Sunday, September 16, 2012

Knowledge@Wharton interviews on globalization

Knowledge@Wharton had two interesting interviews recently. One of Pankaj Ghemawat and the other of Pascal Lamy

Pankaj Ghemawat essentially argues that the world is not as integrated as it is made out to be. In this semi-golbalised world, the benefits of integration, he feels, are immense. I had blogged about his views earlier here.
"So what I do in this particular chapter in World 3.0 is put together a lot of existing literature rather than just saying the gains are large, suggesting that when you pay attention to the customarily excluded components, you can bring the gains from trade liberalization itself up to 2% to 3% of the GDP without even really relying on very far-fetched estimates. Then there is service liberalization which people think can add and get us up to 4% or 5 % of GDP. Then there are flows other than products and services. There are flows of capital, flows of people, flows of information. 
People flows are really the big numbers. Some people at Stanford have done an analysis suggesting complete liberalization of immigration could double the world's GDP. Of course, that seems a bit optimistic given where we are. So I rely on estimates that more moderate increases might add another couple of percentage points to global GDP, around 3% to 4%. Around immigration, the gains are just huge as all the studies suggest."

Pascal Lamy speaks about the future of the multilateral trading system in the context of the impasse in the Doha round of trade negotiations.The risk of bilateral trade agreements and the relevance of multilateral trade negotiations are touched upon. Highlighting the political economy of trade negotiations and the complexity of concluding multilateral trade negotiations I found this point interesting:
"The second reason, and this raises a fundamental problem of trade negotiations, [is that] in this game, the losing parties know precisely why they lose and are able to form coalitions to support their causes, while the winning parties are often unaware they won. The tee-shirt you are buying cheaper today doesn't come with a "Thank You, WTO" sign on it! I have been working on international trade for 20 years, and unsurprisingly, it turns out that in emerging countries, public opinion is more and more open to trade liberalization, while in developed countries, it is less and less favorable to it -- not in the name of the poor in the South anymore, as was the case in radical circles in the 1990s, but on behalf of the poor in the North. The positive impact is obscured by the difficulties associated with the restructuring of Western economies -- by the crisis, of course -- but also by the great shift from industrialized countries to emerging countries, which may lead [some] to think that unemployment is due to relocation. Under these conditions, negotiators from developed countries now have less room to maneuver."
The debate about the extent of globalization, trade rules, the political economy of reducing barriers to trade and the way countries react to it continues. 

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