the future of globalisation and challenges for advanced ...€¦ · (labour services) trade costs...
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The future of globalisation and challenges for advanced economies comments based largely on my book THE GREAT CONVERGENCE: Information Technology and the New Globalisation, Harvard University Press
RICHARD BALDWIN P R O F E S S O R O F I N T E R N AT I O N A L E C O N O M I C S THE GRADUATE INSTITUTE I GENEVA
17 May 2018, ECB Frankfurt
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Globalisation changed radically (twice) Shares of world income
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Arbitrage drives globalisation
• Goods
• Knowhow
• Labour
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Arbitrage is constrained by 3 costs
Communication costs (ideas)
Face-to-face costs (labour services)
Trade costs (goods)
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Globalisation: Past, Present, Future
GOODS – « Old Globalisation »
KNOWHOW - « New Globalisation »
LABOUR - « Future Globalisation »
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High High wages Knowhow Labour
Low Low wages Knowhow Labour
Global value chains open a ‘pipeline’ for globalisation as knowledge arbitrage
Factory Economies
Headquarter Economies (G7)
High Tech + Low Wages Revolutionises World Manufacturing
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The future is unknowable, but also inevitable
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High High wages Knowhow Labour
Low Low wages Knowhow Labour
Digital technology opens a pipeline for direct international wage competition
Factory Economies
Headquarter Economies (G7)
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Future globalisation: Office jobs, not factory jobs
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Tele-migration People sitting in one nation & working in offices in another nation
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Economics => profitable Digitech => possible
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4 ways digital technology is lowering barriers to tele-migration
• Domestic remote work paves the way. • Online “match making” platforms. • Machine translation. • Advanced telecommunication technology.
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Global “talent tsunami”
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- Mismatch of velocities => Short run upheaval - Policy response?
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Long term: More local, more human, and richer