Features - Undergraduate Papers

Read Below for honors thesis abstracts. Outstanding Paper Recipients are included in full. Click on the title to read the paper in entirety.

Click here for Senior Thesis Abstracts from the following years: 2005, 2004 , 2003 , 2002

Senior Thesis Abstracts - 2006

Andrew de Maar - The Effect of Early European Integration: Did the EEC and EFTA Increase European Trade?

Over the past ten years the number Regional Trade Agreements has nearly tripled. The European Economic Community (EEC) and the European Free Trade Association (EFTA) were two of the first of such agreements. The principle empirical tool for evaluating the cross-country integration effects on trade flows has been the gravity equation. However, the results have been mixed, and consequently the form of the gravity equation has been criticized, contested, and amended many times over since its inauguration forty years ago. This paper revisits one of the earliest applications of the gravity equation employed by Norman Aitken, and seeks to establish greater insight into the influences of the EEC and the EFTA on trade flows over the period 1951-67. I use a theoretically motivated gravity equation that adjusts for the endogeneity of regional trade agreements. The results suggest that both the EEC and the EFTA had a statistically significant impact on member trade flows.

Lisa Gabrieles Keating - The Effects of Religion on Paternal Involvement in Fragile Families

This paper examines the effects of religion and religiosity on paternal involvement in a sample of fathers from the Fragile Families and Wellbeing Study. Using a logit model and controlling for race, education, and other socioeconomic background variables, I find that unmarried men who report attending religious services more often are less likely to be involved with their children in a number of measures of paternal involvement. Unmarried fathers who report no religious affiliation are less likely to provide financial support, read or tell stories, sing songs or nursery rhymes to their children, put the child to bed, feed, diaper or visit with family than those who report religious affiliation. Unmarried men reporting no religion were also less likely to spank their child and more likely to show physical affection than all men reporting religious affiliations except for Catholic fathers. Logit models were also estimated for a smaller sample of men who were not married at birth but cohabitating with the mother one year after birth and a sample of married men. For unmarried couples, having the same religion as their partner had a negative effect on most measurements of paternal involvement. The negative effect declined for unmarried men who were cohabitating with the mother one year after birth and declined further for married men, supporting that religion is a complimentary trait within marriage.

Ryan Christopher Keith - Chile ’s Full School Day Reform and Its Impact on Schooling Outcomes

Beginning in the early 1990’s, Chile ’s educational system began a series of major reforms. However, it was not until May, 1996, that one of the most influential and drastic educational laws was passed. Under the title Jornada Escolar Completa, the Full School Day (FSD) reform mandated that all primary and secondary “public” schools in Chile switch from a multi-day schooling system to a full-day regime. Before May of 1996, the majority of schools in Chile split their students into two cohorts; one group of students would attend classes in the morning and the other group would attend classes in the afternoon. Under the FSD, these two cohorts were joined together and attended school for the entire day, much like what we are accustomed to in the United States .

This paper begins with a qualitative overview of the Chilean school system, the major educational reforms of the late 20 th -Century in Chile , and the available literature and economic analysis of the FSD reform. Secondly, using data obtained from the Chilean Ministry of Education, I use an OLS estimation procedure, controlling for both school and family characteristics, to measure the effect the program has had on national standardized testing (SIMCE) at the 4 th grade level. The model used is a simple variant of the production function used by Lee and Barro in analyzing the determinants of schooling outcomes in a cross-country panel set of data.

Weng Chi Lei - China and Taiwan: Real and Financial Integration Pre- and Post- China's Exchange Rate Reform - Outstanding Paper Award 2006

The real and financial integration between China and Taiwan are assessed through an analysis on the empirical validity of real interest parity, uncovered interest parity and relative purchasing power parity. The regression analysis and the decomposition of variances performed over the data show that although China ¡¦s exchange rate reform is merely instant, it significantly explains the deviation from the parity conditions. Exchange rate movements play a more major role in determining the variability of deviations from the parity conditions after the exchange rate reform. The unit-root tests indicate higher degrees of real and financial integration in the long-run. However, the tests for autocorrelation give evidence against instantaneous financial integration.

Irene Botosaru - Market Effciency in Hungary, the Czech Republic, Bulgaria, and Romania

This paper intends to answer the following questions: Do stock markets in Hungary, the Czech Republic, Bulgaria, and Romania serve as efficient and accurate collecting mechanisms for Eastern European stock markets? And how did the European integration affect market efficiency in Hungary and the Czech Republic? The study utilizes both daily and weekly indices of closing stock prices for Hungary, the Czech Republic, Bulgaria and Romania.The tests employed are: AR(1), AR(10), Breusch-Godfrey, KPSS, Augmented Dickey-Fuller, and variance ratio. The results of these tests provide ambiguous results for the random walk hypothesis and thus for the weak-efficiency hypothesis of the markets.

Physical constraints as well as regulatory restrictions pose many problems for economic analysis of electricity markets. Physical constraints create opportunities for firms to generate market power by isolating segments of the grid thus preventing competition. This can be problematic for regulators trying to identify market manipulation. This paper examines two commonly used indices of market power the Herfindahl-Hirschman Index and the Lerner Index and shows how they can be compared to one another specific to this gaming situation by aggregating the Lerner Index across the market and comparing the net change in the indices. By analyzing the indices together some of the problems of only using the Lerner or the HHI are eliminated. Through this analysis I offer a rule of thumb for regulators looking to spot market manipulation.

Anna Franz - The Application of Option Value in Determining Global Warming Abatement Policy

This paper examines the application of an option value, commonly used in evaluating irreversible investments, in shaping global warming abatement policy. Through analysis of existing literature, the nature of the global warming phenomenon and proposed abatement models are examined to determine the similarity of key characteristics displayed by irreversible investments. As irreversibility, uncertainty, and the possibility of future learning are all elements of abatement policy, a simple option value model of abatement policy created by Dixit and Pindyck is analyzed. The parameters of the model are examined, including the choice of social discount rate and its affect on the option value. This paper finds that the inclusion of an option value in estimating the costs and benefits of an abatement policy is superior to traditional cost benefit analysis, as key characteristics cause the latter to be biased toward current generations.

The emergence of open source software as a viable economic model has risen to the forefront in the debate on the future of the information technology industry. However, at first glance, the open source software development model is strikingly enigmatic and counterintuitive. To help better understand this phenomenon, this paper, through market data and economic theory, proceeds to ask and answer three related questions. First, what is the economic relationship between open source software development communities and proprietary software firms? Second, what are the resulting effects on market innovation and innovation incentives? And third, what legal mechanisms allow for the sustainability of open source software and should they be expanded or reduced? This paper concludes that open source activity appears to be generating four economic effects, whose net effect on innovation in the software market is ambiguous.

This paper will explain why Denmark is more macroeconomically prepared than Sweden to join the European Monetary Union (EMU). Since becoming a member of the EMU entails a complete loss of monetary policy and restrictions on fiscal policy, candidates should have business cycles and monetary policies that are highly synchronized with those of the dominant Euro-Area economies. Currently, Denmark's business cycle is more convergent with that of Germany, and its fixed exchange rate with the euro permits it from conducting an autonomous monetary policy; therefore, in joining the EMU, it would not forfeit monetary autonomy to the European Central Bank (ECB). EMU membership is less appealing to Sweden, for its business cycle is less synchronous with that of Germany, and its flexible exchange rate still allots Sweden with a sovereign monetary policy.

Both Sweden and Denmark will likely encounter little trouble in adhering to the provisions of the Stability and Growth Pact. The Pact's recent reform has removed any fiscal dangers the EMU posed to both countries, and Sweden and Denmark have implemented budgetary targets that are more strict than the Pact's new provisions. Therefore, future Swedish and Danish EMU memberships should be contingent only upon whether close economic convergence with the Euro-Area is viable and whether the adoption of the ECB's monetary policy is optimal.

Alexander MacKnight - The Evolving Mexican Economy: Policy Change and the Decline of Oil Dependence

Over the past 30 years Mexico has seen a profound change in the importance of oil in the economy. This paper will focus on Mexico's shift from a relatively isolated and controlled economy dependent on its oil resources to one that relies on free trade and limited government involvement. This will be shown by providing evidence both historically and empirically, of a policy shift which has kept Mexico more economically stable to this day.

This paper will seek to explain how a proposed trade of water between the Palo Verde Irrigation District and the Metropolitan Water District, both located in Southern California, would provide benefits to all involved. A trade would imply transferring the scarce resource from the low marginal value agricultural users to the higher marginal value urban users. The analysis of this trade is based on the lessons learned from two similar previous trades and a pilot program between the two agencies in the proposed trade.

Stephanie Price- Transition Firm Data: The Effects Ownership Identity upon Investment

This paper asserts that s tate controlled, privatized, domestic “de novo,” and foreign owner firms will all behave differently in terms of their demand for new capital, expectation of future profits, information access, and access to funding. Through the 2002 Business Environment and Enterprise Performance Survey (BEEPS), a GLS model, a probit model, and an ordered probit model estimate the relationship between firm identity and firm investment. Each different model utilizes the fundamental theory that firms maximize a stream of future expected profits, minus costs. These costs include “costs” that effect investment in a stable economy, as well as a vector of deterrents to investment. For all three models, firm identity is statistically significant variable in determining investment level and probability, leading to evidence that firm identity may effect firm investment in new capital.

Cecilie Wathne - The Effect of the Tax Structure on State and Local Government Spending

A recurring debate in Washington State surrounds the question of adopting an income tax. While many think this is the best solution to our fiscal needs, opponents fear that a state income tax would increase the ability of states to extract revenue, thus leading to higher levels of government spending. In order to either support or refute this hypothesis, the author has created a model to analyze the role of the state tax structure in determining state spending levels. More specifically, I am using regression analysis with spending measures as the dependent variables, the percent of tax revenue collected by means of a state income tax as the independent explanatory variable, and a series of additional independent control variables.

According to the results, the fear of increased government spending is unwarranted as it is in fact the economic, political, and demographic components, rather than the tax structure, that determine the level of state and local government expenditure. Therefore, the choice of whether or not to have a state income tax should depend on whether it will make our tax structure more efficient and equitable as the objections raised against an income tax do not withstand statistical scrutiny.

Rachel Hunt - Estimating the Economic Impacts to the Walleye Pollock Fishery of Fluctuations in the Arrowtooth Flounder and Steller Sea Lion Populations Within the Eastern Bering Sea Ecosystem

Most economic models in the literature to date are able to predict the economic value of events directly affecting a particular species, but become unusable when the observation of indirect effects is desired. Those multi-species models which do exist fail to incorporate existing biological knowledge. This paper approaches the problem from a biological standpoint, using available biological ecosystem modeling software to predict the economic impacts on the Alaskan Eastern Bering Sea Walleye Pollock fishery for a variety of hypothetical predator population values. First it shall be shown that this approach is valid and preferable to previous attempts within the economics literature, and then it shall be demonstrated on the aforementioned empirical concern.

Thomas Jafari - Analyzing the U.S. Market Structure for Prescription Drugs: Why are Americans Traveling to Canada for Their Drugs?

This paper examines the market structure for prescription drugs. Specifically, it hopes to determine whether or not the trend of senior citizens purchasing prescription drugs from Canadian pharmacies is the result of excessive, monopolistic pricing within the pharmaceutical industry. By analyzing the development and pricing of drugs, we will show that parts of the drug industry fit nearly every model of competition. Moreover, the significance of demand-side variables such as product characteristics counters the claim that high drug costs are the result of monopolistic pricing. Movement to Canadian pharmacies, consequently, is symptomatic of poor prescription drug coverage for seniors. With the passage of the Medicare Prescription Drug Modernization Act of 2003, it is hoped that the drug burden faced by many senior citizens will be relieved. Analyzing the structure and design of Medicare's new drug benefit will show that the current trend of seniors purchasing drugs from Canada will change little in the next few years. Once the drug benefit takes full effect in 2006, however, the trend will decrease significantly.

Trends in the past years have shown that the OEDC countries have shifted from manufacturing to service economies. With the advent of the globalization, US firms are trying to reach foreign resources in their quest for maximizing profit in two major ways: establishing a presence in a foreign country and outsourcing, i.e. getting the benefit from cheaper and more abundant inputs. The OECD countries are committed to offer assistance to developing and less developed countries towards installing a proper legal system and enforcement of intellectual property rights (IPR). US firms have established themselves as leaders among foreign direct investors abroad, but the new practice – outsourcing – has gained significant ground recently especially in IT. Outsourcing in manufacturing flourished in the 80’s, followed by outsourcing in the service industry in the 90’s. The two major service areas being outsourced now are IT (Information Technology) and BPO (Business Process Outsourcing). My hypothesis states that the strength of enforcement of intellectual property rights can predict the levels at which US firms will engage in FDI or outsourcing in foreign countries.

This paper seeks to determine the impact of emissions allowance banking on incentives for firms to invest in improved abatement technology. It reviews prior literature and theory, as well as current knowledge regarding the U.S. SO 2 allowance-trading program, and then develops a two-period model of allowance banking and investment. This model shows that banking of emissions allowances reduces the optimal level of investment in research and development. This paper then explores the determinants of this reduction and finally suggests areas for further study.

This paper uses four measures of aggregate risk and one measure of idiosyncratic risk to test the empirical relationship between the per capita growth rate and the level of aggregate and individual income risk. It attempts to discern the proper functional from for a direct relationship and also analyzes the possibility of an effect via precautionary savings.

Laurie Miller - An empirical analysis of the relationship between TANF and child support payment levels in the U.S.

Recent public assistance and child support enforcement policies have been linked by the underlying assumption that the government can reduce welfare caseloads by increasing child support enforcement techniques. This implies that, in general, non-custodial parents are capable of supporting their children but, for whatever reason, currently are unwilling to do so. Using PSID (Panel Survey on Income Dynamics) data from 1999, I look at the relationship between TANF (Temporary Assistance for Needy Families) and child support payment levels throughout the United States to see if non-custodial parents treat TANF payments as an alternative form of support for their children. After controlling for spurious relationships caused by prior variables, I found that there was no statistically significant relationship between potential TANFand actual child support payment levels. Thus my data showed no evidence that non-custodial parents were substituting TANF payments for their own support of their children.

As knowledge creation marks the economy of 21 st century, Singapore prepares itself for the digital economy. In the creation of such an economy, information technology is an area that Singapore attempts to exploit for its benefits, and most of all, for driving economic growth. In this paper, Paul. M. Romer’s model of endogenous growth aids the analysis of whether Singapore can establish information technology as its next engine of growth after the electronics industry, her current economic strength. As an extension to Romer’s model in which the private sector is responsible for endogenous technological change, the government is a sector that will always be involved behind any technological activity carried out by the private sector. Throughout the analysis, the Singapore government has proven itself to be highly capable in promoting information technology, which brings us to the conclusion that information technology can become Singapore ’s next engine of growth in the near future.

Julie Bratten - Risk Aversion, Gender, and Sociodemographic Interaction Effects - Which Ones Matter?

Past economists posited a well-behaved and invariant formulation of risk aversion as a central tenet of utility theory. While this assertion allows for easy calculations, it does not reflect reality. Recent behavioral research suggests that risk aversion is individually, temporally, and contextually determined. This paper examines risk aversion in relation to gender, age, education, and income, and the interactions between them. Data from a recent Siberian sample are used to answer two primary questions: (1) Do age, education, and income increase or decrease risk aversion? (2) Are the effects the same for women and men?

I-Heng Emma Lee - An investigation into past Thai AIDS policies and their applicability to South Africa

This paper presents an investigation into past AIDS policies implemented in Thailand , and assesses whether after necessary modifications such policies can be applied to South Africa with the same success. Thailand’s AIDS crisis reached peak level in the early 90’s (much like the situation in South Africa today) , and despite its active commercial sex industry, it is nevertheless one of the few countries that has been able to keep the infection rate under control. The two countries are economically comparable since neither are fully advanced nor poor developing nations. Furthermore, there exist cultural similarities between the countries, for example the dominance of the male in households.

My findings indicate that South African AIDS policies should be divided into three components. First, family and community involvement is necessary to promote responsible sexual behavior as well as to supplement insufficient medical resources through the provision of homebased care. Next, government contributions should be directed at the creation of a 100% condom usage programme, and also to provide training as needed. Finally, private sector involvement is required to disseminate AIDS information and counseling in the workplace, which helps to reinforce the importance of the fight against rising HIV infection rates.

In addition, due to its significance across all sectors of the economy, education as a means to AIDS prevention is also discussed. Education is one of the means by which appropriate behavior and knowledge can be instilled at a young age, and from a trusted source. It is also a cost effective way to bring the community together for the infrastructure is most often already in place.

Mark Leher - An Assessment of the Ports of Hong Kong and Shanghai After China's WTO Accession

Shanghai has rapidly grown and developed thanks to strong government support since the early 1990s. Many analysts expect Shanghai to overtake Hong Kong as the most important city in China. This paper examines each city in regards to trade and looks at the impact of China's WTO accession. Hong Kong is expanding linkages with Southern China and improving synergies with its hinterland. Hong Kong firms have the knowledge and experience to capitalize on a post-WTO China that is more open to foreign firms than evre before; there are ample opportunities for service exports, especially trade and ligistics services. Shanghai continues to invest in infrastructure imporvements that will be much needed for it to serve its rapidly and naturally growing hinterland along the Yangtze River. Shanghai will venefit from more foreign direct investment and a more transparent trading environment, post-WTO. Hong Kong and Shanghai each serve a geographically separate hinterland, so ther is no rela competition for port services between the two cities. Each city will gain net benefits from China's WTO membership and China is big enough for each port to prosper in the future.

Kenneth Khin-Chung Lum - Reasons for Companies To Use Executive Coaching As a Form of Executive Training

Executive coaching is widely used by large corporations in the United States to train their executives from the late 1980s till today. It is the most expensive method of training due to its one-to-one executive approach but the effects of it are obviously significant because so many companies are using it. This paper aims to answer the question, why are companies using executive coaching despite its cost and risk of executive quitting after being trained? The results of the paper suggest that companies choose to use executive coaching because of four reasons. 1) The economic cost of executive coaching may be lower, equal or slightly higher than other forms of training. 2) Executive coaching increases executives’ productivity more than other forms of training. 3) Executive coaching increases executive retention rate 4) Companies who provide executive coaching have monopoly power over their executives. The paper is based on the Theory of Human Capital Investment and nineteen other references.

Using data are from the Federal Reserve Bank's 1998 and 2001 Survey of Consumer Finances, this study tests for "taste-based" discrimination in homeowner-household loans. The analysis consists of a series of probit regressions used to predict a household's probability of late payment. This late payment information is intrinsically valuable and may also be useful in determining eventual loan default. Results of the analysis show that, controlling for what the author considers relevant socioeconomic characteristics, minority headed households present a lower probability of being two months delinquent in loan payments at a statistically significant level in the 2001 observations; this probability is 29% for whites and 16% for non-whites. Though the results are similar for the 1998 observations (the probability of being two months late is 22% for whites and 19% for non-whites), the race coefficient is not statistically significant. When the 1998 and 2001 observations are restricted to households that have no second or third mortgage and whose first mortgage originated in the last five years, minorities are less likely to be delinquent in their loan payments in both data sets at a statistically significant level. The results of this study may be interpreted as evidence that "taste based" discrimination (that which is not based on profit maximization) exists. This paper provides a summary of other notable studies in the field of the economics of discrimination in mortgage lending and a review of the theoretical literature related to this topic in addition to these empirical results

John Quinlan - Modeling Remodeling - Outstanding Paper Honorable Mention 2003

Home remodel projects are usually framed in terms of how much market value they add to the home. This paper shows that most remodels actually have negative net market returns. Idiosyncratic benefits allow the total benefits of remodeling to be positive even if market returns are negative. These idiosyncratic benefits are closely tied to how long a homeowner expects to reside in their current home. Home sale patterns show that remodeled homes sell less often then their non-remodeled counterparts. Also, the amount of time elapsed between the end of the remodel job and the home sale is negatively related to net market returns.

Paul Vronsky - Higher Education Subsidies in Washington: A Case of Director’s Law

This study attempts to discern the income redistributive effects of higher education subsidies in the state of Washington and specifically the University of Washington. It reviews past literature and lays out a general framework for subsidizing higher education including resulting equity and efficiency consequences. Using participation rates and incidence of taxation among income quintiles, the results suggest that the system is a variant of director’s law (transfers from upper and lower income brackets to the upper middle class). Alternative subsidy and tuition schemes are proposed that would mollify the effects of the present system. Suggestions for further study and possible mitigation measures are offered.

Senior Thesis Abstracts - 2002

This thesis attempts to explain the reasons for the underperformance of the East German economy by analyzing the situation in East Germany over the last decade. Afterwards, the policy choices in Poland will be presented so as to provide perspective on those made in Germany. The author comes to the conclusion that three main principles are at fault: 1) the wage policy, 2) the privatization process, and 3) the investment measures chosen. Through analyzing these policies it becomes apparent that policy makers ignored market forces. These resulted in gross distortions that have harmed the economy in East Germany. Poland, in contrast, has for the most part been forced to follow market mechanisms more closely at the expense of immediate hardships for laborers. It has therefore confronted fewer distortions in transitioning from a centrally planned econmy to amarket economy and has a brighter positive outlook for the next decade.

Ryan Brooks - The Impact of the Major League Baseball Players Association on the Economics of Professional Baseball

This paper replays the proceedings that occurred in the negotiations, offers, and compromises between Major League Baseball's players and owners between the late 1960's and late 1970's and demonstrates that these proceedings deserve economic analysis. Many Economists have argued that the Coase Theorem can be applied to Major League Baseball, making an analysis of the effects of the MLBPA useless other than to describe the redistribution of wealth from owners to players. I present an argument that the Coase Theorem does not hold in this case, and the change from the reserve clause to a free agency system can have real effects on the allocation of players in Major League Baseball. I also show that a certain amount of exploitation of Minor League players is necessary for training to occur at all and that some semblance of the reserve clause is necessary for Major League Clubs to recover their training expenses.

This paper reviews the modern history of the Irish economy and the dynamics of its labor market. It explores the influences and pressures that have shaped and changed the labor market over the last 30 years. Significant influences include an increase in structural aid from the European Union, drastic reform of government spending policies, sectoral shift away from agriculture, and the influx of foreign capital, especially from the U.S., into growing tech and service sectors. These influences help explain trends seen in total employment, employment rate by cohort and gender, and participation rates. Analysis reveals that no single factor influenced a majority of any changes seen in the labor market, but rather that the factors worked together to promote change and growth.

This paper examines the market for live jazz in Seattle. Consumers of live jazz generally consume live jazz simultaneously with other goods and do so on the terms of venue owners, who negotiate the stipulations of performances with the musicians. The market exhibits heterogeneity of goods, producers and buyers. The heterogeneity of producers is the result of varying skill levels, varying artistic and consumer tastes. The high cost of transacting leads to inefficiency, although the market appears sustainable due to imperfect information.

Ryan Redekopp - Educational Freedom: Could Choice and Competition be the Solution to Seattle's Education Crisis?

Americans should be concerned with the efficiency of public schools not only as parents and taxpayers, but also as citizens who wish to continue to enjoy a growing economy centered around human capital intensive industries. Our public schools¹ ability to efficiently educate children will have broad effects on the macroeconomy, on trade, and on the nation¹s jobs. With these issues in mind, this paper examines the productivity outcomes of school vouchers and charter school initiatives in Minnesota and Wisconsin to determine if similar programs should be considered as an alternative to Washington¹s current standard-based accountability program.

Jorge Sebastian Roberts - Effects of Regional Integration on Trade Flows in the Americas

The world, at end of the 20th century, particularly the Americas, saw a revival of regional economic agreements. With the revival of these agreements there was also a renewed interest in this area of regional integration. This paper is part of this renewed interest. In this paper, I make use of a modified gravity model in order to estimate whether these regional agreements have contributed to the increases in trade flows between countries in the Americas. The estimates show that three out of the five major agreements (Central American Common Market, Andean Community, and MERCOSUR) have contributed significantly to the increases in trade flows, while the other two have not (NAFTA & G-3 Free Trade Agreement). In addition, these estimates show that all regional blocs, while increasing trade within their bloc, have continued to increase trade with non-member countries.

Indonesia was one of the countries that were badly hit by the Asian financial crisis. The real extent of insolvencies caused by a combination of deregulation and poor portfolio choices in the banking sector was finally exposed. To resolve this crisis, the government pledged to restructure the banking sector through bank recapitalization. This paper examines in depth the Indonesian experience of recapitalizing its undercapitalized banks and provides some comparisons with the experiences of the United States and Korea which were affected in a similar.

China has recently joined the World Trade Organization (WTO). As a result of China's becoming a WTO member; many economists with different analytical approaches and theories try to predict China's future economic growth. Ever since the Chinese government launched the economic reform and "open door" policies in 1978, China has proved to the world that the country is no longer traditional and conservative. My paper takes into account not only what the WTO entry means to China, but also the impact of the WTO entry to China's economy overall by looking at the implications of trade reform. Shanghai is the major case study in my paper since its location as a main port of international trade draw much attention and brings the most contributions to China's economic development.The city is an autonomous region run by the Municipal government named GuangXi Zhuang and is directly under China's Central government. Even though Shanghai is China's main port and an autonomous region, the city has not yet become an international finance and economic trade center like Hong Kong. How the city of Shanghai will improve to become a center for industry, finance, and trade is related to the trade implication reform. My paper will, therefore, examine the effects of trade liberalization on Shanghai's economy, especially in the areas of investments and industries. The goal of my paper is to predict the impact of China's WTO entry on Shanghai's future economic growth 5 to 10 years from now, such as whether or not this makes the process of Shanghai's becoming an international finance and economic trade center faster. In predicting Shanghai's future economic growth, there are some econometric models and related graphs that I made after I have completed my research.