misthinking globalisation (iioa 10jul13)(40min)(final) · source: amador and cabral (2009)....
TRANSCRIPT
Misthinking Globalisation
Richard BaldwinGraduate Institute, Geneva &
University of Oxford
Conventional view of globalisation• Autarky to free trade, slowly.• Several ‘waves’, but single process.
1870–1990: Globalisation Trade costs
1913
1921 1938
1950
1990
1011111212131314141515
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9 Averge trade cost
Global trade flow (rightscale)
1870–1990: Globalisation Trade costs2.Rising tariffs
3.Falling tariffs & transport costs
1.Falling transport costs
Source: Gravity model based estimates of trade costs (Jacks, Meissner, Novy 2011).
Globalisation changed post‐1990
1990
1820, 22%
1900, 46%
1990, 66%
2012 47%
0%
10%
20%
30%
40%
50%
60%
70%
80%G7 world GDP share
What changed globalisation?• Follow the clues …
67%
11%
RoW
G7, 48%
10 gainers
27%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Global GDP shares, 1960‐2012
Post‐1990:• G7 share loss goes to 10
developing nations.• RoW see little change.
1990
Low
Lo-middle
Hi-Middle
1993
- 200 400 600 800
1,000 1,200 1,400 1,600
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2010
Millions under $2/day by national income class
People in poverty (under $2/day)
1980 – 1993 poverty:• Rising in Low and Low‐middle
income nations.• Flat in High‐middle income nations.
1990
Low
Lo-middle
Hi-Middle
1993
- 200 400 600 800
1,000 1,200 1,400 1,600
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2010
Millions under $2/day by national income class
People in poverty (under $2/day)
Post 1993• Hi‐middle poverty plummets.
‐ 650 million fewer poor!• Others’ poverty keeps rising.
1990
Global manufacturing shares, 1970‐20101990, G7
65%
China, 3%
6 risers,
5%
RoW
0%
10%
20%
30%
40%
50%
60%
70%
80%
1970
1975
1980
1985
1990
1995
2000
2005
2010
Wor
ld m
anuf
actu
ring
shar
e
Source: unstats.un.org; 6 risers = Korea, India, Indonesia, Thailand, Turkey, Poland
1990, G7
65%
3%
6 risers,
5%
RoW
47%
China, 18%
9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
1970
1975
1980
1985
1990
1995
2000
2005
2010
Wor
ld m
anuf
actu
ring
shar
e
Source: unstats.un.org; 6 risers = Korea, India, Indonesia, Thailand, Turkey, Poland
• 7 ‘losers’.• 7 ‘risers’.• RoW = little change.
Nature of trade: Vertical specialisation
Africa
G7
Asia ex Jpn
LatAm
0
0.5
1
1.5
2
2.5
3
3.5
419
6719
6919
7119
7319
7519
7719
7919
8119
8319
8519
8719
8919
9119
9319
9519
9719
9920
0120
0320
05
Vertical specialisation index
1990
Source: Amador and Cabral (2009).
Germany-France
US-Mexico
Germany-PolandUS-
Mexico
Japan-Thailand
0%
10%
20%
30%
40%
50%
60%
70%
80%
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
Intraindustry trade indices
Nature of trade changed: Intra‐industry trade (IIT)
1990
Trade & investment policiesDeveloping nations
BITs signed
per year
(right scale)
World FDI ($ billion)
1988
0
500
1000
1500
2000
2500
0
50
100
150
200
250
1959
1964
1969
1974
1979
1984
1989
1994
1999
2004
2009
South Asia
Sub-Saharan Africa
Middle East & North Africa
East Asia
US, Japan & EU0
5
10
15
20
25
30
35
40
45
50
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Applied tariffs (%)
What changed globalisation?
CluesClue #1: The change is:• Historic in size,• Global in reach, • Unevenly spread geographically.Clue #2: The change is:• Related to manufacturing & trade in intermediates.
Clue #3: Transformed developing nations’ views of trade & investment.
It’s FDI
It’s ‘hyper‐globalisation’
It’s FDI
It’s vertical specialisation
It’s ‘Emerging Markets’
It’s the East Asian ‘miracle’ It’s
capital flows
Buzzwords in lieu of analysis
It’s FDI
It’s ‘hyper‐globalisation’
It’s FDI
It’s vertical specialisation
It’s ‘Emerging Markets’
It’s the East Asian ‘miracle’ It’s
capital flows
Elephant = international movement of firm‐specific know‐how.“GVC revolution”Know‐how becomes:1) Firm‐specific, not nation‐specific.2) Rapidly combined with South
labour – but only in a few developing nations.
We need a new narrative for globalisationGlobalisation as 2 processes, not 1
Globalisation: 3 cascading constraints
High HighHigh
Stage BStage A
Stage C
1stunbundling=
Stage B
Stage A Stage C
2ndunbundling=
Pre‐globalised world
=
Low LowHigh
ICT revolution
LowHigh High
Steam revolution
Distance still matters
Regionalization of supply chainsHypothesis: people still expensive to move. • “Face‐2‐face” and “Face‐2‐
machine” constraints.
Economy Period of +7% growth GDP/pop at start GDP/pop in 2005
Botswana 1960–2005 210 3,800
Brazil 1950–1980 960 4,000
China 1961–2005 105 1,400
Hong Kong, China* 1960–1997 3,100 29,900
Indonesia 1966–1997 200 900
Japan* 1950–1983 3,500 39,600
Korea, Rep. of* 1960–2001 1,100 13,200
Malaysia 1967–1997 790 4,400
Malta* 1963–1994 1,100 9,600
Oman 1960–1999 950 9,000
Singapore* 1967–2002 2,200 25,400
Taiwan, China* 1965–2002 1,500 16,400
Thailand 1960–1997 330 2,400
Misthinking industrialisation: Spence growth commission (2008)
Misthinking globalisation = misthinking economics
• 1st unbundling thinking:
• 2nd unbundling thinking:– Globalisation changes technology in some developing nations.
– Know‐how flows directly in ‘global value chains’ & indirectly via intermediates.
[ , ]Jpn Jpn Jpn JpnY A F L K
Economics of 2nd unbundling• 2 ways of recombination hi‐tech & low‐wages:
– Direct: North know‐how moves to South labour • (offshoring).
– Indirect: North know‐how moves to South in components.
• (trade in parts & components).
NB: Comparative advantage becomes a multi‐country concept.
1st unbundling:
SSDSDN
P’
Quantities World trade Quantities
euros euros euros
P’-T
TSNXS
MD
1st unbundling: Trade costs fall North industrialises; South de‐industrialises
SSDSDN
P’
Quantities World trade Quantities
euros euros euros
P’-T
TSNXS
MD
PFT PFT
S produces less & imports more
N produces & exports more
2nd UB Direct recombination of North tech with South labour
SSDSDN
Quantities World trade Quantities
euros euros euros
SNXS
MDMD’
S’S XS’
P2UB P2UB
PFT PFT
S exports
N exports
Quantity,parts
DY
SZ
DZ
euros euros
MCZ
Quantity,final goodsQY=QZ
SY WZP
PY
MZ
Trade in parts can switch comparative advantage
QY
South South
S’Z
PYP
X’ZQ’
Y
Basic economic difference• 1st unbundling globalisation:
– Exploit comparative advantage by producing more at home & exporting.
• 2nd unbundling globalisation:– “Sources of comparative advantage” move internationally.
Rethinking impact of globalisation• The death of production functions?
• Globalisation works with a finer degree of resolution.– Need IO work to track its impact.
• Old, bold approaches need more detail.• Open up the blackbox of production functions.
[ , ]Jpn Jpn Jpn JpnY A F L K
Key difference for policy• 1st unbundling = UB
– Slow, predictable, controllable (tariff cuts).– By sector and skill‐group.
• 2nd unbundling = 2UB– Sudden, individual, unpredictable.– Globalisation with a ‘finer degree of resolution’.
GVC revolution:Policy rethinks necessary
1. Social & education policy.2. Industrial policy.3. Urban policy.4. Trade policy & Global trade governance.
#5: Development policy• Traditional industrialisation = build a supply chain (e.g. Korea).
• After 2nd unbundling, industrialisation = join a supply chain (e.g. Thailand).
• Some key points:– Industrialisation is easier but less significant.– 2nd unbundling killed import substitution.
• North tech + South labour unbeatable.
00.10.20.30.40.50.60.7
- 10,000 20,000 30,000 40,000 50,000Per capita GDP (2000 $s)
Importing to export: Rising then falling with incomeHolmes‐Lopez‐Gonzales curve
Development paths changed
END• Thank you for listening.• Please continue developing Int’l IO tables and the like.– World of 2nd unbundling needs finer ganularity!
• Unpaid avert: please visit:www.VoxEU.org
“Research‐based policy analysis and commentary by leading economists”
Extra slides for Q&A
1UB
z, sectors
w/w*
A(z)
zx
e
EU exports EU imports
Foreign goods in Home
Home goods in Foreign
Non‐tradedzm
Job destruction
Job creation
Non‐traded
Globalisation’s impact is:1. Slow & controlled.‐ Mainly tariff
liberalisation2. Predictable.‐ ‘Sunset’ sectors like
those already lost.‐ ‘Sunrise’ sectors like
those already exporting.
3. Globalisation’s impact felt at level of sectors & skill groups.
Postwar tariff liberalisation
39
2nd unbundling: Industrialisation easier, but less meaningful
wage
VMPLA
Social Value Marginal Product of Labour in Manufacturing
LLM
M
A
SVMPLM (ISI)
L’M
U
2UB: External economies with GVC
L’M
U’
Supply‐chain trade by industry
0% 10% 20% 30%
Non-metallic…Mining
Basic metals &…Wood & related
Rubber & PlasticsPaper & related
Chemicals &…Fuels
Ag & relatedElect & Opt'l equip
Textiles & relatedTransport equipMachinery, nec
Leather &…Manufacturing,…Food & related
All services
Totalworldexportshares '09
0% 20% 40% 60% 80%
Non-metallic…Mining
Basic metals &…Wood & related
Rubber & PlasticsPaper & related
Chemicals &…Fuels
Ag & relatedElect & Opt'l equip
Textiles & relatedTransport equipMachinery, nec
Leather &…Manufacturing,…Food & related
All services
Worldfinalshare, '09
Worldfinalshare, '95
I2P '09 UK
Ger
man
y
Fran
ce
Itlay
NL
Bel
gium
Aus
tria
Pola
nd
Cze
ch
Den
mar
k
Spai
n
Portu
gal
Finl
and
Gre
ece
Irela
nd
Turk
ey
Swed
en
Bra
zil
Rus
sia
Indi
a
Indo
nesi
a
Aus
tralia
Taip
ei
Chi
na
Japa
n
Kor
ea
US
Mex
ico
Can
ada
RoW
UK 0% 0% 0% 0% 1%Germany 0% 1% 0% 0% 0% 1% 0% 2%France 0% 1%Itlay 1%NL 1% 0% 0%Belgium 0%AustriaPolandCzechDenmark 0%Spain 0%PortugalFinlandGreeceIreland 0%Turkey 0%Sweden 0%Brazil 0%Russia 1%India 0%Indonesia 0%Australia 1% 0%Taipei 1% 0%China 1% 0% 1% 1% 2% 4%Japan 1% 0% 0% 2%Korea 1% 1%US 0% 0% 0% 1% 0% 1% 1% 4%Mexico 1%Canada 2%RoW 1% 1% 1% 1% 1% 0% 0% 0% 1% 0% 0% 0% 4% 2% 1% 3%
I2P trade: Bilateral intermediate imports as % of global flows, 2009
Factory Europe
Factory Asia
FactoNorA
2nd unbundling: Differences for policymaking
• Misthinking globalisation = misthinking policy.2nd unbundling:1. Less predictable.
– Globalisation changes national comparative advantage.
2. More sudden.– Not controlled by tariff cutting.
3. More individual.– Not by sectors or skill‐groups.