Purdue economist revolutionizes trade analysisWEST LAFAYETTE, Ind. -- Just as Henry Ford's idea of standardized, interchangeable parts lowered the cost of production for the Model T, Tom Hertel's idea of interchangeable data for trade analysis has lowered the cost of economic analysis. Hertel, a Purdue University agricultural economist, used his innovation to start the Global Trade Analysis Project (GTAP).
"Tom has done for economics computer modeling what Henry Ford did for motorcars. It was a magnificent idea," says Alan Winters, research manager for international trade at the World Bank. "GTAP was the first to be explicitly a network, the first to separate the data from the [computer] model. It saves us time and expense."
When economists analyzed an international trade problem 15 years ago, it took nearly five years to get results. For each project, a researcher collected data, reformatted them, then developed computer models to analyze them. Data and model were inextricably entwined. For each new project, a researcher had to start over with both data collection and model-making.
Hertel was involved in such studies because agriculture, like other sectors of the economy, is a global business. About one out of every five acres of U.S. cropland is planted for export, Hertel says. Ag economists must understand trade policies both at home and abroad to help farmers stay competitive in the world market.
"In the 1980s, I was consulting for the Australian Industry Commission," Hertel says. "After several years of hard work on the data base and economic model, they killed the project. Each time researchers started over, they had to begin from scratch. It struck me that a university could provide continuity."
Hertel took his first step toward continuity by separating the data from the computer model. Then, he put both the model and the data base on a World Wide Web server at Purdue where people around the world could use them together, or they could use the data with their own model.
"The timing was perfect, since the Internet, and then the World Wide Web, were just coming into their own," Hertel says. "Also, tight budgets in many national and international agencies meant that those agencies were forced to collaborate."
That prompted Hertel to start the Global Trade Analysis Project (GTAP) in the early 1990s.
Winters at the World Bank was the first to pay the annual $15,000 membership fee to be a GTAP sponsor and part of the GTAP Consortium, which helps guide development of the data base and model. He says the investment already has been more than repaid.
Eighteen sponsors from around the world now serve on the advisory board. They meet annually to decide how to update the data base and computer model, what research to fund, and where to offer training courses and conferences. "At board meetings we also network, making contacts we wouldn't have otherwise," Winters says. "With GTAP, we're all talking the same language."
It's a language that people are picking up fast. To date, 150 research groups around the globe have used GTAP to analyze effects of trade, transport and protection interactions on everything from textiles to climate change. For example:
GTAP's success stems partially from Hertel's outreach efforts. Starting in 1993, he began offering week-long GTAP short courses. So far he's offered seven courses in the United States, two in Europe, and one in Africa. More than 200 people from more than 30 countries have attended.
At the end of the course, Hertel sends students off with the latest GTAP data and software. They keep in contact through an e-mail discussion group that connects 250 users on five continents.
GTAP programmers at Purdue release an updated version of the data base every 18 months. The latest version includes information on more than 50 types of industries or commodities from 45 regions of the world. Much of the data comes from international agencies that are also sponsors, but individual researchers in academia and government also contribute data bases on their own economies.
"We don't add a new country to the data base until there is strong local collaboration and interest," Hertel says. "Once in the network, participants tend to update their data as new information becomes available -- and they get a free GTAP data base in return."
To join the GTAP e-mail group, download a condensed version of the GTAP data base and basic GTAP computer model, or just to learn more, go to the GTAP Web site.
Government agencies can buy copies of the full data base and computer model for $2,500. Multiple academic users can get copies for $1,500, single academic users for $800.
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