Accommodating Emerging Giants in the Global Economy (nber.org) 12
Abstract of a paper featured on NBER: How has aggregate income and welfare in the United States been affected by globalization and rapid productivity growth in emerging economies? We use the class of constant elasticity trade models to provide quantitative evidence on these questions. We find that reductions in worldwide trade frictions over the period from 1960-2020 reduced the share of the United States in global GDP but raised its aggregate welfare. Similarly, productivity growth in Japan and China led to a decline in the relative income of the United States, but brought aggregate welfare gains from the resulting expansion in global production possibilities. Trade integration and foreign productivity growth have relatively modest effects on domestic income and welfare compared to domestic productivity growth.
Translation (Score:5, Insightful)
The US has a smaller slice of a larger pie, for a net gain.
That is, it is better to have 30% of a Watermelon then it is to have 60% of an Orange, because the Watermelon is more than twice as big as an Orange.
Re: (Score:3)
Different take (Score:2)
it should be about reclassifying countries from the outdated pre/post WW2 era first and third world into large and small.
Large being large in GDP, population, exports or high overall standard of living (excluding rural areas).
Small being small GDP, poor, small population and low standard of living (excluding rural areas).
The large ones being more equally measured together as a group on pollution, economic policies, government and institutions with the important including treaties,international agreements, m
Re: (Score:2)
There are some significant issues with using GDP to distinguish between what used to be called 1st and 3rd world countries
GDP measures production, not economic distribution. Certain parts of the US and certain countries for example, have high GDP but also high poverty levels. This represents for example, a nation that has a dictator milking large natural resources (often oil) while leaving his population as poverty stricken uneducated peasants. This results in the ruler/ruling class getting very rich whi
Aggregate Welfare? (Score:2)
Can anyone define what exactly they are referring to as "aggregate welfare"? It is an ambiguous term that they did not define.
Re: (Score:2)
they don't. i assume:
"aggregate income" is basically gdp, what the us produces as a whole, which has decreased in relation to the rest of the world.
"aggregate welfare" is basically buying power (income divided by prices), which has increased in the us.
so in a nutshell, the us economy has gotten less productive, but us citizens are in general better off. that's 1960-2020. sounds about right, but i wouldn't take that trend for granted if you factor in debt, rise in inequality and loss of global influence. i d
Re: (Score:3)
They did define it in the actual paper (Eq. (7) on pg. 8). Saying this, however, isn't particularly helpful. They define welfare as (essentially) "Real Wages = Income / Price Index".
I'm not an economist, but from a first read, what I see is that they take some existing simplified trade models which allow exogenous factors (ie, trade patterns *outside* the country in question) and then model it as a globalized system covering a bunch of countries. They model the results across multiple years while holding
Re: (Score:2)
They do. Equation 9. It's basically income corrected for cost of living.
I'm perplexed (Score:2)
What does accommodation have to do with it?
My first thought was that it's ballsy to use such an innocuous term... like the US is doing some sort of favour by making room for them. They're coming, like it or not. The U.S. will have to adapt... not accommodate.
Re: (Score:2)
To a massive degree, that is exactly correct. The US is doing the rest of the world a HUGE favor by making room for them.
Since WWII, the US Navy has enforced open navigation of the seas - free trade for all in effect. This has allowed any and all "new world powers" to exist, grow, and have influence. As you say, "They're coming, like it or not". Well, if the US does not "like it" they have a very simple counter.
If the US were to ever withdraw the Navy and no longer patrol the seas of the world, the entir