Lecture 12.1
Globalization
Globalization
At the broadest level, globalization is the increasing integration of people, cultures and institutions
IMF’s four aspects of globalization: trade; investment; migration; knowledge
In economics, globalization typically refers to increasing trade and investment
Benefits of Globalization
- Increased capital flows
- Sharing of knowledge & technology
- Lower prices
- Cultural exchange
- New economic opportunities
- Others?
Challenges of Globalization
- Exploitation
- Weak regulation
- High start-up/investment costs
- Localized job loss/displacement
- Immigration
- Others?
Theory of Comparative Advantage
Comparative advantage: the ability of a country to produce something at a lower opportunity cost relative to other countries (Ricardo)
For example, low-income countries have a comparative advantage in labor-intensive goods, high-income countries have a comparative advantage in high-skill and technology-intensive sectors
Capital and labor will naturally reallocate based on logic of comparative advantage
The China Shock
Is the theory of comparative advantage true?
Will capital and labor reallocate from low-skill to high-skill sectors?
Or is localized job loss more enduring?
Autor et. al.
How to read an econ paper
How to read a regression table
Interpreting results
What are the main conclusions? Do they ring true to you?
Detour
FRED St. Louis
Updating Graphs
Form new groups
Select one graph from WB
Update it
Discuss: what has changed?
