Transcript presentation

Distributional Consequences
of Globalization
Ron Rogowski
UCLA
Broader View of “Globalization”
and “Consequences”
• Trade in
– Products
– Factors of production (migration, investment)
• Effects on (at least)
– World
– Nations
– Factors
– Sectors
Four (or five?) IPE Models
• Heckscher-Ohlin
• Specific-factors
– Samuelson-Jones
– Ricardo-Viner
• Neo-Ricardian (Davis-Weinstein)
• Economies of Scale
– Firm (Boeing v. Airbus)
– Locational or network
World and Country Effects
(Important for Redistribution)
• World welfare improved by trade,
migration in almost all models (EoS partial
exception)
• Country welfare
– Improved by trade in products in almost all
cases (EoS exceptions)
– May be diminished by migration (H-O, S-J,
neo-Ricardian)
Within-country Effects:
Heckscher-Ohlin
• Trade (in products)
– Benefits abundant factors
– Harms scarce factors
– Former outweighs latter (redistribution
feasible)
• Migration (of factors)
– Same benefits, harms
– Harm may outweigh gain in advanced
economies (redistribution not feasible)
Within-country Effects:
S-J Specific Factors
• Trade (in products)
– Has predictable effects on specific factors (by
relative abundance)
– Has ambiguous effects on the mobile factor
• Migration (of factors)
– Presumably benefits abundant, harms scarce
factors, regardless of specificity
– Hence mobile factor’s preferences on trade
may differ from those on migration
Within-country Effects:
R-V Specific Factors
• Trade (in products)
– Benefits exporting sectors, harms importcompeting ones: sectoral effects
• Migration (of factors)
– Presumably divides sectors along factoral
lines: e.g., import-competing capitalists want
immigration, import-competing workers
oppose it (?)
Within-country Effects:
Neo-Ricardian
• Trade (in products)
– Benefits all groups in all countries
• Migration (esp. of labor)
– Benefits all groups in poor (sending)
countries
– Harms all groups in rich (receiving) countries
– Former outweighs latter; world is better off
• Assumes mobile factors; what if factors
are specific?
Within-country Effects:
Locational EoS
• Trade (in products)
– Benefits (usually richer) country with
locational EoS (Krugman,Geography and
Trade)
– May harm (usually poorer) country (European
periphery, Canada ??)
– Harm may theoretically outweigh benefit,
leaving world worse off
Within-country Effects:
Locational EoS
• Migration (of factors)
– Complements, rather than substitutes for,
trade in products
– Usually harms sending area, benefits
receiving one, by diminishing / expanding
scale
Focus 1: Theoretical Anomalies,
esp. for H-O
• Why capital doesn’t migrate more to poor
countries (Lucas)
• Why skilled labor does migrate to rich
ones (Davis)
• Why free-trade coalitions form more easily
than free-migration ones (contrast to 19th
Century: cf. Williamson)
• Why preferences on migration differ from
those on trade
Focus 2: Possible Crucial Tests
• Do kinds of trade matter?
– Factor-endowments (H-O or S-J)
– Technological superiority (neo-Ricardian)
– EoS (Hollywood, Microsoft, Boeing)
• Does specificity of factors matter?
• Do preferences on trade differ from those
on migration in theoretically predictable
ways?
Focus 2: Possible Crucial Tests
• Do compensation mechanisms, related
institutional aspects, affect
– Acceptance of trade, migration?
– Specificity of factors, esp. human capital
(Estevez-Abe et al.)
• Does pace of opening (or of change in
compensation mechanisms) affect
preferences?