2017 - 18 Year in Review

14 The Misthinking of Globalization— Past, Present, and Future Everyone knows globalization is a process—driven forward by falling trade and communication costs— that is integrating national economies around the world. This view is incomplete. Richard Baldwin argued that globalization should be viewed as two processes, not one. The first is the traditional view where more goods crossing borders integrate economies. The second started with the ICT Revolution, which made it feasible for G7 firms to unbundle their factories and shift some production stages to low-wage nations. To coordinate the whole, said Baldwin, G7 firms brought their firm-specific know-how along with the offshored stages. Flows of know-how, investment, training, services, and people that used to happen only inside factories in G7 nations are now a part of international commerce. The resulting North-to-South flows of know-how transformed global economic realities—giving rise to the emerging economies, the commodities supercycle, and much more. The talk concluded with conjectures on what this means for future globalization. Professor Baldwin argued that digital technology will bring globalization to the service sector via machine translation, better substitutes for face-to-face, and international freelancing platforms like UpWork.com. MARCH 5, 2018 RICHARD BALDWIN Professor of International Economics, Graduate Institute, Geneva; President and Director, Centre for Economic Policy Research; and Editor in Chief, VoxEU.org