Gianmarco Ottaviano, 03 July 2019

Economic geography strikes back. After a couple of decades of easy talk about the ‘death of distance’ in the age of globalisation, the promise of a world of rising living standards for all is increasingly challenged by the resilience of regional disparities within countries. As long as many people and firms are not geographically mobile – and those who are tend to be the most skilled and productive – easier distant interactions can actually strengthen rather than weaken agglomeration economies. Recent electoral trends in Europe can be understood to a surprisingly large extent from this angle. 

Nicola Gennaioli, Guido Tabellini, 06 June 2019

In recent decades, the political systems of advanced democracies have witnessed large changes, often in reaction to economic shocks due to globalisation and technology.  This column uses insights from the social psychology of groups to explain how when large shocks hit, new cleavages in society emerge. This causes individuals to shift their beliefs about themselves and others in the direction of new social stereotypes. If globalisation clusters society in a nationalist versus cosmopolitan cleavage instead of the traditional left versus right, this may dampen demand for redistribution despite potential increases in income inequality. 

Sergi Basco, Martí Mestieri, 19 May 2019

Trade in intermediates (or ‘unbundling of production') and trade in capital have become increasingly important in last 25 years. This column shows that trade in intermediates generates a reallocation of capital across countries that exacerbates world inequality in both income and welfare. Unbundling of production hurts middle-income countries but helps those with high productivity. Trade in intermediates also increases within-country inequality, and this increase is U-shaped in the aggregate productivity level of the country. 

Leonardo Baccini, Giammario Impullitti, Edmund Malesky, 17 May 2019

The recent success of China and Vietnam over the past three decades has triggered a debate over ‘state capitalism’ as a viable growth and development model. This column studies the effect of the 2007 WTO accession on the productivity, profitability, and survival rates of state-owned and private Vietnamese firms. The findings reveal that state-owned enterprises have hampered the efficiency gains brought about by globalisation. An analysis suggests that productivity gains from trade five years after WTO entry might have been 66% higher in the absence of state-owned firms.

Susan Lund, Jacques Bughin, 10 April 2019

The history of trade reflects the ongoing march of technological innovation. This column argues that despite today’s increased trade tensions, rising nationalism, and slowdown in global goods trade, globalisation is not in retreat. Instead, it is entering a new chapter that is being driven by flows of information and data, as well as technological changes that are reshaping industry value chains.

Jonathan Dingel, Kyle Meng, 06 March 2019

Climate change is expected to reshape the global distribution of productivities. In theory, shifts in the spatial structure of economic conditions will affect international inequality by altering the pattern of international trade. In practice, it is hard to identify natural experiments to causally validate predictions about global conditions. This column describes research that exploits a global climatic phenomenon to estimate the general equilibrium consequences of changes in the spatial correlation of productivities. 

Rui Esteves, 15 February 2019

A new data set compiles the history of international finance spanning a century and a half, revealing new information about globalisation, crises and capital flows. Rui Esteves of the Graduate Institute, Geneva, tells Tim Phillips what lessons it offers for policymakers today.

James Harrigan, Ariell Reshef, Farid Toubal, 23 January 2019

Economists have studied the nexus between labour demand, globalisation, and technology adoption for decades, but quantifying the relative importance of these factors is challenging. Using firm-level data from France, this column proposes a new measure of productivity based on the number of workers in technology-related occupations. It finds large effects of importing, ICT, and R&D on the relative demand for skilled workers through their effects on productivity. Interestingly, the demand for both skilled and unskilled workers rises when firms hire ‘techies’ or engage in offshoring.

Bernhard Michel, Caroline Hambÿe, Bart Hertveldt, 21 January 2019

Domestic value creation is shaped by how and to what extent economies integrate into global value chains. This column argues that further insights can be gained by distinguishing export-oriented and domestic market firms in standard indicators of global value chain integration and participation. Using data for Belgium, it documents that export-oriented firms differ from domestic market firms in terms of input structure and import patterns. These two types of firms play different roles in determining the nature of a country’s global value chain participation.

Richard Baldwin, 23 November 2018

, 12 November 2018

Major cities are thriving as the world becomes increasingly interconnected, but many places are also missing out. In this video, David Arnold and Riccardo Crescenzi of LSE and Mara Giua of Roma Tre University give an overview of the LSE's Global Investment – Local Development project, which examines the mistakes that many regions are making and offers solutions on how to move forward.

Costas Arkolakis, Natalia Ramondo, Andres Rodríguez-Clare, Stephen Yeaple, 08 October 2018

One consequence of the last decades of globalisation is that, thanks to multinational firms, goods are increasingly being produced far from where ideas are created. Using general equilibrium modelling, this column analyses the welfare and distributional effects of the recent wave of protectionism. Central to the results is the flexibility that multinational firms have in locating their innovation and production activities around the globe.

Lubos Pastor, Pietro Veronesi, 28 September 2018

The vote for Brexit and the election of protectionist Donald Trump to the US presidency – two momentous markers of the ongoing pushback against globalisation – led some to question the rationality of voters. This column presents a framework that demonstrates how the populist backlash against globalisation is actually a rational voter response when the economy is strong and inequality is high. It highlights the fragility of globalisation in a democratic society that values equality.

Lee Branstetter, Britta Glennon, J. Bradford Jensen, 21 August 2018

US firms have begun shifting R&D investment towards non-traditional destinations such as China, India, and Israel. The column argues that this is a response to a shortage in software and IT-related human capital within the US. When US multinationals are able to import talent or export R&D work, this reinforces US technological leadership. Conversely, politically engineered constraints on this response will undermine the competitiveness of US-based firms.

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