Lecture 12.1


Emmanuel Teitelbaum


  • At the broadest level, globalization is the increasing integration of people, cultures and institutions

  • IMF’s four aspects of globalization: trade; investment; migration; knowledge

  • In economics, globalization typically refers to increasing trade and investment

Benefits of Globalization

  • Increased capital flows
  • Sharing of knowledge & technology
  • Lower prices
  • Cultural exchange
  • New economic opportunities
  • Others?

Challenges of Globalization

  • Exploitation
  • Weak regulation
  • High start-up/investment costs
  • Localized job loss/displacement
  • Immigration
  • Others?

Theory of Comparative Advantage

  • Comparative advantage: the ability of a country to produce something at a lower opportunity cost relative to other countries (Ricardo)

  • For example, low-income countries have a comparative advantage in labor-intensive goods, high-income countries have a comparative advantage in high-skill and technology-intensive sectors

  • Capital and labor will naturally reallocate based on logic of comparative advantage

The China Shock

  • Is the theory of comparative advantage true?

  • Will capital and labor reallocate from low-skill to high-skill sectors?

  • Or is localized job loss more enduring?

Autor et. al. 

  • How to read an econ paper

  • How to read a regression table

  • Interpreting results

  • What are the main conclusions? Do they ring true to you?


Updating Graphs

  • Form new groups

  • Select one graph from WB

  • Update it

  • Discuss: what has changed?