-5 CCBE Globalization

trade openness index formula

(exports + imports)/GDP

trade openness index interpretation

the higher the index, the higher the influence of trade transaction on economic activity

technological progress on PPF

shifting/tilting the graph

opportunity ocst

ratio of sacrifice in one good in terms of gain in the other

Prebisch-singer hypothesis (mixed results and limited support

incomes rising -> higher spending on manufactured goods, lower spending on primary products

Franker and Romer

Instrumental variable approach, used geography as a proxy for trade

Stolper-samuelson theorem

strong re-distributive implications of free trade

techology adoption through trade

decreases the need for physically demanding skills and improves relative wage and employment of women

endogeneity problem

basically correlation does not equal causation

pre-globalized world

close proximity to production, all costs are high, local monopoly, small markets (limits to division of labour)

first unbundling of globalization 1820-1980

lower transportation costs, lower monopolies, appearance of mass production, turn-over times of capital increase (time between investing and receiving profit)

results of first unbundling

old international division of labour (often artificially) (primary commodities outsources to global south), knowledge and information remain in global north, The divergence (europe and us eclipse the rest of the world)

rebundling between two wars

Increased tariffs, production returned to be mainly for domestic consumption

second unbundling 1945+

international flow of goods/ideas/know-how/investment, increases turnover time of capital further, faster product life cycles

Lower middle classes of the rich during globalization

made the weakest relative gains

winners of globalization

asian poor and middle classes

loosers of globalization

lower middle class of the rich world (manufacturing workers)

globalization and inequality

the income gaps between the top and bottom have widened

Hecksher-ohlin theory

a country will export goods that are intensive in the factor in which it has an advantage and import those products in which it has a factor endowment

Rodrik's economic arguments for populist backlash

redistributive effects of liberalization get larger and tend to swamp the net gains as the trade barriers in question become smaller

commodity

a product that can be bought and soldo

precarization

the process by which the number of people who live in precarity increasesp

precarity

a situation in which someone's job or career is always in danger of being lost

results of precarization

populist election pols, right-wing turning against immmigation, lest wing turning agains wto/eu (souther europe and latin america)

Daniel Rodrik's trilemma

can't have all 3: hyper globalisation, national sovereignty, democratic policies

Rodrik's straight jacket

authoritarian government, hyper-globalisation, national sovereignty (ex: kinda china)

Rodrik's Global governance

hyper-globalisation, democratic policies (kinda like eu)

Rodrik's bretton woods

national sovereignty, democratic policies (kinda like brexit)