Econ 161-Lecture 14

Econ 161-Lecture 14 - GlobalIntegrationofLatinAmerica...

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Unformatted text preview: GlobalIntegrationofLatinAmerica Lecture14 c Marc-AndreasMuendler UniversityofCalifornia,SanDiego May19,2011 14.GlobalIntegration,EconomicChange,PovertyandInequality Econ161, c M.Muendler ReformandGrowth Despitevigorouspro-competitiveandtradereforms,growthinLatin Americathroughoutthe1990sremainedrelativelyslow Lackingresourcereallocationfollowingpro-competitivereformmay beacauseofsluggishperformance Brazilstradereformtriggersworkerdisplacementsparticularlyfrom protectedindustries,astradetheorypredictsandwelcomes Butneitherexporters(norcomparative-advantageindustries)absorb trade-displacedworkersforyears 14.GlobalIntegration,EconomicChange,PovertyandInequality Econ161, c M.Muendler InequalityandGlobalization Inequality within countriesandinternationaltrade Hanson(2002):MexicoundergoesrisinginequalityafterNAFTA Williamson(2002):China(since1984),India(since1990),In- donesia(since1970),Russia(since1991)recordwideningin- comedisparityafterglobalintegration Theseeffectsmaybeduetoanexclusionofpartsofthepopu- lationsfromthegainsofglobalization(Mexico:borderregionvs. Southernparts,China:Shanghaivs.hinterland) Theseeffectscouldalsobeduetoneweffectsoftradefroma globalfragmentationofproductionandoffshoreoutsourcing 14.GlobalIntegration,EconomicChange,PovertyandInequality Econ161, c M.Muendler WageInequalityandInternationalTrade Tradeandforeigninvestmentmatter,buttheyareneitherallthatmatters norperhapstheprimarycausesoftheobservedchanges Threecompetingtheories Heckscher-Ohlintradetheory:Wagesforthelessskilledwillfall incountriesthatarerelativelyabundantinhighskilledlabor Offshoring:Tradeintasksandintermediategoodsacrossproduc- tionstageswithrichpredictions Directed(skillbiased)technicalchange:Advancesininformation technologyfavor(complement)highskillsmorethanlowskills 14.GlobalIntegration,EconomicChange,PovertyandInequality Econ161, c M.Muendler PreferentialTradeAgreements Throughpreferentialtradeagreements,countriesgranteachother lowertradebarrierswhilekeepingbarriersfortherestoftheworld Regionalagreementsmaycause TradeDiversion andnotleadto TradeCreation :Membercountriesmayexportgoodstoothermem- berswhilenon-memberswouldhavecomparativeadvantage (Bhagwati2008:Termitesinthetradingsystem) TheGATT-WTOallowspreferentialtradeagreementsinprinciple Mostfavorednationprinciple:Membersgetaslowtradebarriersasanyone Formationofpreferentialtradearrangementspermittediffreertradeamong members 14.GlobalIntegration,EconomicChange,PovertyandInequality Econ161, c M.Muendler FreeTradeAreasintheAmericas FreeTradeAreaoftheAmericas(FTAA):Negotiationsscheduleduntil 2005.FTAAwouldincludeall34countriesinAmericas,barCuba, andapopulationofmorethan800million(launchedMiami,1994) NorthAmericanFree-TradeAgreement(NAFTA)betweenCanada, Mexico,andUS:IneffectJanuary1,1994. NontariffbarrierstoagriculturaltradebetweentheUnitedStatesandMexicoelim- inated.Manytariffseliminatedimmediately,withothersbeingphasedout.Allinated....
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This note was uploaded on 08/14/2011 for the course ECON 161 taught by Professor Muendler during the Spring '11 term at San Diego.

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Econ 161-Lecture 14 - GlobalIntegrationofLatinAmerica...

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