Category Archives: Globalization

"The Asian Crisis After Ten Years"

Below is an excellent post by Barry Eichengreen, Professor of Economics and Political Science at UC Berkeley, at the new blog VoxEU. The post posits that the biggest risk to Asia is an asset crash, and looks at America’s experience during its industrializing phase to see what lessons might be learned. He determines that whether […]

Be Careful What You Ask For: Yuan Edition

The US has spent considerable time and energy hectoring the Chinese about the artificially low value of its currency (although there is considerable disagreement among experts as to how undervalued it really is). The notion that the currency is the chief culprit has become so fixed in the public imagination that Congress is determined to […]

Martin Wolf on Savings Glut Vs. Money Glut Hypotheses

Martin Wolf, in a Financial Times comment, “Villains and victims of global capital flows,” looks at the two competing theories of the causes of global imbalances. One is the savings glut story, in which parsimonious Chinese and Japanese force the US to consume to keep the world from falling into recession. This view is favored […]

"Is international labor mobility necessarily good?"

Faithful readers, I hope you’ll forgive the comparatively skimpy posts this early morning. I had to spend some time with a buddy who had just learned that one of his closest friends is dying. Generally, I give trade economics a wide berth, because once you get past simple two-country, two factor models the discussion gets […]

Indian Outsourcer Beefing Up in Mexico for Cost Reasons

Bloomberg tells us, “India’s Tata Consultancy Plans to Hire 5,000 Workers in Mexico.” The rise of the rupee is making India less attractive for outsourcing. This development begs a couple of questions. First, will US companies have to go through disruption and risk as they chase cheaper labor to various countries as currency relationships change? […]

Foreigners Buying the US: Should We Worry?

Mark Thoma quotes a Washington Post op-ed piece by Daniel Gross that gets worried about the current and prospective level of foreign ownership of US businesses: …In countries that are resource-rich or export powerhouses, governments and government-controlled entities have amassed huge pools of capital. A report issued last month by Morgan Stanley economist Stephen Jen […]

Roubini (via Martin Wolf) on Global Imbalances

I’m a bit late to get to this item, a predictably good article by the Financial Times’ Martin Wolf on Nouriel Roubini’s observations about why Asian countries became so willing to finance our deficits (short answer: they decided to keep their currencies cheap after the 1997 emerging markets crisis) and whether this situation is sustainable […]

Stiglitz: China Holds the Better Cards if Things Get Ugly

Nobel Prize winning economist Joseph Stiglitz can be blunt. In an interview with MarketWatch, he says that our dependence on Chinese capital puts us in a not-so-great bargaining position. He also pointed out in Congressional testimony that the Chinese have no reason to open their financial markets since they don’t need capital. And our focus […]

China Negotiations: Paulson Coming Up Empty-Handed?

We predicted, given China’s blistering response to America’s imposition of countervailing duties on coated paper manufacturers (a small amount of goods, but a big shot across the bow) and its aggressive posture in the negotiation of the language of the third IPCC report, that Paulson’s efforts to obtain trade concessions and a revaluation of the […]

China: The Trade Surplus That Ate the World

That won’t go anywhere as a horror flick title, but the specter of China’s ever growing trade surpluses is focusing the mind of its trading partners. Some hoped that these surpluses would correct themselves naturally over time as the Chinese population started consuming more and its economy became less dependent on exports. That clearly isn’t […]

Understanding the Chinese Trade Threat

Mark Thoma pointed us to an insightful Washington Post op-ed piece, “China’s Trade Time Bomb,” by Robert Samuelson. He makes the point that trade with China isn’t yet having much impact on the US economy, but soon will be, mainly because they don’t play fair (something we’ve commented on before): It sometimes seems as if […]

Dani Rodrik Looks at the Free Trade Math and Finds Some of It Wanting

The debate among Serious Economists about the benefits of free trade continues, and Dani Rodrik continues to take a dispassionate look at the data and the models. This post, although a bit geeky, is intriguing because Rodrik dissects an analysis cited by Bernanke in a recent speech, which found that the benefits of free trade […]

Trade: China Doesn’t Play by the Rules

Readers may have taken note about the robust debate among Serious Economists about free trade, provoked in large measure by Harvard economist Dani Rodrik holding some of his peers’ feet to the fire (note that Rodrik is not anti-free trade, but anti sloppy or dumbed down justifications). One continuing bone of contention between economists and […]

Nouriel Roubini: Asian Hard Dollar Peg Likely to Produce Crisis

Many economists have observed that the current global imbalances, meaning US trade deficits financed by overseas capital flows, cannot continue forever. Indeed, there are already signs that foreign central banks are getting uncomfortable with their level of US dollar holdings and have said they plan to diversify their currency holdings (translation: sell dollars) which would […]