Globalisation and Immigration Flashcards
3 horns of Rodrik’s globalisation trilemma
- Full international economic integration
- Nation state
- Democracy
What does hyper-globalisation require?
- No transaction costs associated w/national borders
2. Elimination of all tariff/non-tariff trade barriers and harmonisation of regulation (e.g. in consumer safety)
Evidence that world economy today is very globalised?
Fouqin and Hugot (2016)
Value of global exports as % of GDP more than doubled in last 3 decades
Evidence ‘macro constraint’ of globalisation not particularly strong for most developed economies
USA consistently able to borrow cheaply, despite large deficits (Mosley 2005)
Evidence on changes in OECD tax revenues as % of GDP in last 3/4 decades
Tax revenues as % of GDP not declined over last 3 or 4 decades (OECD 2018)
Evidence on effective tax rates on capital and corporate profits in recent decades
- Devereux et al (2008):
(i) Decline in effective tax rates on capital and corporate profits - Swank and Steinmo (2002)
(i) Top statutory capital tax rates decreased in most countries since 80s
(ii) Caveat – such cuts accompanied by broadening of tax base, leaving effective capital tax rates almost unchanged 1981-95
Race to bottom hypothesis
Economic openness forces countries into competition, which implies a convergence of national policies (e.g. over corporate tax rates)
Rodrik (1997)
IMPACT OF ECONOMIC OPENNESS ON GVT SPENDING
- strong positive association between trade openness and LEVEL of spending
- negative association between trade openness and CHANGES in spending
Evidence of strong positive association between trade openness and level of spending
Rodrik (1997)
Evidence that framing effects may make surveys unreliable guides to extent of trade opposition
Hiscox (2006)
What % of respondents, on average, have anti-trade views in a cross-national survey? Source?
~60% (Mayda and Rodrik 2003)
What does specific factors trade model predict about globalisation attitudes?
EXPORT ORIENTED/IMPORT-COMPETING
- Globalisation attitudes shaped by sector of employment
- Because trade benefits those employed in export-oriented sectors and hurts those in importing-competing sectors
What does factor endowments trade model predict about globalisation attitudes?
FACTOR ABUNDANCE
- Globalisation attitudes shaped by level of human capital (in developed economies)
- Because trade benefits owners of factors of production w/which economy relatively well-endowed and hurts others
General evidence that self-interest rarely enters into formation of policy opinions because citizens find it hard to link personal economic situations to public policies
Sears and Funk (1990)
Why does self-interest rarely enter into formation of policy opinions, generally? (Sears and Funk 1990)
Citizens find it hard to link personal economic situations to public policies
Evidence that trade policies generally anti-free trade?
- Rodrik (1995)
“trade policies universally biased against (rather than in favour of) trade”
- Busch and Mansfield (1995)
“free trade is rare”
Fouqin and Hugot (2016)
Value of global exports as % of GDP more than doubled in last 3 decades
….. and ….. (…..)
Value of global exports as % of GDP ….. in last ….. decades
Fouqin and Hugot (2016)
Value of global exports as % of GDP more than doubled in last 3 decades
OECD (2018)
Tax revenues as % of GDP not declined over last 3 or 4 decades
Tax revenues as % of GDP not declined over last 3 or 4 decades
OECD (2018)
Value of global exports as % of GDP more than doubled in last 3 decades
Fouqin and Hugot (2016)
Sears and Funk (1990)
WHY SELF-INTEREST DOESN’T ENTER INTO POLICY OPINIONS
Generally, self-interest rarely enters into formation of policy opinions because citizens find it hard to link personal economic situations to public policies
“trade policies universally biased against (rather than in favour of) trade”
Rodrik (1995)
Rodrik (1995)
“trade policies universally biased against (rather than in favour of) trade”
Why is hyper-globalisation incompatible with the nation state and democracy simultaneously?
- If keep nation state, must significantly restrict scope of democratic politics
(i) Reason – to ensure coordination/harmonisation, citizens’ right to decide across many policy areas curtailed - If keep democracy, politics can’t take place at level of nation state
(i) Reason – guaranteeing global coordination would require politics to be conducted at global level w/global federal government
Mosley (2005)
- Substantial cross-national diversity in terms of:
(i) Overall government size
(ii) Distribution of spending across programmatic areas
(iii) Structure of taxation - Globalisation pressures (esp. capital market openness) cause ‘macro’ constraint for countries
(i) Common trend towards lower average rates of inflation and smaller fiscal deficits in more globalised economies - ‘Macro constraint’ of globalisation not particularly strong for largest developed economies
(i) e.g. USA consistently able to borrow cheaply, despite large deficits
Beramendi and Rehm (2007)
Evidence of shift from taxation of capital to taxation of labour and consumption, due to globalisation
Evidence of general views towards trade in cross-national survey?
Mayda and Rodrik (2003)
Generally, ~60% of respondents have anti-trade views
Mayda and Rodrik (2003)
TRADE VIEWS
- Generally, ~60% of respondents in cross-national surveys have anti-trade views
2a. Trade preferences strongly correlated w/trade exposure of sector of employment
2b. Individuals in non-traded sectors = most pro-trade
Evidence supporting specific factors model
Mayda and Rodrik (2003)
1a. Trade preferences strongly correlated w/trade exposure of sector of employment
1b. Individuals in non-traded sectors = most pro-trade
Counter-evidence to specific factors model
- Mansfield and Mutz (2009)
(i) Use more comprehensive measures of industries
(ii) V. little support for prediction that globalisation attitudes shaped by sector of employment
Problems with Mayda and Rodrik’s (2003) evidence supporting specific factors model?
(i) Locate respondents by industry via questions about type of industry employed in
(ii) But coding responses into industries v. difficult due to vagueness of responses
(iii) Many assigned to multiple overlapping sectors due to inadequate information
Mansfield and Mutz (2009)
- Little evidence that globalisation attitudes shaped by sector of employment
- Strong support for socio-tropic basis of trade attitudes (not self-interest)
- In/out-group attitudes (ethnocentrism) and world view (isolationism) strongly associated with increased hostility to free trade
- Education has marked effect on trade attitudes
(i) Those with a graduate school education 65% more likely to support trade compared to high-school educated
(ii) BUT effect disappears after controlling for domestic ethno-centrism and isolationism - Local information (e.g. about trade-related job losses) = key influence on formation of national-level collective perceptions
Evidence supporting factor endowments model
Scheve and Slaughter (2001)
(i) US evidence that high-skilled more pro-trade
Counter-evidence to factor endowments model?
Margalit (2009)
- Cross-national survey data using broader universe of countries
2a. Little evidence of relationship between skill-level and pro-trade attitudes as function of country’s skill-abundance
2b. High skilled consistently more in favour of free trade everywhere (regardless of skill-abundance of country)
Margalit (2009)
EVIDENCE AGAINST FACTOR ENDOWMENTS + FOR CULTURAL ANXIETIES
- Cross-national survey data using broader universe of countries
2a. Little evidence of relationship between skill-level and pro-trade attitudes as function of country’s skill-abundance
2b. High skilled consistently more in favour of free trade everywhere (regardless of skill-abundance of country)
- Sense of loss from free trade reflects anxiety about cultural changes associated with increased economic openness (to a large extent)
Evidence that education impacts trade attitudes
Mansfield and Mutz (2009)
- Those with graduate school education 65% more likely to support trade compared to high-school educated
- Caveat - effect disappears after controlling for domestic ethno-centrism (in/out group attitudes) and isolationism (world view)
Evidence - are trade attitudes shaped by self-interest or sociotropic concerns?
Mansfield and Mutz (2009)
Strong support for sociotropic basis of preferences
Mansfield and Mutz (2009)
- Education has marked effect on trade attitudes
- Those with ….. are …..% more likely to support trade compared to …..
Mansfield and Mutz (2009)
- Education has marked effect on trade attitudes
- Those with a graduate school education are 65% more likely to support trade compared to high-school educated
Scheve and Slaughter (2001)
US evidence that high-skilled more pro-trade