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The Great Convergence: Information Technology and the New Globalization by Richard Baldwin
3D printing, additive manufacturing, Admiral Zheng, agricultural Revolution, air freight, Amazon Mechanical Turk, Berlin Wall, bilateral investment treaty, Branko Milanovic, buy low sell high, call centre, Columbian Exchange, commoditize, Commodity Super-Cycle, David Ricardo: comparative advantage, deindustrialization, domestication of the camel, Edward Glaeser, endogenous growth, Erik Brynjolfsson, financial intermediation, George Gilder, global supply chain, global value chain, Henri Poincaré, imperial preference, industrial cluster, industrial robot, intangible asset, invention of agriculture, invention of the telegraph, investor state dispute settlement, Isaac Newton, Islamic Golden Age, James Dyson, knowledge economy, knowledge worker, Lao Tzu, low skilled workers, market fragmentation, mass immigration, Metcalfe’s law, New Economic Geography, out of africa, paper trading, Paul Samuelson, Pax Mongolica, profit motive, rent-seeking, reshoring, Richard Florida, rising living standards, Robert Metcalfe, Second Machine Age, Simon Kuznets, Skype, Snapchat, Stephen Hawking, telepresence, telerobotics, The Wealth of Nations by Adam Smith, trade liberalization, trade route, Washington Consensus
First, since industrialization can happen stage by stage in global value chains (rather than sector by sector as in the Old Globalization world), industrialization policy is easier and less risky. Industry can be established with a series of small nudges rather than a few big pushes. Second, the sequencing question was blurred by the fragmentation implicit in the global value chain revolution. Developing nations may jump straight into exporting what may look like highly advanced sectors such as aerospace or automobiles. Instead, new questions arise: What global value chains should be joined? How can the country keep expanding and strengthening its participation in global value chains? And—most important—how can it turn global value chain participation into sustainable development? The last key point is simply that global value chains are not magical.
Industrialization and broader development only come by densifying participation in these international production networks. This can happen far faster as global value chains remove bottlenecks, but global value chains are not magical. They are only door openers. Most of the hard work in pushing a nation into middle-income ranks and beyond still has to be done at home. Development means getting more value added from a country’s productive factors. This requires improvements in labor skills and technological capabilities as well as fixing domestic market failures and knitting social cohesion to ensure a consensus stays in favor of economic progress. In a 2014 report from the World Bank, Making Global Value Chains Work for Development, Daria Taglioni and Deborah Winkler write that three new policy issues arise when it comes to global value chains.8 How to enter global value chains. How to expand and strengthen participation in global value chains.
How to expand and strengthen participation in global value chains. How to turn global value chain participation into sustainable development. The GVC Entry Question In global value chains, like dancing, it takes two to tango. National governments cannot unilaterally dictate global value chain participation. They have to induce foreign partners to set up new production facilities or invite existing national firms into their network. As discussed in Chapter 8, global value chain production requires two sets of policies. First are policies that convince the foreign firms that they can safely do business in the developing nation. When these firms set up production facilities—or even when they form long-term ties with suppliers—they are exposed to theft of their tangible and intangible property. If a nation hopes to attract global value chain production, it will need to find a way to provide assurances that property rights will be protected.
The Innovation Illusion: How So Little Is Created by So Many Working So Hard by Fredrik Erixon, Bjorn Weigel
Airbnb, Albert Einstein, asset allocation, autonomous vehicles, barriers to entry, Basel III, Bernie Madoff, bitcoin, Black Swan, blockchain, BRICs, Burning Man, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, Clayton Christensen, Colonization of Mars, commoditize, corporate governance, corporate social responsibility, creative destruction, crony capitalism, dark matter, David Graeber, David Ricardo: comparative advantage, discounted cash flows, distributed ledger, Donald Trump, Elon Musk, Erik Brynjolfsson, fear of failure, first square of the chessboard / second half of the chessboard, Francis Fukuyama: the end of history, George Gilder, global supply chain, global value chain, Google Glasses, Google X / Alphabet X, Gordon Gekko, high net worth, hiring and firing, Hyman Minsky, income inequality, income per capita, index fund, industrial robot, Internet of things, Jeff Bezos, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, Joseph Schumpeter, Just-in-time delivery, Kevin Kelly, knowledge economy, labour market flexibility, laissez-faire capitalism, lump of labour, Lyft, manufacturing employment, Mark Zuckerberg, market design, Martin Wolf, mass affluent, means of production, Mont Pelerin Society, Network effects, new economy, offshore financial centre, pensions crisis, Peter Thiel, Potemkin village, price mechanism, principal–agent problem, Productivity paradox, QWERTY keyboard, RAND corporation, Ray Kurzweil, rent-seeking, risk tolerance, risk/return, Robert Gordon, Ronald Coase, Ronald Reagan, savings glut, Second Machine Age, secular stagnation, Silicon Valley, Silicon Valley startup, Skype, sovereign wealth fund, Steve Ballmer, Steve Jobs, Steve Wozniak, technological singularity, telemarketer, The Chicago School, The Future of Employment, The Nature of the Firm, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, transaction costs, transportation-network company, tulip mania, Tyler Cowen: Great Stagnation, University of East Anglia, unpaid internship, Vanguard fund, Yogi Berra
19.Smithers, The Road to Recovery, appendix 2. 20.For a comparison, see Lebrun and Pérez Ruiz, “Demand Patterns in France, Germany, and Belgium,” 5. 21.The Economist, “The Sick Man of the Euro.” 22.Sinn, “The Pathological Export Boom and the Bazaar Effect.” 23.Aichele, Felbermayr, and Heiland, “Neues von der Basarökonomie.” 24.Sally, States and Firms. 25.Servan-Schreiber, The American Challenge. 26.Safarian, Multinational Enterprise and Public Policy. 27.Dunning, The Globalization of Business. 28.IMD, IMD World Competitiveness Yearbook. 29.Hansakul and Levinger, “China–EU Relations,” 2. 30.Galbraith, The New Industrial State, 38. 31.Bernard, Jensen, and Schott, “Importers, Exporters and Multinationals.” 32.UNCTAD, “World Investment Report 2013.” 33.Altomonte et al., “Global Value Chains during the Great Trade Collapse.” 34.Baldwin, “Trade and Industrialisation after Globalisation’s 2nd Unbundling.” 35.Manyika et al., “Digital Globalization.” 36.Baldwin, “Globalisation.” 37.Desai, “The Decentering of the Global Firm.” 38.Baldwin and Robert-Nicoud, “Trade-in-Goods and Trade-in-Tasks.” 39.Krugman, “Growing World Trade.” For documentation of literature and trade patterns, see also WTO, “World Trade Report 2008.” 40.Escaith and Inomata, “Trade Patterns and Global Value Chains in East Asia.” 41.Hummels, Rapoport, and Yi, “Vertical Specialization.” 42.Lanz and Miroudot, “Intra-firm Trade.” 43.Bernard et al., “Intra-firm Trade and Product Contractibility.” 44.Timmer et al., “Slicing up Global Value Chains,” 104. 45.Dedrick, Kraemer, and Linden, “Who Profits from Innovation in Global Value Chains?”
., “Slicing up Global Value Chains,” 104. 45.Dedrick, Kraemer, and Linden, “Who Profits from Innovation in Global Value Chains?” 46.Athukorala, “Production Networks and Trade Patterns in East Asia.” 47.IMF, “German-Central European Supply Chain – Cluster Report.” 48.For data on the foreign value-added content of exports in Europe, see Amador, Cappariello, and Stehrer, “Global Value Chains: A View from the Euro Area.” 49.Stehrer and Stöllinger, “The Central European Manufacturing Core.” 50.Nordås, Pinali, and Grosso, “Logistics and Time as a Trade Barrier.” 51.Boddin and Henze, “International Trade and the Servitization of Manufacturing”; Lodefalk, “The Role of Services for Manufacturing Firm Exports.” 52.National Board of Trade (Sweden), “Everybody Is in Services,” 9. 53.Grossman and Hart, “The Costs and Benefits of Ownership.” 54.This view draws on Baumol, Panzar, and Willig, Contestable Markets and the Theory of Industry Structure. 55.Marx, Capital, ch. 32. 56.Shields, “Consolidation and Concentration in the US Dairy Industry.” 57.Corbae and D’Erasmo, “A Quantitative Model of Banking Industry Dynamics.” 58.FCC, “18th Mobile Wireless Competition Report.” 59.Murray, “5 Things You Didn’t Know about the Fortune 500.” 60.Freund, Rich People Poor Countries, 55. 61.Hillerud, “Ericsson var före Apple med paddan.” 62.OECD, “The Future of Productivity.” 63.Antràs and Yeaple, “Multinational Firms and the Structure of International Trade.” 64.However, a note of caution is warranted.
Time Magazine, “The Committee to Save the World.” Cover story, Feb. 15, 1999. Timmer, Marcel P., Abdul Azeez Erumban, Bart Los, Robert Stehrer, and Gaaitzen J. de Vries, “Slicing up Global Value Chains.” Journal of Economic Perspectives, 28.2 (2014): 99–118. Toynbee, Arnold, A Study of History: Abridgement of Volumes I–VI by D. C. Somervell. Oxford University Press, 1987. Tracy, Abigail, “Why Some of Google’s Coolest Projects Flop Badly.” Vocativ, Mar. 19, 2015. At http://www.scientificamerican.com/article/why-some-of-google-s-coolest-projects-flop-badly/. UNCTAD, “World Investment Report 2013. Global Value Chains: Investment and Trade for Development.” United Nations Conference on Trade and Development, 2013. United Nations, Department of Economic and Social Affairs, Population Division, World Population Prospects: The 2012 Revision – Special Aggregates, DVD-ROM, 2013.
Connectography: Mapping the Future of Global Civilization by Parag Khanna
1919 Motor Transport Corps convoy, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, 9 dash line, additive manufacturing, Admiral Zheng, affirmative action, agricultural Revolution, Airbnb, Albert Einstein, amateurs talk tactics, professionals talk logistics, Amazon Mechanical Turk, Asian financial crisis, asset allocation, autonomous vehicles, banking crisis, Basel III, Berlin Wall, bitcoin, Black Swan, blockchain, borderless world, Boycotts of Israel, Branko Milanovic, BRICs, British Empire, business intelligence, call centre, capital controls, charter city, clean water, cloud computing, collateralized debt obligation, commoditize, complexity theory, continuation of politics by other means, corporate governance, corporate social responsibility, credit crunch, crony capitalism, crowdsourcing, cryptocurrency, cuban missile crisis, data is the new oil, David Ricardo: comparative advantage, deglobalization, deindustrialization, dematerialisation, Deng Xiaoping, Detroit bankruptcy, digital map, diversification, Doha Development Round, edge city, Edward Snowden, Elon Musk, energy security, ethereum blockchain, European colonialism, eurozone crisis, failed state, Fall of the Berlin Wall, family office, Ferguson, Missouri, financial innovation, financial repression, fixed income, forward guidance, global supply chain, global value chain, global village, Google Earth, Hernando de Soto, high net worth, Hyperloop, ice-free Arctic, if you build it, they will come, illegal immigration, income inequality, income per capita, industrial cluster, industrial robot, informal economy, Infrastructure as a Service, interest rate swap, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Isaac Newton, Jane Jacobs, Jaron Lanier, John von Neumann, Julian Assange, Just-in-time delivery, Kevin Kelly, Khyber Pass, Kibera, Kickstarter, labour market flexibility, labour mobility, LNG terminal, low cost carrier, manufacturing employment, mass affluent, mass immigration, megacity, Mercator projection, Metcalfe’s law, microcredit, mittelstand, Monroe Doctrine, mutually assured destruction, New Economic Geography, new economy, New Urbanism, off grid, offshore financial centre, oil rush, oil shale / tar sands, oil shock, openstreetmap, out of africa, Panamax, Parag Khanna, Peace of Westphalia, peak oil, Pearl River Delta, Peter Thiel, Philip Mirowski, Plutocrats, plutocrats, post-oil, post-Panamax, private military company, purchasing power parity, QWERTY keyboard, race to the bottom, Rana Plaza, rent-seeking, reserve currency, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Scramble for Africa, Second Machine Age, sharing economy, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, six sigma, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, South China Sea, South Sea Bubble, sovereign wealth fund, special economic zone, spice trade, Stuxnet, supply-chain management, sustainable-tourism, TaskRabbit, telepresence, the built environment, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, Tim Cook: Apple, trade route, transaction costs, UNCLOS, uranium enrichment, urban planning, urban sprawl, WikiLeaks, young professional, zero day
The Rise of Financial Capitalism: International Capital Markets in the Age of Reason. Cambridge University Press, 1990. Nisbett, Richard E. The Geography of Thought: How Asians and Westerners Think Differently…and Why. Free Press, 2004. Nolan, Peter. Is China Buying the World? Polity, 2013. Norbu, Dawa. China’s Tibet Policy. Routledge, 2001. OECD. Interconnected Economies: Benefiting from Global Value Chains. OECD, 2013. OECD, WTO, UNCTAD. Implications of Global Value Chains for Trade, Investment, Development, and Jobs. OECD, 2013. Ogilvy, James. Many Dimensional Man. HarperCollins, 1979. Ohmae, Kenichi. The End of the Nation State: The Rise of Regional Economies. Free Press, 1996. ———. The Next Global Stage: Challenges and Opportunities in Our Borderless World. Wharton School Publishing, 2005. Olsthoorn, Xander, and Anna J.
*6 The geographer Harm de Blij has identified twelve physical realms, each with multiple subregions: Europe, Russia, North America, Central America, South America, Sub-Saharan Africa, North Africa/Southwest Asia, South Asia, East Asia, Southeast Asia, Australasia, and the Pacific Islands. *7 A more formal definition of supply chain is the systems of organizations, people, technology activities, information, and resources involved in moving products and services from producers to customers. “Global supply chain” and “global value chain” are often used interchangeably, with the latter sometimes preferred to emphasize the value-added processes not inherent in simple supply-demand terminology. Others speak of value webs or value networks to capture the wide range of participants involved in supply chains and their interdependent and mutually beneficial nature. *8 I use “supply chain world” or “supply-demand world” or “supply-demand system” or other variations interchangeably
Manufacturing supply chains began to unbundle almost fifty years ago, shifting a massive share of the production of everything from electronics to clothing to the Asian Tigers (Hong Kong, Singapore, South Korea, and Taiwan), China, Thailand, Mexico, and eventually other pockets of low-wage and semiskilled workers in India, Indonesia, and beyond. Components and inputs from screws and bolts to dyes and paints to copper and glass circulate for assembly, finishing, packaging, and more tasks along the supply chain. Like data packets routed through servers around the world before arriving at your neighbor’s computer, there is no avoiding the radically dispersed nature of supply chains. Global value chains are becoming one complex but comprehensive whole. European companies have software development in the United States, manufacturing in Asia, back-office work in the Middle East, and joint ventures with local partners for after-sales services such as repair and insurance in every market they sell in. America’s import content of exports is relatively low at only 15 percent, but it is actually 40 percent if one takes a full-cycle view of downstream distribution and sales.
The Fair Trade Scandal: Marketing Poverty to Benefit the Rich by Ndongo Sylla
British Empire, carbon footprint, corporate social responsibility, David Ricardo: comparative advantage, deglobalization, Doha Development Round, Food sovereignty, global value chain, illegal immigration, income inequality, income per capita, invisible hand, Joseph Schumpeter, labour mobility, land reform, market fundamentalism, mass immigration, means of production, Mont Pelerin Society, Naomi Klein, non-tariff barriers, offshore financial centre, open economy, Philip Mirowski, Plutocrats, plutocrats, price mechanism, purchasing power parity, Ronald Reagan, Scientific racism, selection bias, structural adjustment programs, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, transatlantic slave trade, trickle-down economics, Washington Consensus, zero-sum game
This is less and less the case, following agricultural liberalisation policies implemented widely following structural adjustment programmes. Since then, developing countries significantly reduced the restrictions they impose on agricultural and manufactured products (World Bank and IMF, 2009). This is one of the merits of the global value chain analysis2 – to highlight recent developments on the commodity markets (agricultural and nonagricultural). The concept of the ‘value chain’ refers to all the steps that 18 Sylla T02779 01 text 18 28/11/2013 13:04 inequalities of the trade system make up the cycle of products, from production to consumption. In fact, the global value chain (GVC) approach is especially opposed to the traditional orthodox vision, whereby product markets are considered a typical example of competitive market, with homogeneous products, a large number of small buyers and sellers, the absence of entry barriers, and relations between sellers and buyers that are supposed to be limited to on-the-spot financial transactions.
Farmers, Workers and Consumers Strive to Change an Industry (Tucson: University of Arizona Press). Georgescu-Roegen, Nicholas (1995 ) La Décroissance: entropie–écologie– économie [Degrowth : Entropy–Ecology–Economy] (Paris: Éditions Sang de la Terre). Gereffi, Gary and Korzeniewicz, Miguel (eds) (1994) Commodity Chains and Global Capitalism (London: Praeger). Gereffi, Gary, Humphrey, John and Sturgeon, Timothy (2005) ‘The Governance of Global Value Chains’, Review of International Political Economy, 12(1): 78–104. Getz, Christy and Shreck, Aimee (2006) ‘What Organic and Fair Trade Labels do Not Tell Us: Towards a Place-based Understanding of Certification’, International Journal of Consumer Studies, 30(5): 490–501. GFN (Global Footprint Network) (2010) The Ecological Wealth of Nations (www. footprintnetwork.org, accessed August 2013). Griffith, Peter (2009) ‘Lack of Rigour in Defending Fairtrade: A Reply to Alastair Smith’, Economic Affairs, 30(2): 45–9.
Howell, George (2007) ‘The North–Southern Environmental Crisis: An Unequal Ecological Exchange Analysis’, New School Economic Review, 2(1): 77–99. Hudson, Ian, Hudson, Mark and Fridell, Mara (2013) Fair Trade, Sustainability and Social Change (Houndmills: Palgrave Macmillan). Hudson, Michael W. (2009) Trade, Development and Foreign Debt, new edition (New York: ISLET). Humphrey, John and Memedovic, Olga (2006) ‘Global Value Chains in the Agrifood Sector’, Working Paper (Vienna: United Nations Industrial Development Organization). ILO (International Labour Organization) (2010) ‘Key Indicators of Labour Market’ (www.ilo.kilm.org, accessed August 2010). Jacquiau, Christian (2006) Les Coulisses du commerce équitable: mensonges et vérités sur un petit business qui monte [Behind the Scenes of Fair Trade: The Truths and the Lies Regarding a Small Business that Rises] (Paris: Mille et une Nuits).
The New Prophets of Capital by Nicole Aschoff
3D printing, affirmative action, Affordable Care Act / Obamacare, Airbnb, American Legislative Exchange Council, basic income, Bretton Woods, clean water, collective bargaining, commoditize, crony capitalism, feminist movement, follow your passion, Food sovereignty, glass ceiling, global supply chain, global value chain, helicopter parent, hiring and firing, income inequality, Khan Academy, late capitalism, Lyft, Mark Zuckerberg, mass incarceration, means of production, performance metric, profit motive, rent-seeking, Ronald Reagan, Rosa Parks, school vouchers, shareholder value, sharing economy, Silicon Valley, Slavoj Žižek, structural adjustment programs, Thomas L Friedman, Tim Cook: Apple, urban renewal, women in the workforce, working poor, zero-sum game
In the age of global supply chains, free trade agreements, and capital flight, states have increasingly come to be seen as incapable of protecting their citizens from big global problems like ozone depletion, climate change, and biodiversity loss, and even more tractable problems, like controlling hazardous waste flows or regulating toxic substances in consumer goods.14 But while processes of globalization have delegitimized states and made citizens feel disconnected from the protective embrace of their respective governments, they have also helped to forge new, global identities based on feelings of “world-citizenship.”15 Westerners in particular have become uneasily aware of their power as consumers in shaping and driving global value chains. Whereas in the past consumers were considered “small polluters” relative to the big industrial polluters, in recent years this view has changed. Current global frameworks of environmental power place consumers on an equal plane with states, corporations, and civil-society actors. This newfound perception conflates consumption with politics and citizenship and has led to the widespread adoption of “ecological consumerism” and “lifestyle politics” as expressions of environmental awareness and concern.
As rural sociologist Phil McMichael argues, in the 1980s the “development project”—in which poor countries implemented national development strategies geared toward economic self-sufficiency and political sovereignty—was replaced by the “globalization project”—an ideological turn that encouraged states to lower their trade barriers, privatize resources and services, and embed themselves in global value chains.10 In this climate, national states lost legitimacy and, during the debt crisis, structural adjustment programs forced developing countries to dramatically curtail spending on health, education, and food subsidies. To ameliorate the human crisis that resulted, international governing bodies (UN, IMF, World Bank) encouraged poor states to outsource welfare provision to Western INGOs, which were considered more efficient and knowledgeable than local institutions.
Grave New World: The End of Globalization, the Return of History by Stephen D. King
9 dash line, Admiral Zheng, air freight, Albert Einstein, Asian financial crisis, bank run, banking crisis, barriers to entry, Berlin Wall, Bernie Sanders, bilateral investment treaty, bitcoin, blockchain, Bonfire of the Vanities, borderless world, Bretton Woods, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collateralized debt obligation, colonial rule, corporate governance, credit crunch, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, debt deflation, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, Edward Snowden, eurozone crisis, facts on the ground, failed state, Fall of the Berlin Wall, falling living standards, floating exchange rates, Francis Fukuyama: the end of history, full employment, George Akerlof, global supply chain, global value chain, hydraulic fracturing, Hyman Minsky, imperial preference, income inequality, income per capita, incomplete markets, inflation targeting, information asymmetry, Internet of things, invisible hand, joint-stock company, Long Term Capital Management, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, moral hazard, Nixon shock, offshore financial centre, oil shock, old age dependency ratio, paradox of thrift, Peace of Westphalia, Plutocrats, plutocrats, price stability, profit maximization, quantitative easing, race to the bottom, rent-seeking, reserve currency, reshoring, rising living standards, Ronald Reagan, Scramble for Africa, Second Machine Age, Skype, South China Sea, special drawing rights, technology bubble, The Great Moderation, The Market for Lemons, the market place, trade liberalization, trade route, Washington Consensus, WikiLeaks, Yom Kippur War, zero-sum game
Bullard, ‘Testing long-run monetary neutrality propositions: Lessons from the recent research’, Federal Reserve Bank of St Louis Review, November/December 1999, available at: https://research.stlouisfed.org/publications/review/99/11/9911jb.pdf 5.The Marshall–Lerner condition states that there will be an improvement in the balance of trade following a devaluation so long as the absolute sum of the export and import elasticities is greater than one. 6.For a discussion of the impact of global value chains on the effects of exchange rate declines, see S. Ahmed, M. Appendino and M. Ruta, Depreciations without Exports? Global value chains and the exchange rate elasticity of exports, Policy Research Working Paper No. 7390, World Bank, Washington, DC, August 2015. 7.Robert Triffin described the dilemma in testimony to US Congress in 1960. For a good description of his view, see: https://www.imf.org/external/np/exr/center/mm/eng/mm_sc_03.htm 8.I am indebted to Gideon Bloom for this hybrid term. 9.See, for example, K.S.
Why Nations Fail: The origins of power, prosperity and poverty, Profile Books, New York, 2013 Acemoglu, D. and J. Robinson. ‘The rise and decline of general laws of capitalism’, Journal of Economic Perspectives, 29:1 (2015), pp. 3–28 Admati, A. and M. Hellwig. The Bankers’ New Clothes: What’s wrong with banking and what to do about it, Princeton University Press, Princeton, NJ, 2013 Ahmed, S., M. Appendino and M. Ruta. Depreciations without Exports? Global value chains and the exchange rate elasticity of exports, Policy Research Working Paper No. 7390, World Bank, Washington, DC, August 2015 Akerlof, G. ‘The market for lemons: Quality, uncertainty and the market mechanism’, Quarterly Journal of Economics, 84:3 (1970), pp. 488–500 Alesina, A., A. Devleeschauwer, W. Easterly, S. Kurlat and R. Wacziarg. Fractionalization, Harvard Institute of Economic Research Discussion Paper No. 1959, Cambridge, MA, June 2002, available at: https://dash.harvard.edu/handle/1/4553003 Andrews, D., C.
India's Long Road by Vijay Joshi
Affordable Care Act / Obamacare, barriers to entry, Basel III, basic income, blue-collar work, Bretton Woods, business climate, capital controls, central bank independence, clean water, collapse of Lehman Brothers, collective bargaining, colonial rule, congestion charging, corporate governance, creative destruction, crony capitalism, decarbonisation, deindustrialization, demographic dividend, demographic transition, Doha Development Round, eurozone crisis, facts on the ground, failed state, financial intermediation, financial repression, first-past-the-post, floating exchange rates, full employment, germ theory of disease, Gini coefficient, global supply chain, global value chain, hiring and firing, income inequality, Indoor air pollution, Induced demand, inflation targeting, invisible hand, land reform, Mahatma Gandhi, manufacturing employment, Martin Wolf, means of production, microcredit, moral hazard, obamacare, Pareto efficiency, price mechanism, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, quantitative easing, race to the bottom, randomized controlled trial, rent-seeking, reserve currency, rising living standards, school choice, school vouchers, secular stagnation, Silicon Valley, smart cities, South China Sea, special drawing rights, The Future of Employment, The Market for Lemons, too big to fail, total factor productivity, trade liberalization, transaction costs, universal basic income, urban sprawl, working-age population
If India missed the bus, it could suffer trade diversion, especially in services trade, as well as having to put up with trade disciplines in whose shape and content it had played no part. (The losses would be greater if China joined the US-led mega-regionals.) Correspondingly, India could gain substantially if it engaged fully with the new entities.36 It could acquire markets for exports of services and manufactured goods (including, crucially, labour-intensive manufactures such as textiles) and a much-needed entry into global value chains. Exposure to cheaper imports and higher standards could well spur productivity growth, directly, as well as indirectly by catalysing domestic reform efforts. Thus, India urgently needs to devise a strategy to deal with the PTA jig-saw. In my judgement, the safest course, because it would hedge all bets, would be try and energize the slow-moving RCEP talks but simultaneously open negotiations to join APEC, with a view to a possible entry into the TPP, and eventually into the FTAAP, if the latter became a reality.37 At the same time, India should shift away from negotiating shallow bilateral agreements with all and sundry.
There seems to be little realization that trade expansion and exposure to global competition are essential components of a strategy to sustain rapid growth and to address India’s employment problem. (It is noteworthy that no country has achieved durable super-fast growth, especially of its manufacturing sector, that has not had super-fast growth in its exports.) Indian policymakers have also failed to recognize the changing character of international trade, especially the importance of global value chains and the associated movements in the direction of tighter ‘behind the border’ disciplines. All of India’s major trading partners are now contemplating, negotiating, or concluding mega- regional agreements that take these new developments on board. When completed, these agreements are potentially likely to cover more than two- thirds of world trade and to set its rules and framework for years to come.
If India makes an entry into these mega-regionals without compromising on its main demands, large advantages are likely to accrue. India would gain easier access to foreign markets for exports of services and manufactures (including, crucially, labour-intensive manufactures such as apparel and clothing). Exposure to lower-cost imports and higher foreign standards could raise productivity in Indian manufacturing and services, and prepare these sectors to participate in global value chains. At the same time, as in many countries (e.g. in China, after it joined the WTO), trade policy commitments may serve to catalyse domestic reform efforts. Fourthly, India should also fight to keep the WTO process going because multilateralism continues to have some solid advantages (see Chapter 12). It will not be easy to strike the right balance between these four different tracks. It will need clear thinking and competent execution.
Airbnb, airport security, Albert Einstein, altcoin, Amazon Web Services, bitcoin, Black Swan, blockchain, business process, centralized clearinghouse, Clayton Christensen, cloud computing, cryptocurrency, disintermediation, distributed ledger, Edward Snowden, en.wikipedia.org, ethereum blockchain, fault tolerance, fiat currency, fixed income, global value chain, Innovator's Dilemma, Internet of things, Kevin Kelly, Kickstarter, market clearing, Network effects, new economy, peer-to-peer, peer-to-peer lending, prediction markets, pull request, QR code, ride hailing / ride sharing, Satoshi Nakamoto, sharing economy, smart contracts, social web, software as a service, too big to fail, Turing complete, web application
Over time, there will be a critical mass of users with significant cryptocurrency balances in their accounts, and further network effects benefits will ensue. Only then can the crypto economy claim to have made potential dents in the current financial system in contrast to the “one nation-one sovereign currency” paradigm. A NEW FLOW OF VALUE The blockchain enables a new “flow of value,” a concept related to 2001 Nobel laureate in economics Michael Spence’s5 work on how digital technologies transform global value chains through the dynamics of information flows. Michael Spence observed that emerging economies were growing at rates not seen before, primarily due to the enabling effect of the larger global economy. He attributed the acceleration in the flow of knowledge, technology and learning, as the main linkage to the acceleration in their growth. We have a similar situation relating to what the blockchain is enabling.
The Fourth Industrial Revolution by Klaus Schwab
3D printing, additive manufacturing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, augmented reality, autonomous vehicles, barriers to entry, Baxter: Rethink Robotics, bitcoin, blockchain, Buckminster Fuller, call centre, clean water, collaborative consumption, commoditize, conceptual framework, continuous integration, crowdsourcing, disintermediation, distributed ledger, Edward Snowden, Elon Musk, epigenetics, Erik Brynjolfsson, future of work, global value chain, Google Glasses, income inequality, Internet Archive, Internet of things, invention of the steam engine, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, life extension, Lyft, mass immigration, megacity, meta analysis, meta-analysis, more computing power than Apollo, mutually assured destruction, Narrative Science, Network effects, Nicholas Carr, personalized medicine, precariat, precision agriculture, Productivity paradox, race to the bottom, randomized controlled trial, reshoring, RFID, rising living standards, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, smart cities, smart contracts, software as a service, Stephen Hawking, Steve Jobs, Steven Levy, Stuxnet, supercomputer in your pocket, The Future of Employment, The Spirit Level, total factor productivity, transaction costs, Uber and Lyft, Watson beat the top human players on Jeopardy!, WikiLeaks, winner-take-all economy, women in the workforce, working-age population, Y Combinator, Zipcar
This is the reason why Massachusetts Institute of Technology (MIT) Professors Erik Brynjolfsson and Andrew McAfee have famously referred to this period as “the second machine age”2, the title of their 2014 book, stating that the world is at an inflection point where the effect of these digital technologies will manifest with “full force” through automation and and the making of “unprecedented things”. In Germany, there are discussions about “Industry 4.0”, a term coined at the Hannover Fair in 2011 to describe how this will revolutionize the organization of global value chains. By enabling “smart factories”, the fourth industrial revolution creates a world in which virtual and physical systems of manufacturing globally cooperate with each other in a flexible way. This enables the absolute customization of products and the creation of new operating models. The fourth industrial revolution, however, is not only about smart and connected machines and systems. Its scope is much wider.
A Pelican Introduction Economics: A User's Guide by Ha-Joon Chang
Affordable Care Act / Obamacare, Albert Einstein, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, collateralized debt obligation, colonial rule, Corn Laws, corporate governance, corporate raider, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, discovery of the americas, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Akerlof, Gini coefficient, global value chain, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Gunnar Myrdal, Haber-Bosch Process, happiness index / gross national happiness, high net worth, income inequality, income per capita, information asymmetry, intangible asset, interchangeable parts, interest rate swap, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, laissez-faire capitalism, land reform, liberation theology, manufacturing employment, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, Northern Rock, obamacare, offshore financial centre, oil shock, open borders, Pareto efficiency, Paul Samuelson, post-industrial society, precariat, principal–agent problem, profit maximization, profit motive, purchasing power parity, quantitative easing, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, Scramble for Africa, shareholder value, Silicon Valley, Simon Kuznets, sovereign wealth fund, spinning jenny, structural adjustment programs, The Great Moderation, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Vilfredo Pareto, Washington Consensus, working-age population, World Values Survey
CHANG Bad Samaritans: Rich Nations, Poor Policies and the Threat to the Developing World (London: Random House, 2007). P. HIRST, G. THOMPSON AND S. BROMLEY Globalization in Question, 3rd edition (Cambridge: Polity, 2009). R. KOZUL-WRIGHT AND P. RAYMENT The Resistible Rise of Market Fundamentalism: Rethinking Development Policy in an Unbalanced World (London: Zed Books and Third World Network, 2007). W. MILBERG AND D. WINKLER Outsourcing Economics: Global Value Chains in Capitalist Development (Cambridge and New York: Cambridge University Press, 2013). D. RODRIK The Globalization Paradox (Oxford: Oxford University Press, 2011). J. STIGLITZ Making Globalization Work (London and New York: W. W. Norton and Co., 2006). M. WOLF Why Globalization Works (New Haven and London: Yale University Press, 2004). The first part of this book has been about ‘getting used to’ economics.
3D printing, Airbnb, American energy revolution, assortative mating, autonomous vehicles, Bakken shale, barriers to entry, basic income, Bernie Sanders, BRICs, call centre, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, cloud computing, collective bargaining, computer age, creative destruction, dark matter, David Ricardo: comparative advantage, deindustrialization, dematerialisation, Deng Xiaoping, deskilling, Dissolution of the Soviet Union, Donald Trump, Downton Abbey, Edward Glaeser, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, falling living standards, first square of the chessboard, first square of the chessboard / second half of the chessboard, Ford paid five dollars a day, Francis Fukuyama: the end of history, future of work, gig economy, global supply chain, global value chain, hydraulic fracturing, income inequality, indoor plumbing, industrial robot, intangible asset, interchangeable parts, Internet of things, inventory management, invisible hand, Jacquard loom, James Watt: steam engine, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph-Marie Jacquard, knowledge economy, low skilled workers, lump of labour, Lyft, manufacturing employment, Marc Andreessen, mass immigration, means of production, new economy, performance metric, pets.com, price mechanism, quantitative easing, Ray Kurzweil, rent-seeking, reshoring, rising living standards, Robert Gordon, Ronald Coase, savings glut, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, single-payer health, software is eating the world, supply-chain management, supply-chain management software, TaskRabbit, The Future of Employment, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, trade liberalization, transaction costs, Tyler Cowen: Great Stagnation, Uber and Lyft, Uber for X, very high income, working-age population
Ibid; the internal quote is from Mitch, David, ‘The Role of Education and Skill in the British Industrial Revolution’, Mokyr, Joel, ed. The British Industrial Revolution: An Economic Perspective, 1993. 11. Subramanian, Arvind, and Kessler, Martin, ‘The Hyperglobalization of Trade and its Future’, Word Trade Organization, 2013. 12. Dedrick, Jason, Kraemer, Kenneth, and Linden, Greg, ‘Who Profits from Innovation in Global Value Chains? A Study of the iPod and Notebook PCs’, Industrial and Corporate Change, February 2010. 13. Marshall, Alfred, Principles of Economics (1890). 14. Copeland, Rob, and Hope, Bradley, ‘Schism atop Bridgewater, the World’s Largest Hedge Fund’, Wall Street Journal, 5 February 2016. 15. Robischon, Noah, ‘How BuzzFeed’s Jonah Peretti is Building a 100-year Media Company’, Fast Company, 16 February 2016. 16.
Industry 4.0: The Industrial Internet of Things by Alasdair Gilchrist
3D printing, additive manufacturing, Amazon Web Services, augmented reality, autonomous vehicles, barriers to entry, business intelligence, business process, chief data officer, cloud computing, connected car, cyber-physical system, deindustrialization, fault tolerance, global value chain, Google Glasses, hiring and firing, industrial robot, inflight wifi, Infrastructure as a Service, Internet of things, inventory management, job automation, low skilled workers, millennium bug, pattern recognition, peer-to-peer, platform as a service, pre–internet, race to the bottom, RFID, Skype, smart cities, smart grid, smart meter, smart transportation, software as a service, stealth mode startup, supply-chain management, trade route, web application, WebRTC, WebSocket, Y2K
The essence of vertical networking stems from the use of cyber-physical production systems (CPPSs), which lets factories and manufacturing plants react quickly and appropriately to variables, such as demand levels, stock levels, machine defects, and unforeseen delays. 199 200 Chapter 13 | Introducing Industry 4.0 Similarly, networking and integration also involve the smart logistics and marketing services of an organization, as well as its smart services, since production is customized in such a way that it is individualized and targeted specifically to customers. 2. Horizontal integration through global value chain networks Integration will facilitate the establishment and maintenance of networks that create and add value. The first relationship that comes to mind when we talk of horizontal integration is the one between the business partners and the customers. However, it could also mean the integration of new business models across countries and even across continents, making for a global network. 3.
China into Africa: trade, aid, and influence by Robert I. Rotberg
barriers to entry, BRICs, colonial rule, corporate governance, Deng Xiaoping, energy security, European colonialism, failed state, global supply chain, global value chain, income inequality, Khartoum Gordon, labour market flexibility, land reform, megacity, microcredit, offshore financial centre, one-China policy, out of africa, Pearl River Delta, profit maximization, purchasing power parity, RAND corporation, Scramble for Africa, South China Sea, special economic zone, structural adjustment programs, trade route, Washington Consensus, zero-sum game
African countries will want to avoid being trapped as a “resource basket” for a rapidly modernizing economy, such as China, and to realize their own dynamic efficiency gains by extracting value from their own endowed resources. Natural resources provide a quick launching base for African countries to generate value-added activities. Although still limited to a few countries, such as South Africa and Nigeria, resource-based, manufactured products, such as aluminum, could become a viable export to China. The second aspect relates to the prospects for broader participation in global value chains. There are growing vertical complementarities along value chains between Africa and China. Among the top African exports to and imports from China, there are clear complementarities in the cotton-textile-garment value chain. Raw material (cotton) is supplied by West African countries to 05-7561-4 ch5.qxd 9/16/08 4:13 PM Page 107 Vanguard of South-South Commerce 107 China, and intermediate materials (fabrics) are supplied by China to apparel producers in South Africa, Mauritius, Nigeria, and other countries in sub-Saharan Africa.
The Fissured Workplace by David Weil
accounting loophole / creative accounting, affirmative action, Affordable Care Act / Obamacare, banking crisis, barriers to entry, business process, call centre, Carmen Reinhart, Cass Sunstein, Clayton Christensen, clean water, collective bargaining, commoditize, corporate governance, corporate raider, Corrections Corporation of America, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, declining real wages, employer provided health coverage, Frank Levy and Richard Murnane: The New Division of Labor, George Akerlof, global supply chain, global value chain, hiring and firing, income inequality, information asymmetry, intermodal, inventory management, Jane Jacobs, Kenneth Rogoff, law of one price, loss aversion, low skilled workers, minimum wage unemployment, moral hazard, Network effects, new economy, occupational segregation, Paul Samuelson, performance metric, pre–internet, price discrimination, principal–agent problem, Rana Plaza, Richard Florida, Richard Thaler, Ronald Coase, shareholder value, Silicon Valley, statistical model, Steve Jobs, supply-chain management, The Death and Life of Great American Cities, The Nature of the Firm, transaction costs, ultimatum game, union organizing, women in the workforce, Y2K, yield management
“Realizing Labor Standards: How Transparency, Competition, and Sanctions Could Improve Working Conditions Worldwide.” Boston Review 26, no. 1: 1–20. Galbraith, John Kenneth. 1971. The New Industrial State. 2nd ed. Boston: Houghton Mifflin. Gazel, Neil. 1990. Beatrice: From Buildup through Breakup. Urbana: University of Illinois Press. Gereffi, Gary, John Humphrey, and Timothy Sturgeon. 2005. “The Governance of Global Value Chains.” Review of International Political Economy 12, no. 1: 78–104. Ghilarducci, Teresa. 2008. When I’m Sixty-Four: The Plot against Pensions and the Plan to Save Them. Princeton, NJ: Princeton University Press. Gibson, John, and Steven Stillman. 2009. “Why Do Big Firms Pay Higher Wages? Evidence from an International Database.” Review of Economics and Statistics 91, no. 1: 213–218. Gilley, K.
The Making of Global Capitalism by Leo Panitch, Sam Gindin
accounting loophole / creative accounting, active measures, airline deregulation, anti-communist, Asian financial crisis, asset-backed security, bank run, banking crisis, barriers to entry, Basel III, Big bang: deregulation of the City of London, bilateral investment treaty, Branko Milanovic, Bretton Woods, BRICs, British Empire, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collective bargaining, continuous integration, corporate governance, creative destruction, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, currency peg, dark matter, Deng Xiaoping, disintermediation, ending welfare as we know it, eurozone crisis, facts on the ground, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, floating exchange rates, full employment, Gini coefficient, global value chain, guest worker program, Hyman Minsky, imperial preference, income inequality, inflation targeting, interchangeable parts, interest rate swap, Kenneth Rogoff, land reform, late capitalism, liberal capitalism, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, manufacturing employment, market bubble, market fundamentalism, Martin Wolf, means of production, money market fund, money: store of value / unit of account / medium of exchange, Monroe Doctrine, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, new economy, non-tariff barriers, Northern Rock, oil shock, precariat, price stability, quantitative easing, Ralph Nader, RAND corporation, regulatory arbitrage, reserve currency, risk tolerance, Ronald Reagan, seigniorage, shareholder value, short selling, Silicon Valley, sovereign wealth fund, special drawing rights, special economic zone, structural adjustment programs, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transcontinental railway, trickle-down economics, union organizing, very high income, Washington Consensus, Works Progress Administration, zero-coupon bond, zero-sum game
Akyuz, “Capital Flows to Developing Countries,” p. 22. 49 Richard Kozul-Wright and Paul Rayment, “Globalization Reloaded,” UNCTAD Discussion Paper No. 167, January 2004, Table 3, p. 32; US Bureau of Labor Statistics, “International Labor Comparisons,” available at bls.gov; Erin Lett and Judith Bannister, “China’s Manufacturing Employment and Compensation Costs: 2002–2006,” Monthly Labour Review, April, 2009. 50 See Timothy Sturgeon, Johannes Van Biesebroeck, and Gary Gereffi, “Value Chains, Networks and Clusters: Reframing the Global Automotive Industry” Journal of Economic Geography 8: 3 (2008), pp. 297–321. 51 Stephen Hymer, ‘The “Multinational Firm and the Law of Uneven Development’, in J. Bhawgwati, ed., Economic and the World Order from the 1970s to the 1990s, New York: Free Press, 1972. 52 Jason Dedrick, Kenneth L. Kraemer, and Greg Linden, “Who Profits from Innovation in Global Value Chains? A Study of the iPod and Notebook PCs,” Industry Studies, Alfred P. Sloan Foundation, Boston, May 2008. 53 Peter F. Cowhey and Jonathon D. Aronson, Transforming Global Information and Communication Markets: The Political Economy of Innovations, Cambridge, MA: MIT Press, 2009, p.15. Cowhey and Aronson see American high-tech leadership as having been renewed since the early 1980s, thereby consolidating American postwar technological dominance: “Since 1945 the US market has been the most consistent agenda-setter for the global market.