Quick Notes on the World Trade Statistical Review, 2022

If you are a student of economics, you should create a calendar for yourself about important data releases. This could be the release of GDP reports in your own country, it could be the release of the WEO reports from IMF… and if you are a student of international trade, your data release calendar aboslutely should include the World Trade Statistical Review from the WTO. Pro-tip re: the WTO – you’ll learn much more by spending a day drinking coffee and going though as many links as you can stand to from here. The coffee is important, trust me, and it really helps if you can do this with a friend going though the same exercise with you (but on a separte device, mind you).

But back to the World Trade Statistical Review: this year’s report is really important for obvious reasons. We get a look at how the world recovered from the pandemic, and we also get a sense of how 2022 has unfolded, given all of what this year has given us in terms of momentous events.

First, the obvious stuff. The year-on-year change in terms of world trade in both goods and services saw a remarkable recovery in 2021. We also saw a bit of tapiering off in 2022, relative to 2021. China, the US and Germany (in that order) were the three largest merchandise traders. If you are a student of the Indian economy, you absolutely should ask where India stands in the list. The answer is to be found in Table A6, pp 58 of the report. You can also download the associated Excel file from the World Trade Statistical Review website (the link is in the first paragraph above).

Note also that the appendix si worth going through in order to get a sense of how India fares in other dimensions of international trade. Open up the PDF, and do a CTRL-F for India, and see what you might wish to take note of. Me, for instance, I found it fascinating that in terms of percentages of world merchandise exports, we touched 2.2% in 1948, and have not crossed that level (or even matched it) ever since. That is from Table A4. I also found it interesting that India, more than any other nation, did remarkably well in terms of IT exports (pp. 31). The commodity specific export data related to India in the appendix is also faascinating, and if you really want to get into the weeds of the report as a student of the Indian economy, I think you will find it to be worth your while.

The global exports of digitally delivered services on pp 17 is a fascinating chart, and one that Timothy Taylor has spoken about on his blog.

Ask yourself if you know how to create the kind of chart that you see on pp 18.

Note the impact of the war in Ukraine on international trade in chart 3.3, pp 24. But also take a look at chart 3.8

Ask yourself why the price of natural gas is falling off with the advent of winter in 2022. Should it not be even higher, now that winter is setting in? Ask yourself what you have not understood about trading, futures and finance if the answer escapes you.

Ask what’s up with Japan when you look at chart 3.5.

Compare China and India in chart 3.10, pp 31

Go to pp 43 of the report. Are you familiar with what SITC means? What about HS codes? Update: hereticindian, in the comments, shares this very useful link: https://unstats.un.org/unsd/classifications/Econ

More fun awaits you on pp 45: what about BPM6? What about SNA?

How familiar are you with the list of sources given on pp 50? Do you regularly visit these website? If you are a student of economics, you should have all of these bookmarked, and you should have a degree of familiarity with at least some of these sources.

“What should I read to prepare for placements?” is the wrong question to ask.

“What, of all of what I’ve been reading over the past five years, is the most relevant to placements?” is the better question to ask. Get in the habit of reading far and wide, and get in the habit of familiarizing yourself with the relevant data sources in your field.

The correct time to start on this? Yesterday.

Duolingo, Gamification and Habit Formation

I got “promoted” on Duolingo recently, and today’s blogpost is about how weirdly happy I feel about it.

I am an incredibly lazy person. We all are to varying degrees, I suppose, but I’m convinced that I do putting off and procrastrination better than most. There are a few things that I do with enthusiasm and something approaching regularity (writing here being one of them) but with most things in life, tomorrow is a better day for me than today.

There is a very short list of things I am compulsively addicted to doing on a daily basis, There’s Wordle, for example. Reading blogs, for another. The NYT mini crossword, and some other stuff. But there is a clear winner on this list: Duolingo.

On Duolingo I have a 753 day streak, and counting. That is, I have practised on the Duolingo app for 753 days and counting. And it’s not because I am awesome at showing up regularly – it is because Duolingo has incentivized me to show up regularly, and here’s how they do it.

First, peer pressure. Duolingo allows you to follow people in your contact list who are also on Duolingo, and it’s a two way street. That is, they can follow you too:

AshishKulk is my user ID on Duolingo, and please feel free to “add” me to your network if you are so inclined. I can always do with more peer pressure! Knowing that my friends are practising more than I am is a great incentive to try and keep up – which, of course, is what peer pressure is all about.

The score-keeping mechanism in Duolingo is XP. The app tells you how much XP you “acquired” on a daily, weekly, monthly and all-time basis.

Each of these frequencies is gamed differently. For the all time streak, you can check where you rank among your friends (I’m third, if you’re wondering). For the monthly score, Duolingo hands out “badges” if you earn a certain number of XP in a month:

For weekly streaks, you get promoted to different “leagues” based on how many points you score on a weekly basis. It is a double edged sword: you also get “demoted” if you don’t practise enough in a week. The leagues start and finish every Sunday afternoon India time, and I’m typing this out on a Sunday morning – wish me luck!

And the daily basis is perhaps the best gamification of them all, because you end up in a contest with yourself. How long can you keep your daily streak going? Like I said, mine is at 750 odd days, and I got “promoted” for it:

There are also daily quests, friend quests, stories involving characters that build a more personalized, relatable learning experience, and recently, learning paths that use spaced repetition to make sure that weaker concepts are revised and firmed up over time. You can “buy” streak freezes to “protect” your streak in the Duolingo store. These artefacts can be “purchased” using “gems”, and that’s yet another gamificaiton story.

Long story short, the Duolingo team goes out of its way to try and keep you hooked on to learning, and I’m here to tell you that it has definitely worked in my case.

And that’s the point of this post, really. I think Duolingo to be an exemplar when it comes to gamification, but the meta-point here is an obvious one: how do we all go about gamifying activities in our life that we wish would turn into habits? How about a Duolingo experience for exercise? Meditation? Learning cooking? Financial habits?

There are those among us who can build out habits in their lives without gamification, of course, and I envy them for it. But for those of us who are paashas of procrastination, such a tool can help us get better at showing up more regularly.

I speak from personal experience when I say this, though: Duolingo has done it better, and been more effective, than any other habit forming app that I have tried.

Now, excuse me while I go and try to stay in the Diamond League!

Pick Up A Bottle of Rice With a Chopstick

And a bonus, on a related topic:

An Appropriate Continuation to Monday and Tuesday’s Posts

The Art of the Adda: Is an EFE MeetUp A Good Idea?

You learn best when you debate, discuss and disagree.

That’s my shtick at the start, and throughout the entire semester of any course that I’m teaching. A prof yapping away while standing at the lectern, and students paying closer attention to the time than to the prof is the worst way to learn. Unfortunately, it is this that is far more prevalent than the d,d and d strategy, and more’s the pity.

Which is why that adda I spoke about yesterday was so much fun, at the Fat Labrador Cafe. I’m betraying the fact that I’m married to a Bengali when I speak of the art of the adda. While katta is a word that a Maharashtrian would prefer, I’ve always had an attraction for alliteration, so I hope you’ll allow me my little word-play.

But back to the adda: Anupam Manur from the Takshashila Institute in Bangalore was in town for a conference, and he and I regaled a small but extremely enthusiastic audience with our list of five under-rated/counter-intuitive ideas from the field of economics.

The point isn’t about which were his five and which were mine – at least, that’s not the point of this post. The point is that fun laid-back discussions about any topic is a wonderful way to learn, to network and to have fun. And when accesorized with coffee that is as good as the one that The Fat Labrador Cafe serves up, well, what more can one ask for?

It is December, so why not try out something fun? This is addressed to folks who are in Pune (to begin with). How many of you would be interested in meeting up for an adda on the 11th of December, at 6 pm? The topic I have in mind are three posts that I really enjoyed writing this year, about learning economics by watching movies, paintings and cricket.

No money in and no money out, to be clear – this is not a paid event, this is very much a group of people getting together for a relaxed conversation. If we meet at, say, The Fat Labrador Cafe, each one of us pays for our own beverages and food. The idea is to learn through debate, discussion and disagreement (the non-Twitter variety, just to be clear). Around ten to fifteen people would be ideal, I think, so if I hear back from enough people, I’ll be more than happy to coordiante and make this happen. Feel free to reach out via this form.

When:
11th December, 2022 at 6pm

Where:
The Fat Labrador Cafe.

What:
An adda about fun ways to learn and apply economics.

Do I need to know economics?
Gawd no. But an interest in movies OR cricket OR art will help. Even this ain’t mandatory!

What do I need to pay?
Nothing, except an investment of your time. And you need to pay for whatever you eat/drink at the cafe

Lebenskunst

I was part of a small but fascinating discussion at The Fat Labrador Cafe yesterday (about which more in tomorrow’s post). The idea was to speak about under-rated/counter-intuitive ideas in economics, and a session that was supposed to last for an hour ended up starting at a little after nine pm, and going on well past eleven pm!

One of the ideas that I thought would be under-rated and counter-intuitive was that cities are magical places. Not only, it turns out, was this not under-rated and counter-intuitive where the audience was concerned, but it was almost quotidian. Huh, but also yay!

I’ve said it before, and I’ll say it again: cities are awesome, fantastic and brilliant, and we need many more of ’em on our planet.

Lebenskunst, The Economist magazine tells us, is the art of living well. Wiktionary has an even better translation, calling it the art of life. But whatever the definition, The Economist’s ranking of the world’s most liveable cities places Vienna at the top.

https://www.economist.com/graphic-detail/2022/06/22/the-worlds-most-liveable-cities

It is, after all, an index, and that means that you can choose to argue endlessly about which metrics are included and which aren’t, what weights have been given and what should have been the weighting instead, about how liveability isn’t all that measurable and especially comparable, and on and on and on.

The index rates cities along thirty different factors, bucketed into five different categories: stability, health care, culture and environment, education and infrastructure. Note that the article we’re talking about is from June, but that doesn’t really matter for us today. The good news, for the most part, is that “global activity is only around one-sixth lower than before the virus emerged. This is reflected in the global average liveability score, which has bounced back to something approaching normality.”

Of course, parts of the world have done worse compared to the pre-pandemic era. Almost all Chinese cities are worse off, although that is not at all surprising. Re: India, the bad news is that not a single Indian city comes in the top ten, and the good news is that not a single Indian city comes in the bottom ten! A summary of the report is available to read here, once you share your email address with the EIU. No Indian city makes the list of the cities that moved up the most in the rankings, nor does any Indian city make the list of cities that dropped down the most.

The full report costs an insane amount of money, and there’s no way I am paying for it, but you might want to just take a look at a Wikipedia article, as I did, for more information. I wasn’t aware of Numbeo, and obvious concerns about quality of data aside, it is a very interesting project.

Take a look at India’s data, it is fascinating. Pune comes in at number 2, which fills me with pride, and also with worry about what is up with the rest of India’s cities. If we’re at number 2…

What Should One Be Paying Attention To?

Television, he writes, “serves us most ill when it co-opts serious modes of discourse — news, politics, science, education, commerce, religion — and turns them into entertainment packages. We would all be better off if television got worse, not better. ‘The A-Team’ and ‘Cheers’ are no threat to our public health. ‘60 Minutes,’ ‘Eyewitness News’ and ‘Sesame Street’ are.”

https://www.nytimes.com/2022/08/07/opinion/media-message-twitter-instagram.html

Do read the entire column, and I hope it is not behind a paywall for you, for it deserves to be widely read. But I’ve found myself thinking about that line: “We would all be better off if television got worse, not better”, and thinking about its broader applications and implications.

  1. How should I be thinking of Twitter and how much time I spend on it? (A lot, by the way, far too much. The only good thing, if at all, is that I spend almost all of this time reading what others have to say rather than saying anything myself. But – and this is a pertinent question, especially right now – would I be better off if Twitter got “worse”, or is it the other way around?)
  2. How should I be thinking of the amount of time I spend reading blogs? Books? Fiction books vs non-fiction books? Do books serve me most ill when they co-opt non-serious modes of discourse?
  3. Should I be watching the Rene Girard series on YouTube, or does that make my experience of both learning more about Girard and time spent on YouTube worse?
  4. “What am I optimizing for?” is a great question, and a very powerful one for analysis. When it comes to learning, is “What am I optimizing for when I consume content in different ways?” an even better question, or simply a subset of the first one?
  5. I’ve given up on watching news on television entirely, and have been patting myself on the back ever since. That, to me, is the only silver lining after having read this column.

Two Sides of the Same Model

Yesterday’s post and today’s post are really talking about the same thing (or the same model, to be a little bit pedantic), but it’s a little bit like that story about the blind men and the elephant.

Which model? This one:

The Solow–Swan model or exogenous growth model is an economic model of long-run economic growth. It attempts to explain long-run economic growth by looking at capital accumulation, labor or population growth, and increases in productivity largely driven by technological progress.

https://en.wikipedia.org/wiki/Solow%E2%80%93Swan_model

Ask yourself a simple question: which countries in the world today are likely to see reasonably rapid growth over the course of the next three decades or so?

As a person whose job it is to teach people introductory economics, I’m not as interested in your answer as much as I am in your framework for coming up with your answer. No matter whether you say India, or China or Nigeria or Indonesia or any other nation of your choice – why do you choose the set of answers that you do? What is your model for doing so?

And whatever model you come up with, and whatever specification of the model you deem most appropriate, it should have the following ingredients:

  1. People. No country can grow if its labor-force isn’t growing. Duh.
  2. Capital. More machines, more output. Also duh.
  3. Technological progress. It’s not just people and machines, but it is how efficiently you use them, and the quality of your ideas about how to use them. Not so duh, and often underrated.
  4. Quality of education. A close cousin of the third point, if you think about it. Definitely not duh, and a pet passion (and peeve!) of mine.
  5. Quality of institutions. See this video for an explanation. The very opposite of duh, and massively underrated almost always.

So: my pick for a country that is to grow rapidly over the course of the next three decades would have to tick most, if not all of these boxes. And yesterday’s post was about understanding the point that where India is concerned, her rate of growth is somewhat likely to be constrained by her inability to dispense quality education efficiently and at scale, and by the quality of her institutions. We also need to ramp up our capital stock (our infrastructure). Or put another way, if we try to maximize growth without getting these things right, it’s going to create more problems for us down the road.

A warm welcome to Shruti Rajagopalan, who launched her Substack yesterday. Her first post, and indeed her general focus on her entire blog, is about paying more attention to India. Bad puns that are actually good is an underappreciated art form, so a high five is in order for the name of the blog too! (Update: Mihir Mahajan very kindly pointed out that this is actually a song. I obviously hadn’t heard it before, and in case you haven’t either, here you go. Thanks, Mihir!)

Her post is about a lot of things about why (and how) one should pay more attention to India. But the first two sections of her essay are what I want to focus upon here:

  1. “India’s population will peak in 2065. Compare this with China, where the population will peak next year.”
  2. “Smartphone penetration in India since 2010”

If Gulzar Natarajan yesterday spoke about capital, the quality of education and the quality of institutions (2,4 and 5 from my list above), think of Shruti’s post as a discussion about people and technological progress (1 and 3 from my list above). And a great way to learn about the Solow Model is to first learn about it, and then think about India in the context of the Solow model. Which, of course, is what these two posts are trying to do.

Take, in other words, the model out of the diagrams and the math, and apply it to the world around you. And a great place to begin is here, in India!

Shruti’s post is worth reading (and worth using as a teching tool) because it also speaks about labor mobility (or the lack of it), and capital mobility also. And soft power too, if you want even more! So do give it a read, and bookmark her blog, or add it to your RSS reader.

P.S. The very last section of her blogpost speaks about how to get started on learning more about India. I’d add at least two points to her list, the first because it is a passion of mine. If you want to learn more about any country, learn more about its food. Which ingredients are used at what time of the year, and why? What are the popular dishes in different parts of that country, and why? What do food taboos and food habits have to do with the culture, the sociology and the religions of that country? It’s a great way to learn more about different countries, and especially true for India. If you haven’t seen the light yet, and are therefore not as besotted with food as I am, consider music instead.

Or dance, if you like. Or textiles. But pick an entry point that you like, and read/see/travel optimizing for that entry point. But most of all, haffun – that’s the whole point, after all.

And for anybody who’s struggling with the Solow Model, trust you me, you can have fun while slogging through it all. This post is the proof!

Steady As She Goes

Gulzar Natarajan has a typically excellent post (part of a two-part series) on India’s economic growth trajectory. And they key point in the post is a counter-intuitive one.

India cannot, and should not, grow too rapidly.

In Can India Grow, we had argued that India does not possess the capital foundations to sustain high rates of growth for long periods. It does not have the physical infrastructure, human resources, financial capital, and institutional capabilities to grow in the 7-9% ranges without engendering serious distortions and overheating. The last such episode of high growth in the 2003-11 period required nearly a decade for companies to deleverage and for banks to overcome their bad assets. While some commentators have since come forth with similar views citing aggregate demand etc, I think we were the earliest to put forth a clear case for lowering expectations and targeting a 5-6% economic growth rate.

https://gulzar05.blogspot.com/2022/11/indian-economy-thoughts-on-growth.html

Our household owns two cars, a Tata Zest and Tata Nano, and the best analogy I can come up with for 2003-2011 is that it was like racing the Nano along the expressway to Bombay at a 110 kilometers per hour. It might (perhaps) have made it to Bombay at those speeds, but the little blue car would then have needed a long time at the mechanic before being road-worthy again. India, similarly, did grow rapidly in that period, but as Gulzar Natarajan puts it, it did not have the “physical infrastructure, human resources, financial capital, and institutional capabilities to grow in the 7-9% ranges without engendering serious distortions and overheating.”

Or put another way, if we want India to grow rapidy in the next two decades or so (and who wouldn’t?), it is very much a question of whether we’re driving a Nano or a Zest over the course of the next two decades. Or, god willing, an even better car. But a Nano will simply not cut it, and in terms of our infrastructure, human resources, financial capital and institutional capablities, we’re more like Tata’s cheapest car than we are like the Tata’s most expensive car.

But our country needs those upgradations if we want to achieve (and sustain) those aspirational growth rates. And here’s another counter-intuitive bit: even a 6% growth rate would be a challenge when we are talking about sustaining it over the course of twenty long years. That’s not the pessimist in me talking, that’s empirics:

A 6% baseline growth for the next three decades would be extraordinary. Underlining this point, as Ruchir Sharma has written, there are only six countries which have grown at 5% for four decades – Taiwan, Japan, South Korea, Singapore, Malaysia, and China. As the data shows, India has become the seventh. But just two have done it for five decades in a row – South Korea and Taiwan. Given that China looks certain to fall short, India could become just the third. It could go one better and strive to become the only country to grow at 5% for seven decades in a row. This would be exceptional at a time when developed countries will struggle to grow at even 2%.

https://gulzar05.blogspot.com/2022/11/indian-economy-thoughts-on-growth.html

But for that to happen – for us to embark on this journey, we would do well to first take the Nano to the garage, and bring out the Zest instead. We could do with a bigger engine, better suspension, better safety features – why, better everything:

We should simultaneously use the growth to build the capital foundations – increase domestic savings, deepen financial inclusion, develop robust financial intermediation systems, expand physical infrastructure, prioritise human capacity development, and develop and strengthen state capabilities.

https://gulzar05.blogspot.com/2022/11/indian-economy-thoughts-on-growth.html

All of which is easier said than done, as many a “growth star” state of the 20th century will tell you. This stuff is hard, unglamorous, politically risky, and with payoffs that manifest themselves only in the long run. But also, this stuff is unavoidable. Here’s one way to think about it as a student of economics: studying macroeconomics without a deep study of development economics is dangerous.

For as a nation to our north and east is hell bent on showing us in recent times, attemptig rapid growth without getting the basics right isn’t a good idea:

A too rapid growth will invariably drive up signatures of overheating – high inflation, property bubbles and land valuations, spike in wages, environmental damage, clogged infrastructure like traffic congestions and water scarcity etc.

https://gulzar05.blogspot.com/2022/11/indian-economy-thoughts-on-growth.html

Institutions matter. Education matters. Physical infrastructure matters. State capacity matters.

And attempting to engineer rapid growth without getting all (not some, all) of these right is a bad idea.

P.S. If you are a student of the Indian economy, the first chart in this blogpost is worth deep contemplation and reflection. What is your best guess for what comes next, and why is your guess whatever it is? That’s be an excellent essay to assign at the end of a macro semester that focuses on the Indian economy.

Barcelona’s Superblocks

And if you’re curious about how it all turned out, considering this video is six years old…