Trading Away Wide Brands for Cheap Brands

Firms face competing needs to expand product variety and reduce production costs. Trade policy affects firm investments in product variety and production processes differently. Access to larger markets enables innovation to reduce costs. Although firm scale increases, foreign competition reduces markups. Firms react by narrowing their product varieties to recapture these lost markups. I provide a theory detailing this conflicting impact of trade policy and address welfare gains from trade. Accounting for firm heterogeneity, I show support for the theoretical predictions with firm-level innovation data from Thailand's manufacturing sector which experienced unilateral home tariff changes during 2003-2006.brands, trade, manufacturing, heterogeneous firms, Thailand

The EU referendum has already hit the UK economy – here’s how it could recover after a remain vote

Referendums on major issues usually create a degree of uncertainty which can have a knock on effect on a country’s economy. Swati Dhingra writes that uncertainty caused by the UK’s EU referendum has already had a negative economic impact, with some British businesses putting the hiring of new staff on hold until after the vote. But if the UK votes to stay in the EU it would be far from a given that this uncertainty would disappear and a strong response from the government will be necessary to generate a quick recovery

Time to join the war on the error of plagiarism

A national debate around plagiarism has been sparked in India following accusations made against writer Rajiv Malhotra. Here, Swati Dhingra challenges the notion that plagiarism increases societal welfare. She argues that it is not hard to cite, and that presenting someone else’s work as your own is unegalitarian in the increasingly competitive academic world

Minor relaxations of immigration policy will not make up for the economic impacts of a Brexit in the UK or India

As the EU referendum approaches, Swati Dhingra considers how a Brexit is likely to affect British Asians and India’s economy. She writes that although Leave promises of eased immigration restrictions on Indians might appear attractive, they cannot make up for the severe economic consequences on the British, EU and global economies that a vote to leave would entail

Book Review: After the storm: the world economy and Britain’s economic future by Vince Cable

In After the Storm: The World Economy and Britain’s Economic Future, Vince Cable, former Secretary of State for Business, Innovation and Skills (2010-15), reflects on the state of the British economy since the financial crisis. The book explains the policies introduced to restore the economy during the coalition years and offers recommendations to ensure future long-term growth and to stimulate productivity. LSE academic Swati Dhingra welcomes the book as an illuminating behind-the-scenes account of Cable’s experiences in government with policy insights that will be of relevance for many years to come. After the Storm: The World Economy and Britain’s Economic Future. Vince Cable. Atlantic Books. 2015

Scenarios of a new UK-EU relationship: a ‘soft’ Brexit

What consequences will Britain’s EU referendum have for both the UK and the rest of Europe? In a series of papers published as a collaboration between EUROPP and CIDOB (the Barcelona Centre for International Affairs), LSE authors analyse the prospects for three scenarios – a Bremain, a ‘soft’ Brexit and a ‘harsh’ Brexit. Swati Dhingra discusses what would happen in the case of a ‘soft’ Brexit, which is defined as the UK exiting the EU without a significant deterioration in relations between Britain and other EU countries. The full papers are available here

Protecting informal workers in India: the need for a universal job guarantee

The COVID-19 lockdown implemented in India is estimated to have tripled the urban unemployment rate. Most low-income urban workers will fall through the cracks of the provisions being put in place to support workers, and almost none of them has access to benefits. Swati Dhingra (LSE) argues that the self-targeting features of a universal job guarantee make it an appealing policy option to protect informal workers in urban India both now and in the longer term

The ‘leave’ campaigns are ignoring the last 40 years of economic data

One of the key debates in the context of the UK’s EU referendum is whether a Brexit would help or hinder the British economy. Swati Dhingra argues that while both sides of the referendum campaign have a tendency to exaggerate figures, the last 40 years of data demonstrate clear economic benefits from the UK’s EU membership

India is getting a raw deal on the EU-India Trade Agreement

Indian PM Narendra Modi is in Europe this week and will be attending the thirteenth India-EU summit taking place in Brussels today, 30 March. The hottest item on the agenda is likely to be the EU-India broad-based trade and investment agreement. LSE’s Swati Dhingra contends that this is a one-sided agreement, favouring foreign investors while leaving Indian consumers vulnerable, and that India must now use its economic power to get a better deal

Reconciling observed tariffs and the median voter model

Median voter theory applied to trade policy predicts positive tariffs in capital-abundant countries and negative tariffs in labor-abundant countries. Negative tariffs are rare, and this paper reconciles the median voter theory with observed protectionism across countries. By considering large countries, I show the optimal tariff is a sum of the median voter component and a positive term of trade component. Positive terms of trade effects raise tariffs in all countries, and can overcome the negative median voter component in labor-abundant countries. Testing the tariff prediction with cross-section and panel data from the 1990s, I show the median voter component is negative in labor-abundant countries and positive in capital-abundant countries. As expected, terms of trade effects raise tariffs across all countries and are stronger among nonmembers of the WTO