Winners and Losers of Globalization: Sixteen Challenges for Measurement and Theory

Abstract

The goal of this chapter is to summarize the state of the art in research in international trade and global production, and discuss issues relevant to European policymakers. Much of recent research on globalization is primarily empirical, owing to the proliferation of available data. We begin by discussing recent advances in measuring the causes and effects of globalization, and discussing the particular data challenges that have emerged. We then turn to theories of trade and global production, first summarizing the conclusions on which there is a broad consensus in the field. We discuss new insights that may be relevant for policy-makers, and open research questions. 6.

Welfare effects of TTIP in a DSGE model

“…As Hornok and Koren (2016) report in a survey, there is ample evidence (and theory to explain it) that trade increases inequality, and that the associated costs may be larger than previously thought. However, the academic debate on the needed redistribution from the winners of liberalization towards its losers in order to achieve Pareto gains has occupied generations of trade economists.…”

“…First, there are many additional gains from trade that have been elicited in the literature and which our model is unable to capture, including the traditional gains from specialization, the gains from access to a larger market allowing the exploitation of scale economies (Krugman, 1980), the gains from the reallocation of resources towards more productive firms resulting in higher aggregate productivity (Melitz, 2003) and the gains associated from productivity gains related to importing inputs to production (see the numerous references in the survey by Hornok and Koren (2016)). All those gains would reinforce our argument because they result in aggregate productivity increases.…”

Small Is Beautiful and Important: Economies and Firms Trading in Digital Services

“…Firm-level data analysis started with Bernard and Jensen's papers (Bernard & Jensen, 1999) on firm characteristics within countries and industries, but they focused mainly on firms that exported manufactured goods. Although service trade patterns seem similar to those in goods trade there is still a lack of research on service firms (Benkovskis et al, 2019;Hornok & Koren, 2017;Kelle & Kleinert, 2010;Wagner, 2021). Moreover, services have sometimes been left out of international trade as intangible money flows moved via bank transactions.…”

“…At firm level, the number of employees, ownership, service type, service exports and turnover volumes were the most relevant indicators for further study (Aaby & Slater, 1989;Verwaal & Donkers, 2002). The literature suggests substantial challenges to measuring cross-border service flows (Cernat & Kutlina-Dimitrova, 2014;Hornok & Koren, 2017;Lee & Goldman, 2020;Rueda-Cantuche et al, 2016).…”

“…Firm-level studies began appearing in the 1990s (Bernard & Jensen, 1999;Bernard & Wagner, 1997;Melitz, 2003), with more recent studies published on service trading firms (Ambroziak & Stefaniak, 2022;Ariu, 2016;Hornok & Koren, 2017;Tajoli et al, 2021;Temouri et al, 2013;Wagner, 2021;Yi et al, 2022). However, there has not been enough research on service trading firms (Benkovskis et al, 2019;Hornok & Koren, 2017). Therefore, this article explores trade patterns in digital services across countries, focusing on the differences between traders in digital services and traders in other services.…”