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FREE TRADE UNDER PRESSURE:PERSPECTIVES FOR GLOBALIZATIONAND GROWTH
9/10 October 2017 Italian Embassy, Berlin
Kiel Institute for the World Economy
Opening Remarks
Stefan KoothsForecasting Center
What about the losers of globalization?
Free trade under pressure:Market skepticism/neoprotectionism
11.10.2017KOOTHS | KKG Autumn 2017: Opening Remarks3
▪ #1 poverty eraser
▪ Income distribution: Global view
▪ Global working conditions
▪ Consumption possibilities
Poverty, inequality, and material wealth
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▪ #1 poverty eraser: Capitalism» Mass production …
» … for mass consumption
▪ Income distribution: Global view
▪ Global working conditions
▪ Consumption possibilities
Poverty, inequality, and material wealth
11.10.2017KOOTHS | KKG Autumn 2017: Opening Remarks5
Global poverty is shrinking dramatically
11.10.2017KOOTHS | KKG Autumn 2017: Opening Remarks6
90 % (1820)
10 % (2015)
0 % (2030?)
▪ #1 poverty eraser
▪ Income distribution: Global view» Global convergence …
» … within-country divergence
▪ Global working conditions
▪ Consumption possibilities
Poverty, inequality, and material wealth
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Global income more equally distributed
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▪ Worldwide Gini coefficient» 68.7 (2003)
» 64.9 (2013)
» 61.3 (2035)
▪ #1 poverty eraser
▪ Income distribution
▪ Global working conditions
▪ Consumption possibilities
Poverty, inequality, and material wealth
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Working conditions improving decade by decade
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▪ Fatal 20 (1970)
< 5 (2015)
▪ Non-fatal 3000 (1980)
1000 (2015)
▪ Data» ILO
» +/- 40 countries0
5
10
15
20
25
30
1969 1979 1989 1999 2009
World DE
Fatal Occupational InjuriesFatal Occupational InjuriesFatal Occupational InjuriesFatal Occupational InjuriesFatal Occupational InjuriesFatal Occupational InjuriesFatal Occupational InjuriesFatal Occupational Injuries
Annual Data (last observation: 2015). Fatal occupational injuries per 100'000 workers .
Source: ILO.
Fatal Occupational Injuries
0
1000
2000
3000
4000
5000
6000
1969 1979 1989 1999 2009
World DE
Fatal Occupational InjuriesFatal Occupational InjuriesFatal Occupational InjuriesFatal Occupational InjuriesFatal Occupational InjuriesFatal Occupational InjuriesFatal Occupational InjuriesFatal Occupational Injuries
Annual Data (last observation: 2015). Non-fatal occupational injuries per 100'000 workers .
Source: ILO.
Non-fatal Occupational Injuries
▪ #1 poverty eraser
▪ Income distribution: Global view
▪ Global working conditions
▪ Consumption possibilities» Longer lifetimes
» Household composition matters
» Gains from globalization/technological progress
Poverty, inequality, and material wealth
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▪ Low income households: higher expenditure share for tradable goods
▪ Global competition and division of labor make tradable goods more affordable
▪ World trade is mainly trade in mass production
▪ Quality: Case for Haberler-Indices
Consumer gains from global free trade
Source: Fajgelbaum, P. D., & Khandelwal, A. K. (2014). Measuring the unequal gains from trade. NBER WP 20331
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▪ #1 poverty eraser: Capitalism» Mass production …» … for mass consumption
▪ Income distribution: Global view» Global convergence …» … within-country divergence
▪ Globally improved working conditions
▪ Consumption possibilities» Longer lifetimes» Household composition matters » Gains from globalization/technological progress
Poverty, inequality, and material wealth
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Identifying losersis not trivial
Pitfalls of hydraulic macro accounting:Netting out the drivers of wealth
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Intermediate consumption(production structure)
Source UseMacroeconomic goods and services account
Gross Domestic Product(domestic value added)
Imports
Intermediate consumption(production structure)
Final consumption(exclusive source of value)
Domestic capital formation
Exports
Capital formation abroad
IC + GDP + IM = IC + C + I + ExGDP + IM = C + I + ExGDP = C + I + Ex - Im
Domestic and cross-border division of labor are productive (= positively affect GDP)
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Intermediate consumption(production structure)
Source UseMacroeconomic goods and services account
Gross Domestic Product(domestic value added)
Imports
Intermediate consumption(production structure)
Final consumption(exclusive source of value)
Domestic capital formation
Exports
Capital formation abroad
IC + GDP + IM = IC + C + I + Ex
Schedule
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@kielinstitute
www.ifw-kiel.de
Prof. Dr. Stefan KoothsHead of Forecasting Center
T +49 431 8814-579F +49 431 8814-525M [email protected]
Enjoy the 96th KKG!