In the News: Devashish Mitra

"I sincerely hope...India will soon decide to join RCEP at a future date, when it is also able to obtain better terms," says Devashish Mitra, Gerald B. and Daphna Cramer Professor of Global Affairs.

"The economy’s temporary problems can easily become more permanent unless both long-term and short-term measures are taken simultaneously," says Devashish Mitra, Gerald B. and Daphna Cramer Professor of Global Affairs.

According to Devashish Mitra, Gerald B. and Daphna Cramer Professor of Global Affairs, "the real challenge now for the prime minister [of India] and his colleagues is job creation and expansion of the manufacturing sector."

The "Modi government should get a lot of credit for its Insolvency and Bankruptcy Code as well as the cleansing of the banking system, an important component being getting rid of non-performing assets," says Devashish Mitra, professor of economics and Gerald B. and Daphna Cramer Professor of Global Affairs.

"No economist providing policy prescriptions can ignore the political constraint of the inevitability of redistribution to the bottom 20-30 percent," writes Devashish Mitra, Gerald B. and Daphna Cramer Professor of Global Affairs. "Therefore, an important task before any policy economist is to suggest the most efficient form of this redistribution—one that hurts the rest of the society the least. Of course, it also has to be fiscally viable and responsible."

"For those who might totally dismiss such a scheme, by saying that it amounts to socialism, let me remind them that many believers in the power of markets, including myself, have throughout been in support of cash transfers as the least distortionary method of redistribution and fighting poverty," writes Devashish Mitra, professor of economics and Gerald B. and Daphna Cramer Professor of Global Affairs.

"Even though in aggregate, trade leads to economic gains, it almost always creates winners and losers," writes Devashish Mitra, professor of economics and Gerald B. and Daphna Cramer Professor of Global Affairs." He adds that social protection policies "need to be in place for equity reasons as well as to build and sustain support for free trade."

Devashish Mitra, professor of economics and Gerald B. and Daphna Cramer Professor of Global Affairs, says, "any tariff increase will come at a huge cost to India’s consumers as well as producers who use imported inputs."

"While good ideas to deal with them exist both within and outside the government, implementation is key. This is where the government often does not perform well," writes Devashish Mitra, professor of economics and Gerald B. and Daphna Cramer Professor of Global Affairs.

"Tariffs on the imports of steel will make steel more expensive here, thereby raising the cost of production in steel-using industries and making them less profitable," says Devashish Mitra, professor of economics and Gerald B. and Daphna Cramer Professor of Global Affairs. "These steel-using industries will then cut employment."

Why is free trade popular in the U.S, despite the success of many protectionist candidates in US politics? These syracuse professors explain that protectionist rhetoric is enjoyed by voters, who are ideologically committed to nationalist values such as protectionism, while still seventy eight percent of college graduates believe that free trade is an opportunity for economic growth. 

Devashish Mitra, Gerald B. and Daphna Cramer Professor of Global Affairs, argues that "restrictive labor regulations have prevented India from reaping the full potential benefits of opening up the economy."

"If there is predatory dumping (along with injury to indigenous firms and local labour), there needs to be an anti-dumping tax (equal to the calculated dumping margin), which is similar to anti-dumping duties on internationally traded goods," says Devashish Mitra, Gerald B. and Daphna Cramer Professor of Global Affairs.

Instead of raising tariffs India should have emulated China by reforming labor laws and maintaining a low-tariff regime on intermediate goods to attract export-oriented global manufacturing firms, according to Devashish Mitra, Gerald B. and Daphna Cramer Professor of Global Affairs.

Devashish Mitra, Gerald B. and Daphna Cramer Professor of Global Affairs, argues that trade has been beneficial to developing countries in Asia, with competition leading to higher productivity, lower price-cost markups and lower poverty.

"There is a mechanism that will distribute gains from trade in a more inclusive way," said Devashish Mitra, Gerald B. and Daphna Cramer Professor of Global Affairs, "that, over time, will build the support for globalization."

"If the government is serious about exports and jobs, a bolder approach needs to be taken on labor reforms," says Devashish Mitra, professor of economics and the Gerald B. and Daphna Cramer Professor of Global Affairs, about the Indian government.