In defending trade from misguided protectionism, economists argue that the main killer of manufacturing employment around the world has been technology, not trade. This column explores how globalisation has caused the sectoral structures of countries to conform more closely to their factor endowments. In the skill-abundant developed regions, manufacturing became more skill-intensive, while in skill-scarce and land-scarce Asia, labour-intensive manufacturing expanded. In land-abundant developing Africa, Latin America, and the Middle East, by contrast, manufacturing contracted.
Adrian Wood, 18 March 2017
Pol Antràs, Teresa Fort, Felix Tintelnot, 12 March 2017
A growing body of economic research documents the potential negative effects of increased trade integration, often with a focus on increased Chinese import penetration. This column argues that some US firms benefit significantly from increased import opportunities as they lower their costs and expand. Protectionism in the form of higher domestic tariffs would decrease these domestic firms’ competitiveness both at home and abroad.
Thorsten Beck, Geoffrey Underhill, 01 March 2017
The institutions and even the very idea of the EU are under fire, with feelings of disenfranchisement among large parts of the population driving support for populist movements across the continent. This column introduces a new eBook that brings together analyses of this multidimensional crisis and of the way out - the future of the European Union. A worryingly common message is that muddling through will not be enough to save the EU as a political project.
Victor Kummritz, Bastiaan Quast, 25 February 2017
Global value chains offer a new way for developing countries to industrialise. This column provides a deep examination of the pattern of developing countries’ integration in these chains and shows that changes in integration are increasingly driven by low- and middle-income countries, while the integration of high-income countries has begun to even out. It also shows that low- and middle-income countries are still more specialised in downstream activities and typically export less domestic value added.
Marco Buti, Karl Pichelmann, 22 February 2017
With its current competences lacking the ability to address distribution effects, the EU is seen as an agent of globalisation rather than a response to it. At the same time, it is charged with undermining national autonomy, identity, and control. This column sets out five guiding principles for policy articulation at the EU level for a new positive EU narrative.
Italo Colantone, Piero Stanig, 20 February 2017
The revival of nationalism in western Europe, which began in the 1990s, has been associated with increasing support for radical right parties. This column uses trade and election data to show that the radical right gets its biggest electoral boost in regions most exposed to Chinese exports. Within these regions communities vote homogenously, whether individuals work in affected industries or not.
Yasuyuki Todo, 16 February 2017
From the US withdrawal from the TPP to the Brexit negotiations, the tide of trade policy is turning towards protectionism. This column outlines how this could create a vicious cycle of lower productivity and closed economies, and what Japan, as the world’s third largest economy, can do to prevent it. A combination of trade and investment liberalisation and inclusive policies will enable all citizens to enjoy the fruits of growth under globalisation.
Lucian Cernat, Marion Jansen, 07 February 2017
For some time, it was possible to win over trade sceptics by providing explicit numbers reflecting the losses from protectionism. Now it seems that the larger public has become indifferent to evidence-based debates. This column argues for increased use of micro-evidence and firm-level data in policy debates to make the case for trade. By linking trade to personal well-being, an increased focus on micro-economic evidence can generate stronger narratives and greater credibility among voters.
Wolfgang Dauth, Sebastian Findeisen, Jens Südekum, 26 January 2017
The decline of manufacturing jobs in the US has been the focus of much attention recently, with rising trade with China cited as one explanation. This column describes how the German economy has experienced a similar secular decline in manufacturing and rising service employment, but that growing trade with China and Eastern Europe did not speed up this trend. In fact, rising exports to the new markets have stabilised industry jobs.
Sean Dougherty, Sarra Ben Yahmed, 20 January 2017
Globalisation offers many benefits, some of which cannot be separated from other types of policy. This column examines how the benefits from removing regulations that impede competition are partly contingent on openness to import competition. Using recent firm-level analyses of productivity growth, it argues that those firms that contribute the most to overall growth could also be held back by reduced openness, harming overall advances in incomes.
Jacques Bughin, Susan Lund, 09 January 2017
In around 25 years, the internet has become an integral part of our daily lives, connecting billions of users and businesses worldwide and leading to an explosion in the volume of cross-border digital flows. This column attempts to measure these flows and their impact on global activity in general. Global flows of goods, services, finance, people, and data have raised world GDP by at least 10% in the past decade, with the contribution to growth of GDP from data flows nearly matching the value of global trade in physical goods and services.
Ian Tomb, Kamakshya Trivedi, 06 January 2017
It has become consensus to argue that we have approached ‘peak trade’ or the ‘end of globalisation’: that the past five years of stagnant global trade growth are not temporary, but instead reflect persistent forces that are likely to drive a continued stagnation in global trade over the long run. Though this view preceded the Brexit referendum, this column argues that it has now been amplified by the UK’s vote to leave the EU and the prospect that, potentially, US President-elect Trump and other leaders across developed markets will implement protectionist trade policies. The authors consider the arguments for ‘peak trade’, and conclude that, though downside risks to the trade outlook are prominent, there is little evidence – yet – that the current stagnation in global trade is predestined to extend far into the future.
Danny Leipziger, 08 December 2016
Despite lifting millions out of poverty, globalisation is facing growing political opposition. This column surveys the successes and failures of globalisation, and some of the critical policy implications. Globalisation has reached a stage where its benefits have been captured but its costs have been largely ignored. Going forward, governments need to address inequality and social inclusion, boost global investment, and restore confidence.
Klaus Desmet, Dávid Krisztián Nagy, Esteban Rossi-Hansberg, 30 November 2016
Recent political events have highlighted a growing anti-globalisation sentiment, evident in scepticism towards free trade and resistance to immigration. However, existing analyses focus on short-term, local effects. Using global data, this column takes account of the complex relations between trade, migration, innovation, and growth. Liberal trade and immigration stances are found to have positive effects on global output. The results suggest that globalisation remains a tremendously powerful engine of growth.
Italo Colantone, Piero Stanig, 23 November 2016
The vote for Brexit was a watershed moment in European politics. This column investigates the causal drivers of differences in support for the Leave campaign across UK regions. Globalisation in the form of the ‘Chinese import shock’ is found to be a key driver of regional support for Brexit. The results suggest that policies are needed that help to redistribute the benefits of globalisation across society.
Alexander Al-Haschimi, Martin Gächter, David Lodge, Walter Steingress, 14 October 2016
Exceptionally weak global trade growth over recent years has presented a puzzle to academics and policymakers alike. This column presents a study by an expert network across European central banks which suggests that it may actually be the past strength of trade which was exceptional, rather than the subsequent slowdown. The recent deceleration of trade growth can thus be seen as a ‘great normalisation’. The important implication is that an upturn in aggregate demand will not necessarily lead to a significant recovery in global trade.
Christian Dippel, Robert Gold, Stephan Heblich, 07 October 2016
The increasing polarisation of politics in the US in particular has spurred scholarly research on the potential links to increasing globalisation. This column focuses instead on Germany to investigate whether the rise of right-wing populism is associated with increased international trade. Regions most threatened by exposure to imports saw increases in support for far-right parties, while regions that benefited from export opportunities saw decreases. To counter this globalisation backlash, policy should aim to cushion the effects of trade exposure on the losers from globalisation.
Robert Gold, 26 September 2016
Does rising globalisation lead to fringe politicians coming to power? Robert Gold discusses the effect of two historical events that changed globalisation on German national elections. This video was recorded during the European Economic Association's Congress held in Geneva at the end of August 2016.
Dalia Marin , Linda Fache Rousová, Thierry Verdier, 21 September 2016
We know little detail about how much multinational firms transplant their organisational culture to affiliates. Data from Austrian and German multinational firms shows that, contrary to what we might expect, almost 70% of foreign investments do not adopt the parent firm's mode of organisation. This column argues that the size of the home and host markets, and the level of competition in each market, all influence the decision to transplant culture. Globalisation also creates 'reverse transplanting', in which the parent firm's organisation becomes more like the optimal organisation of the subsidiary.
Miguel Niño-Zarazúa, Laurence Roope, Finn Tarp, 20 September 2016
Since the turn of the century, income inequality has risen to be among the most prominent policy issues of our time. This column looks at inequality trends in recent decades. While relative global inequality has fallen, insufficient economic convergence, together with substantial growth in per capita incomes, has resulted in increased absolute inequality since the mid-1970s. The inclusivity aspect of growth is now more imperative than ever.