Globalization

Computer

Trade Liberalization Enhances Economic Growth: New Evidence

A new paper from the FUCAPE Business School in Brazil, authored by Brazilian economist Bruno Funchal and Jadir Soares Junior, find that reductions of barriers to trade in the computer technology sector affected the Brazilian labor market. Specifically, they use the end of the “Informatics Law” in 1992 as the non-tariff barrier to trade of analysis. For eight years the “Informatics Law” imposed a limit on access by foreign companies to the manufacture of small computers and provided various support mechanisms for strictly nationally controlled companies.

Using data from the Annual Social Information Report and the Brazilian Occupational Classification, the authors compare the change in the demand for either “routine” or “non-routine” tasks before and after the repeal of the “Informatics Law” to the percentage of workers using computers in 2002 using a panel regression with fixed effects. The idea is that the liberalization of the technology market in Brazil led to a rise in the demand for workers doing non-routine tasks (considered complementary to computers) and a fall in the demand for workers doing routine tasks (considered a substitute to computers).

The authors find that industries and occupations intensive … Read the rest

Photo of a globe

Review: Aid for Trade, 4 Years Later

Last week marked the fourth annual global review of the World Trade Organization’s (WTO’s) Aid for Trade (AfT) Initiative. Created in 2005 by the Sixth Ministerial Conference of the Doha Development Round, Aft targets “behind the border” constraints to trade in least developed countries (LDCs) as well as strengthens their capacity to negotiate beneficial trade agreements. Essentially, Aft focuses on trade facilitation.

The AfT Initiative shines a light on the idea that the best possible “aid” we can give LDCs is free trade. Evidenced by its theme, “Connecting to Value Chains,” the fourth annual review called for “connecting the least connected countries.” More broadly, the value chain world we live in offers many entry points for firms to connect to the global trade web. And countries don’t need to produce final goods to be a part of that global trade web—increasingly we are a world focused on trade in services and tasks. Sixty percent of global trade is now in parts and components.

Production networks stretch worldwide—Senegal assembles Indian cars, Ford has facilities in Vietnam, and Samoa produces automotive harnesses. As WTO Director-General Pascal Lamy puts it, “you do not … Read the rest

Photo of a solar panel

Is There a Global Anti-Dumping Solution?

Free trade is only successful if all sides are operating on a relatively level, market-based playing field. Unfortunately, in the last few years many nations, particularly developing ones, have dramatically ramped up their mercantilist policies designed to unfairly gain advantages in global trade. The use of these mercantilist policies hurts not only the aggrieved nations, but also, in certain cases, the aggressor. One tool in the mercantilist tool box is “dumping”: the practice of selling exports below the cost of production, often by relying on steep government subsidies. However, to date the system of addressing dumping claims has not been as effective as it should be.  All too often by the time cases are brought to and adjudicated by the World Trade Organization (WTO) the damage has been done and many domestic firms put out of business.

We see this with the current conflict between the European Union (EU) and the United States with China over unfair Chinese trade policies in the solar industry.  The chief issue for U.S. and EU policymakers concerns China’s use of mercantilist practices, especially selling below cost through large government subsidies, to promote Chinese solar … Read the rest

Photo of US/EU flags shaking hands

EU and U.S. Leaders Push Transatlantic Trade at the G8 Summit

On Monday at the G8 Summit, President Obama, U.K. Prime Minister Cameron, European Commission President Barroso, and European Council President Van Rompuy announced plans to launch negotiations for an ambitious trade deal between the European Union and the United States. The Transatlantic Trade and Investment Partnership (T-TIP) is an ambitious, comprehensive, and high-standard trade and investment agreement that promises to boost worldwide economic growth. During the negotiation announcement, Prime Minister Cameron said a successful deal could add £100 billion ($157 billion) to the EU economy, £80 billion ($125 billion) to the U.S. economy, and as much as £85 billion ($133 billion) to the rest of the world. While these numbers are impressive, as ITIF’s March 2013 report, Estimating the Benefits of a Transatlantic Trade Partnership found, citing data from the U.S. Chamber of Commerce, gains could be as high as $450 billion for the United States and $495 billion for the Europe Union, boosting both EU and US GDP by 3 percent.  “We’re talking about what could be the biggest bilateral trade deal in history; a deal that will have a greater impact than all the other trade deals on … Read the rest

Are We a Nation of Homer Hickmans or Homer Simpsons?

Sputnik1

On this day in 1957, the Soviet Union deployed Sputnik. The two-foot, 180-pound orb’s beeping was the starting gun of the space race and we in the U.S. seemed to be just putting our sneakers on. Despite President Eisenhower’s initial shrug, America freaked out – but in good way.

In under a year, a Democratic Congress and the Republican President created and made operational the National Aeronautics and Space Administration (NASA). The National Defense Education Act, which not only jump started higher education in math and science here but also promoted the study of countries we realized were gaining on us, became law. The Advanced Research Projects Agency (ARPA) came into being.  Later, of course, it became (Defense) DARPA, which yielded numerous technological advances, including what became the Internet.

When it came to being #1 in space, we didn’t wait for market forces to work their magic. In a speech at Rice University on September 12, 1962 President Kennedy said the tripling of the space budget in a little over two years was worth it. There were new jobs, new companies and new discoveries.  We were in the race but … Read the rest

More on Gaming, Mechanical Turks, and Future of Taylorism

Well, we appear to have found a solution to the old Taylorist dilemma of working being efficient but boring: turn it into a video game.

I heard on the radio this morning that FoldIt players had solved a virus structure puzzle in 10 days which had eluded the best efforts of scientists thitherto.  FoldIt turns macromolecule folding problems — devilish 3-d puzzles — into a videogame which can be solved in parallel by a bevy of “players”.  The account of the latest solution is in Science Daily here.

How Frederick Winslow Taylor, the inventor of “scientific management” (or, more eponymously, “Taylorism”) would have rejoiced!  Although his methods reduced work to rationally most-efficient segments, it is also notorious for draining work of all pleasure or meaning.

We don’t get the meaning back with video games, but we do get the pleasure.

Mechanical Turks of the world, unite!  Your have nothing to lose but your boredom.… Read the rest

Cloud Computing: Policy Challenges for A Globally Integrated

Summary: “Cloud computing” is much more than simply a new set of technologies and business models. It is rapidly emerging as the platform that will underpin the next generation of digital products and services. Cloud Computing is transforming how consumers, companies, and governments store information, how they process and exchange that information, and how they utilize computing power. Consequently, it opens a new set of policy discussions while at the same time underling the importance of old debates. This post was co-authored by Jonathan Murray.

Discussions of policy in an era of “cloud computing” will continue the debate about classic questions: the terms of market access for services and the rules for privacy, security, IP and more. However, the Cloud must be understood as at once a competitive service, a dynamic enhanced utility, an ICT infrastructure/platform and innovation eco-system, a marketplace, and a production environment. The pervasive, disruptive multi-role character of “cloud computing” demands that a new array of vital questions be opened.

First, though, what exactly is Cloud Computing? Firms are marketing a wide variety of services as “Cloud Solutions,” leading – often deliberately – to some confusion. If … Read the rest

How Global Foreign Aid Supports China’s Clean Tech Mercantilism

The United States, international development organizations like the World Bank, and fellow developed countries continue to give China—the world’s second largest economy which holds $2.85 trillion in foreign currency reserves and which in 2011 will become the world’s largest manufacturer—billions of dollars in development assistance. In fact, China receives more than $2.5 billion a year in foreign government aid, according to the OECD. But China effectively plays all these countries and institutions for suckers, because it continues to take their billions even while it refuses to open up its markets to foreign countries’ products.

The numbers are astounding. In 2008, Japan gave China $1.2 billion in development aid and Germany gave about $600 million. Though the United States gave less, it still gave China at least $65 million for programs promoting nuclear energy, health, and human rights. Likewise, the World Bank provides China billions. In 2008, the World Bank supported seventy-five projects in China and provided the country over $2.4 billion in loans, bringing the total amount of outstanding World Bank loans and development credits in China to over $23 billion. Despite its $2.85 trillion in foreign currency reserves, China … Read the rest

U.S.-China Economic and Security Review Commission Issues 2010 Annual Report

The U.S.-China Economic and Security Review Commission released its 2010 Annual Report this morning, issuing stark findings that the Chinese government continues to pursue a mercantilist-based export-led economic growth strategy, with an intentionally undervalued currency at its core, while continuing to fail to meet the promises made as part of its accession to the WTO. The Commission’s report echoes many of the arguments ITIF made about China’s and other countries’ mercantilist technology export-led economic growth strategies in a report called The Good, The Bad, The Ugly, and The Self-Destructive of Innovation Policy.

The Commission reports that continuing problems with China’s implementations of its WTO commitments, “Can be traced to China’s pursuit of trade-distorting government intervention intended to promote China’s domestic industries and protect them from international competition.”  The report continues, “China has failed in some notable areas to fulfill the promises it made nine years ago when it joined the WTO. Specifically, China is adopting a highly discriminatory policy of favoring domestic producers over foreign manufacturers. Under the guise of fostering ‘indigenous innovation’ in its economy, the government of China appears determined to exclude foreigners from bidding on government … Read the rest

Japan: Canary in the Coal Mine or Economic Experiment Gone Wrong?

In recent months, Japan has been getting increased attention; not for its economic success, but its supposed failure. Jeff Kingston’s “Contemporary Japan: History Politics, and Social Change since the 1980s” tells a story of Japan in stagnation since the bursting in the early 1990s of its economic bubble (like us, based on excessive real estate values). “The Economist” describes Japan as being in a state of “gentle decline.” The “New York Times” has been running a series on “Japan’s slow disheartening decline.

This is a critically important topic, not only for its implications for the United States and other developed economies, but also for the future of the global trading system and for nations like China that are taking a page out of the Japanese development play book.

First, the stories on Japan. It’s long been popular among the Washington economic punditry to sneer at the Japanese economy. Japan, Inc. (the idea that business and government should work collaborative to grow the economy) has long been a threat to the so-called “Washington consensus” that holds that markets, not governments, should be the sole determinate of an economy’s … Read the rest