Tufts University Paper Has Anti-Trade Bias, Says MIDF

KUALA LUMPUR, Jan 18 (Bernama) -- MIDF Research says a recent working paper by Tufts University's Global Development and Environment Institute which claims that the Trans-Pacific Partnership Agreement (TPPA) would lead to losses in unemployment and increased inequality has an anti-trade bias. The January 2016 article by Jeronim Capaldo and Alex Izurieta with Jomo Kwame Sundaram says any trade agreement, including the TPPA, Regional Comprehensive Economic Partnership or ASEAN Economic Community, would give a negative impact or marginal benefit to the economy. "There are two arguable points with the model. Firstly, the model treats labour as immobile and not flexible enough to shift between sectors. "Although we can clearly see the falling labour share in the manufacturing sector as automation begins to replace labour, there is significant evidence that it would eventually lead to a highly-paid services sector and benefit the economy as a whole," MIDF Research said in a research note Monday. MIDF said it is more likely that those replaced by capital-intensive technology are low-skilled workers, not medium- and high-skilled ones. "Secondly, higher profits by companies despite a lower labour share of income would eventually translate into higher revenue for the government. "Countries with high government revenue would be able to redistribute income to the poor, either through cash subsidies for the low-income group or through unemployment benefits, reducing the inequality gap," it added. The research firm also noted that Malaysia’s Gini index is higher than those of the United States and United Kingdom -- economies which can be considered more open than Malaysia. "There is no clear indication that higher trade activity will lead to higher inequality," it said. Entitled “Trading Down: Unemployment, Inequality and Other Risks of the Trans-Pacific Partnership Agreement”, the paper used the United Nations Global Policy Model. -- BERNAMA