temporary tariff
 relief on key inputs.​

Intellectual Property and Regulatory Reform

“To speed up time-to-market, fast-track approval processes should be institutionalized for breakthrough
7. Compatibility with Free therapies.​
Trade Philosophy Equally important is harmonizing IP protections with international standards to safeguard long-term returns on
innovation.​
●​ Do these policies violate free Such reforms enhance investor confidence and incentivize firms to scale up locally while exporting globally.”
trade?​
→ No, if they are:​

○​ Temporary (with Demand-Side and Trade Measures

sunset clauses)​
“Creating early demand is another key factor.​
○​ Transparent and Public procurement commitments—such as purchasing domestically produced vaccines and diagnostics—can
market-conforming​ guarantee market access for new biotech firms.​
Governments can also introduce outcome-based pricing models, rewarding treatments that offer long-term
●​ Goal: build dynamic health and cost benefits.​
comparative advantage in On the international front, export support, trade missions, and limited tariff relief can help domestic firms
high-value sectors.​ penetrate global markets.”

●​ Exit strategy: clear

withdrawal plan once global
competitiveness is achieved.​ Compatibility with Free Trade Philosophy
“Now, a key question: do these policies conflict with free trade?​
The answer is no—provided they are temporary, transparent, and market-conforming.​
These interventions aim to build dynamic comparative advantage by shifting national resources toward
8. Conclusion high-value activities.​
A clear exit strategy, with time-bound sunset clauses, ensures that once firms reach competitiveness, the market
●​ Strategic government is fully liberalized again.”
intervention, grounded in
economic theory, can:​
 ○​ Build a globally Conclusion
competitive biotech
sector​ “To conclude, strategic government interventions—rooted in sound economic theory—can help nations establish
world-class biotechnology sectors.​
○​ Drive innovation, By fostering scale, innovation, and institutional support, we not only compete globally but also ensure long-term,
high-quality jobs, high-quality employment and sustainable growth.
and sustainable
growth​

Câu 9: The world’s poorest countries are at a competitive disadvantage in every sector of their economies. They have little to export; they have no capital; their land is of
poor quality; they often have too many people given available work opportunities; and they are poorly educated. Free trade cannot possibly be in the interests of such
nations. Discuss?

Ý chính: Trả lời:

●​ Dismissing free trade as ●​ While it's true that the poorest countries face significant challenges, dismissing free trade as contrary to their interests
contrary to their interests overlooks its potential benefits.​
overlooks its potential ●​ The African Continental Free Trade Area (AfCFTA) exemplifies how trade can aid development. If fully implemented,
benefits.​ the AfCFTA could boost regional incomes by up to 9% and lift 50 million people out of extreme poverty by 2035. This
●​ The African Continental Free agreement aims to reduce tariffs, improve infrastructure, and harmonize regulations, thereby enhancing competitiveness.​
Trade Area (AfCFTA)
exemplifies how trade can aid
development.
●​ To fully benefit from free
trade, these nations need
supportive policies, including
investments in education,
infrastructure, and governance
reforms.
●​ Moreover, participation in global trade allows developing countries to access larger markets, attract foreign investment,
and acquire new technologies. These factors can stimulate economic growth, create jobs, and improve living standards.​
●​ However, to fully benefit from free trade, these nations need supportive policies, including investments in education,
infrastructure, and governance reforms. International assistance and fair trade practices are also crucial to ensure that the
gains from trade are inclusive and sustainable.

Final