Since the announcement that Princeton University academic and New York Times columnist Paul Krugman had been awarded the Nobel Prize for economics, he has been widely praised for his efforts in academia, with various publications running articles on his academic achievements and his work as a columnist.
Krugman was awarded the prize mainly for opening up new areas of research into international trade theory. Most traditional trade research theories and methodologies start with the assumption that economies operate in a system of perfect competition, that production is of a fixed scale and that each country mainly exports goods for which they have a comparative advantage in producing.
This means that each country starts out with a comparative advantage to engage in an exchange of products for other products from other countries that will increase the wealth of both trading partners.
At the end of the 1970s and the start of the 1980s, Krugman analyzed the characteristics of economies of scale. Krugman also analyzed markets characterized by imperfect competition, and in doing so developed a lot of new avenues for research.
For example, Krugman found that when a product enjoys economies of scale, the average cost of producing the product decreases as the size of the market increases.
This means that manufacturers entering the market and investing in production at an earlier stage will enjoy a greater competitive advantage.
Even if manufacturers in other countries possess an advantage in production technology, they will not be able to gain a market advantage if they enter the market at a later stage. Krugman’s analysis of imperfect market competition also provides a basis from which product differentiation can be analyzed. It also shows that there will be more differentiated products as the scale of the market broadens.
This means that consumers enjoy a choice of brands. In other words, international trade gives consumers more diversity.
In his research, Krugman employed many hypotheses that traditional trade theory did not use. This granted researchers new ways of looking at economic and trade issues. The theories he developed will have profound and long-lasting effects on research into competing products, trade within industries and strategic trade behavior in countries that provide export subsidies.
Krugman also uses simple language when writing books on economic analysis that ordinary people can read. Many of these books have been translated into Chinese in Taiwan.
Krugman’s research abilities and the commitment he displays to academia are something to be admired among today’s economists.
Krugman has also criticized governments over the recent financial crisis and has come up with suggestions. I hope that he can continue to generate policy suggestions because this would help minimize the economic risk that countries around the globe are facing now and in the future.
Wang Jue-shyan is an associate professor of public finance at National Chengchi University.
TRANSLATED BY DREW CAMERON
Taiwan’s semiconductor industry gives it a strategic advantage, but that advantage would be threatened as the US seeks to end Taiwan’s monopoly in the industry and as China grows more assertive, analysts said at a security dialogue last week. While the semiconductor industry is Taiwan’s “silicon shield,” its dominance has been seen by some in the US as “a monopoly,” South Korea’s Sungkyunkwan University academic Kwon Seok-joon said at an event held by the Center for Strategic and International Studies. In addition, Taiwan lacks sufficient energy sources and is vulnerable to natural disasters and geopolitical threats from China, he said.
After reading the article by Hideki Nagayama [English version on same page] published in the Liberty Times (sister newspaper of the Taipei Times) on Wednesday, I decided to write this article in hopes of ever so slightly easing my depression. In August, I visited the National Museum of Ethnology in Osaka, Japan, to attend a seminar. While there, I had the chance to look at the museum’s collections. I felt extreme annoyance at seeing that the museum had classified Taiwanese indigenous peoples as part of China’s ethnic minorities. I kept thinking about how I could make this known, but after returning
What value does the Chinese Nationalist Party (KMT) hold in Taiwan? One might say that it is to defend — or at the very least, maintain — truly “blue” qualities. To be truly “blue” — without impurities, rejecting any “red” influence — is to uphold the ideology consistent with that on which the Republic of China (ROC) was established. The KMT would likely not object to this notion. However, if the current generation of KMT political elites do not understand what it means to be “blue” — or even light blue — their knowledge and bravery are far too lacking
Taipei’s population is estimated to drop below 2.5 million by the end of this month — the only city among the nation’s six special municipalities that has more people moving out than moving in this year. A city that is classified as a special municipality can have three deputy mayors if it has a population of more than 2.5 million people, Article 55 of the Local Government Act (地方制度法) states. To counter the capital’s shrinking population, Taipei Mayor Chiang Wan-an (蔣萬安) held a cross-departmental population policy committee meeting on Wednesday last week to discuss possible solutions. According to Taipei City Government data, Taipei’s