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Academic SeminarR&D subsidies and trade: rationale for WTO rules and empirical evidence

  • Date
  • 2019-05-07 ~ 2019-05-07
  • Time
  • 16:00 ~ 17:30
  • Place
  • Supex Building 3rd, Lecture Room S301
  • Department
  • School of Management Engineering
  • Major
  • Economics
We would like to invite you to participate in Management Engineering (ME) Seminar.

1. When: May 7th (Tuesday), 16:00 ~ 17:20
2. Where: Supex Building 3rd, Lecture Room S301
3. Speaker: Prof. Koh, Yumi (Singapore Management University)
4. Topic: R&D subsidies and trade: rationale for WTO rules and empirical evidence
5. Research field: Managerial Economics
* Lecture will be delivered in English.

A government’s R&D subsidization is often perceived as harmless to other countries because of its externalities. However, a large part of actual R&D activities are highly practical and intended for commercial success in specific products with no significant externalities. Therefore, governments with opportunistic motives may selectively subsidize practical research to promote certain firms and industries. We shed light on R&D subsidies from this practical perspective and address two main questions to assess the legitimacy of strengthening rules on R&D subsidies. Are R&D subsidies harmless or beggar-thy-neighbor policies? Is there empirical evidence that R&D subsidies are used as a strategic policy tool with which to affect trade? We study these questions in the actual legal context imposed by WTO rules that regulate subsidies deemed to be specific and have adverse effects. We modify and develop a Ricardian trade model to analyze the conditions under which R&D subsidies can be harmless or beggar-thy-neighbor policies. Our empirical analysis shows that the Korean government strategically responds to the WTO’s regulation changes and its trade patterns are changed as a result.
Contact : Lee, Jisun ( jisunlee@kaist.ac.kr )