Blog Post

Why do we study economics?

Recently, some questions that most economists are trying to answer are as follows:

  • What is the main reason we experienced the worst recession in 2008?
  • Why are some countries richer than others dramatically?
  • What is the culprit of the income or wealth inequality within a country?
  • How do the robots, full automation, and artificial intelligence change the workforce? How about the change of the structure of the population?

They already look very deep and serious that we can figure them out but the economists are not limited only to these kinds of topics. There are a few different ways to define Economics. First of all, some economics textbooks say that it is the study about scarcity. Others define that it is the study of how we allocate resources efficiently. Sometimes, we think that economics is simply the study of the decision-making process. Most people think that economists think all about the money but economics is a broader subject that we can take advantage of by studying it.

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Teaching Statement

My approach to teaching and enthusiasm is motivating my students to study Economics with great excitement and interest. My teaching style was largely influenced by the professor who taught “Public Economics” in my junior year in college. He encouraged me to think critically with challenging subject inside and outside of the classroom. While taking his course, I discovered my passion and interest in Economics. His enthusiasm for Economics finally made me continue my study and pursue a teaching career in Economics.

I have been teaching various courses and levels of students, from a theory based highly structured topic, such as Intermediate level of Microeconomics and Macroeconomics to Principles of Economics, as well as practical quantitative ones like Econometrics, Statistics and Mathematics. However, regardless of the topic, my main goal is the same as each class should be interesting and meaningful. Sometimes I succeed and other days I fail but I learn a lot every time how to make it interesting. On the other hand, each student need to adopt critical thinking and analytical skills for the future in the long run. I have been striving to balance these two aspects.

When I was a teaching assistant at the University at Buffalo, my first job was helping a professor who taught Principles of Economics in a large lecture hall. He always gave special importance to the personal attention and student engagement. His approach helped a lot about how to manage a class of hundreds when I taught students in a large lecture hall. I moves around the class so that I can take an attention and hear every student easily, as well as addresses them more personally with students’ names. Even though I teach in small class size now, I am always aiming to engage the students with these methods.

As the Roman philosopher Seneca said, “While we teach, we learn,” I encourage my students to work together in small group not only for studying but problem sets in class. Students can learn the concept in detail by teaching other classmates. In my Business and Economic Statistics course, I developed a group project where students test their own hypothesis using the statistical model discussed in class.

I encourage my students to ask any questions at any time and I confirm that my answer is enough to remove any doubts because I believe that efficient communication is important in the welcoming class to boost the learning process. I induce students to find the answer of their own questions by following the relevant series of questions and real life examples. By doing so, they will develop their intuitions and skills of critical thinking and they derive the right conclusion even though they forget the specific concepts.

I am always open to adjust the level by listening to the opinion from students. I cannot find easy answer for setting up the proper level of difficulty for the class in order not to make average students either bored or totally lost. From time to time, I spend enough time to go over practice questions especially difficult to understand for students. In addition, I am not limiting to my office hours during the designated time but extending to online virtual office hours for the students not available during regular hours. I can help them by using online chatting software, video conference, as well as social network services. Before each exam, I upload the practice exam to build up rational expectation.

To sum up, I stay enthusiastic and eager to supply the education at a unique and effective level. My teaching perspectives can be summarized as follows: First, I do my best to balance both skills of critical thinking and enjoying the topic for each student. Second, I make an effort to boost the learning process with efficient communication in welcoming class.

Introduction

My name is Sang-Yong Oh and I am from South Korea. I have a PhD degree in Economics from University at Buffalo, The State University of New York.

My main research area is Empirical Analysis on International Trade. One of my papers investigates the Vertical Specialization in East Asian Country, especially among China, Japan, and South Korea. In the paper, I focus on the industrial structure among those countries by using International Input-Output Table. Moreover, in order to have better understanding of the relationship between the US and East Asian Economy, I introduced the data to the modified Hecksher-Ohlin-Vanek model.

Another paper investigates the incentives to merge in the online search engine industry in South Korea. I develop a two-sided market model to estimate the network externality in the market and to analyze the effect on the two-sided market structure.

In the process of my research, I have learned the theoretical and empirical literature in not only International Trade but Industrial Organization, especially about the relationship among the US and East Asian countries. I have been practicing various econometric skills while dealing with large datasets. To sum up, my research interests stays in International Trade, Empirical Industrial Organization, and Applied Microeconomics.

I have been teaching all of core courses in Economics. I have been teaching the Principle of Microeconomics, the Principle of Macroeconomics, Intermediate Microeconomics, Intermediate Macroeconomics, Econometrics, Business and Economics Math, and Business and Economics Statistics as well. I also have experienced various schools such as University at Buffalo, Buffalo State College, and Bloomsburg University. I am interested in teaching International Trade, Econometrics, Industrial Organization, Applied Microeconomics, Principles of Economics, Statistics.

Youth Unemployment

Youth unemployment is not only of huge problem by itself but also affects the inequality issues between generation. Since the global crisis in 2007, youth unemployment has surged. According to OECD database, there were 51.5% increase in Spain, 50.1% in Greece, 42.3% in Italy, 33.4% in Portugal and 28.8% in the Slovak Republic.

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Figure 1.5 shows the summary of each country. However, sometimes only unemployment rate doesn’t indicate the reality well. Another measure of the unemployment issue was developed, which is the NEET rate. It can be defined the proportion of people who are neither employed nor in education or training. This has increased in most of the OECD countries since 2007. Especially, Countries such as Greece, Ireland, Italy, Slovenia and Spain, have been suffering of the huge increases in the NEET rate.

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Figure 1.6 shows the NEET rates in OECD Countries. Comparing with Figure 1.5, we can see some countries that has high share of youth population inactive. For example, Turkey, Mexico and Korea. This phenomenon can be explained by the culture differences among countries. For example, in Turkey, Mexico, and Korea, a great number of young women don’t want to be employed and raising a family at the same time.

The leaking intellectual property

It has been a while to dispute the benefit of higher education in the U.S. One group insited that it is not fair that the colleges in the U.S. give scholarships to the foreign students during the training period such as their Ph.D program. Since they will return to their home land after getting the degree, the real impact of the education transfer to the foreign countries instead of staying in the U.S.

However, the others think the real adventage belong to the U.S. because of the competition among the students from all over the world. This high level of competition ultimately give a rise to innovate, invent and develop new technology. In addition, the beneficiaries will have a favor of maintaining the good relationship with the U.S. so they will support the U.S. politically too. Especially, in the long run, they think this policy will help the U.S.

Today, I read this article in economist, “Whose brains are draining?” This graph directly shows the negative relationship between each contry’s level of wealth and the level of intellectual property. In other words, as the level of wealth is high, the leakage of intellectual propery is low. Even though there is some outliers in this observation, it is unambiguous that the small coutry that has high GDP per capita doesn’t have the system to accomodate the innovative brain.

In sum, it is really interesting to find out that the correlation between GDP per capita and the drainage of the intellectual property. As we try to broaden our perspective as focusing unlimited competition without any border of country, there is not that much issue the loss of the intellectual property. Do we still need to worry about the losing the competition as the country level like Olympics or World cup?

Vertical Specialization among East Asian Countries

The U.S. Census Bureau have reported the fact that gross export of goods only was $1,579 billion and gross imports was $2,268 billion in 2013. We can obtain a decomposition of this trade balance by all the trading partners. The U.S. has the highest total trade ($632 billion) with Canada but the most trade deficit ($318 billion) with China. The following Table 1 exhibits the statistics of the U.S. top 10 trading partners. All the bilateral trade statistics of the U.S. like the table below are not usually based on value-added but the gross value.

Table 1: Top Country Exports
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Why does the trade balance from each county based on the gross value matter? Because it gives us inaccurate information owing to double counting in each gross value, the most trade deficit from China can be overestimated . In order to shed light on the real trade pattern between the U.S. and China, it is necessary to illuminate the trade among East Asian countries because of the gross value problem.

Today, the international trade relationships among global economy gets more complicated as the level of interdependence of all countries gets higher. For example, the economic relationship between the U.S. and the East Asian countries are getting closer especially in manufacturing sectors. Suppose a Korean company operating factories in China produces smartphones to export to the U.S. and a lot of electronic parts in the smartphones are actually imported from Japan. This would suggest the smartphones are considered as the export from China but it does not show the fact that most parts are from Japan. This example can be called “Vertical Specialization.” More recently, global economies are so integrated that goods and services cross their borders very often. In many cases, China imports a lot of intermediate goods from Japan and South Korea in order to produce the final products and then export to the U.S., or the rest of the world. Moreover, it is necessary to see not only Chinese economy, itself but its behind scene, which has complicated relationship among East Asian countries, especially Japan and South Korea.

The trade balance data cannot capture those cases, relating the role of third countries in bilateral trade. However, value-added trade data can uncover those cases even though data availability is very limited. It is recent for the OECD and the WTO to undertake this joint work of value-added trade data. The following Figure 1 shows the difference in the U.S. bilateral trade balances between value-added deficit and gross trade deficit by using the OECD-WTO TiVA database.
In the OECD-WTO database, the domestic value added and intermediate imports were already taken care of to measure the U.S. Bilateral trade balances. As we can see in the Figure 1, the U.S. trade deficit in terms of the value added was smaller in China, NAFTA partners, and Italy but larger in Germany, Japan, South Korea and other EU countries.

We can explain these differences between gross and value-added trade as follows. The gross exports consist of three elements: domestic value-added that remains in foreign countries; domestic value-added that returns home; and foreign value-added in the exports. In the same manner, the gross imports also consist of three elements: the foreign value-added stays in the country; the foreign value-added in imports which are exported again later; and domestic value-added in its imports. However, a value-added export only counts the domestic value-added that remains in the foreign country and value-added imports do the foreign value-added that stays in the foreign country.

Figure 1: Bilateral Trade Balances
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Theoretically, a country’s trade balance should be the same in terms of gross or value-added terms because domestic and foreign value-added over all the countries cancel each other out over a total trade. However, bilateral trade balances can be different dramatically as we can see the figure above. Differences between gross and value-added bilateral trade give us important lessons for not only theoretical perspectives but trade policy implication perspectives.

How does the pattern of trade among East Asian countries looks like? In order to apply the value-added method, we can find the facts that trade pattern between China and South Korea was dominant in intermediate goods, and that they have high dependency of parts and basic materials on Japan. They show sufficient conditions for China and South Korea to invest on parts and basic materials as well as for them to diversify their trading partners in the long run.