William Milberg

Gender Segregation and Gender Bias in Manufacturing Trade Expansion: Revisiting the "Wood Asymmetry"

We are deeply grateful to Caren Grown, Diane Elson and especially two anonymous referees for constructive comments. We also thank Hui Gao and Frank Schroeder for excellent research assistance and Richard Anker for suggesting the use of the UNIDO Industrial Statistics Database.

The Changing Structure of International Trade Linked to Global Production Systems: What are the Policy Implications?

The paper discusses the extent of the structural change, its causes and implications for policy and theory due to the rise of trade in intermediate goods. It emphasizes theories to be more focused on the competitive struggle of absolute advantage and externalization. This entails industrial, competition, and labour market policies at national levels aimed at producing profit and wage growth, which is needed for long-term economic growth through the building of skills, knowledge-based assets, infrastructure, and demand. Referring to past success cases, the paper argues that for industrial upgrading, countries cannot solely rely on inward foreign direct investment and a balance is needed between firm market power and profits and competitive pressure, which promotes knowledge-asset creation. Policy implications include promoting R&D, skill development in production and management, and very specific competition policy.

Degree of Monopoly, Pricing, and Flexible Exchange Rates

Exchange-rate pass-through is the degree to which a change in the exchange rate is translated into a change in the price of internationally traded goods. The pass-through question took on great importance in the United State in the 1980s with the persistence of its trade deficit in the face of a large depreciation of the dollar. Some delay in adjustment was expected according to the J-curve phenomenon. When the J-curve appeared not to be turning upward, economists began to attribute the intransigence of the US trade deficit in part to the rigidity of prices despite the huge currency shift.1 Explanations of these deviations from the law of one price, however, vary widely. In this chapter we extend some well-known PKE pricing models in an attempt to explain the limited passthrough phenomenon.

Trade crisis and recovery : restructuring of global value chains

The recent large and rapid slowdown in economic activity has resulted in even larger and more rapid declines in international trade. As world trade is set to rebound, this paper addresses three questions: (i) Will trade volumes rebound in a symmetric fashion as world economic growth rebounds? (ii) Will the crisis result in a change in the structure of trade, and in particular will it lead to a reversal of the pattern of more diversified sourcing and thus to a consolidation of global value chains? (iii) What policies can improve the prospects for developing country growth in the event that trade volumes do not rebound symmetrically and there is a consolidation of some global value chains?

The high road and the low road to international competitiveness: Extending the neo‐Schumpeterian trade model beyond technology

Extending the neo‐Schumpeterian trade model, we estimate a ‘social‐gap’ model for a group of 17 OECD countries over the period 1975–1995. We find that government spending on social protection, employment protection regulations, union density, strike activity, and income security in the labor market (all measured in ‘gap’ form) are statistically significantly related to changes in international competitiveness. Specifically, we find some support for a Calmfors–Driffil, nonlinear, relation between cooperative labor relations and social spending patterns on the one hand, and international trade (and inward foreign investment) competitiveness on the other, implying that countries with relatively stronger institutional arrangements have better international economic performance than countries in the middle of the scale of conflict and cooperation. Our results indicate that models focusing solely on innovative effort are misspecified, and may suffer from an omitted variable bias caused by the absence of consideration of other institutional factors influencing international trade and investment.

Errors from the 'Proportionality Assumption' in the Measurement of Offshoring: Application to German Labor Demand

Offshoring has expanded rapidly in most industrialized countries and its impact on the labor markets in these countries has been the source of enormous debate in both scholarly and popular circles. Since data on imported inputs at the sectoral level are not available for the US and the UK, every sector is assumed to import inputs of each material and service in the same proportion as its economy-wide use of that input. German input-output data differentiate between domestically purchased inputs and imported inputs, which permits the authors to calculate a direct measure of sectoral imported input use and compare this measure to the proxy-based measure based on the standard proportionality assumption.

Economic insecurity in the new wave of globalization: offshoring and the labor share under varieties of capitalism

Countries subject to the same degree of exposure to globalization may experience very different levels of economic insecurity depending on social support or employment protections provided by the state or even due to insurance obtained by households. We identify five varieties of industrialized countries, characterized by national levels of ‘labor support’ and ‘strictness of employment protection,’ and analyze the importance of the role of the state in mediating the impact of globalization on economic security by estimating the relation between offshoring and the labor share of income across the OECD. We find that the effect of offshoring varies across countries depending on their regulatory structure and in particular on the degree of labor market support provided by governments. Regression analysis shows that for the countries providing ‘more support’, offshoring has a less unfavorable or more favorable effect on the labor share of national income.

Is the Sky Falling

The fixation on balancing the federal budget deficit may be self-destructive, argues this economist. Washington is not making the right choices.

The rhetoric of policy relevance in international economics

This paper addresses the link between the generation of economic knowledge and economic policy conclusions. Focusing on the case of research in international trade, It establishes a taxonomy of rhetorical practices used to make such a link. The flexibility observed in these practices contrasts markedly with the rigidity of the conventions of theoretical and empirical knowledge creation. A survey of articles on international trade from four major journals from 1988 to 1992 shows that most policy-relevant research is entirely theoretical, but the incidence of rhetorical practices legitimating policy conclusions depends on the nature of the research method (theoretical or empirical), and the journal in which the research is published. The survey data support the conclusion that the flexibility of rhetorical practices is integral to the legitimation of the knowledge generated by international trade economists.

Structural change and international competitiveness in Canada: an alternative approach

The neoclassical theory of international trade says little of relevance about the dramatic shifts in world trade patterns in the postwar period. Much of the weakness of the Hecksher-Ohlin-Samuelson model has been attributed to its assumption of globally uniform technology and thus the instantaneous international diffusion of technological innovation. In this paper we relax these assumptions, focusing instead on the role of innovation in the determination of international trade flows. We develop a disaggregated, dynamic Ricardian trade model (based on Pasinettis 1981 growth model), in which the sectoral rate of process innovation is important in relation to the average innovation rate in the economy. The level of this ratio compared to that of foreign rivals drives long-run trends in international competitiveness. This is called the Pasinetti Trade Hypothesis (PTH). Ricardian comparative cost considerations form the logical foundation for the PTH in that they establish the conditions under which dynamic c...