Globalization Then and Now

Globalization Then and Now - Globalization: Now and Then...

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Globalization: Now and Then Will Silton With the provided support of Professor Leticia Arroyo Abad
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O’Rourke and Williamson: “When Did Globalization Begin?” l Three periods of globalization 1) pre-1490s 2) 1500-1820s 3) 1820s-present l Need to think in terms of trade expansion driven by integration of markets between trading economies, not trade expansion driven by boom in import demand and export supply l Importance of price convergence l Only evidence of price convergence and impacts of globalization: period #3
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Trade characteristics of each period l Range of traded goods did not change gradually three punctuating periods l Period #1 (pre-1500) l largely non-competing luxury goods l Expensive to ship but cheap to produce l i.e. silk l Period #2 (1500-1820s) l Basic competing goods (wheat, textiles) l Some transitional phase commodities (tobacco, cotton, furs) l Period #3 (1820s-present) l Highly differentiated manufactured goods and basic commodities l Rise of skilled labor, dominance of new technologies and skills
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Measuring globalization l Price, trade model l Globalization = decline in wedge between domestic and global prices, export supply and import demand l Causes/indications: l Falling transport costs l Reduction of trade barriers l Falling import prices (lack of domestic need for a country’s goods) l Rising export prices (foreign need for a country’s goods) l Commodity price convergence l Increase in trade volumes l “The only irrefutable evidence that globalization is taking place… is commodity price convergence” l In what period did prices significantly converge?
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Measuring the impacts l Two impacts: 1. Change in domestic commodity prices 2. Aforementioned change must result in a reshuffling of resources in order for trade to influence the things that really matter, like the scale of output, distribution of income, absolute living standards and quality of life l In what period did “globalization” really have these impacts? (Must coincide with periods of price convergence)
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This note was uploaded on 04/19/2010 for the course ECON 0430 taught by Professor Arroyoabad during the Fall '10 term at Middlebury.

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Globalization Then and Now - Globalization: Now and Then...

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