Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 1 Erasmus Najaarsdag 2005 International Bachelor Economics & Business Economics IBEB In-depth programme Lecture Globalisation Lecture Hall C3, Saturday 5 Nov. 11.40-12.10 and 13.20-13.50 Introduction and overview About me Current perspective Historical perspective Globalization Conclusion www.charlesvanmarrewijk.nl
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 2 Introduction and overview This week s The Economist Tired of globalisation But in need of much more of it
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 3 Erasmus Najaarsdag 2005 International Bachelor Economics & Business Economics IBEB In-depth programme Lecture Globalisation Lecture Hall C3, Saturday 5 Nov. 11.40-12.10 and 13.20-13.50 Introduction and overview About me Current perspective Historical perspective Globalization Conclusion www.charlesvanmarrewijk.nl
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 4 Charles van Marrewijk Born in Schipluiden (Den Hoorn) The Netherlands, 1959 Studied (and finished): MAVO HAVO RMTuS (Horticulture) (worked as a grower for a while in Het Westland: Gerbera s) VWO Erasmus University (BA and MA, Economics) Purdue University (MSc and PhD, Economics) Work: University of Groningen Erasmus University Longer term visits: Cornell, Yale, Cambridge, Adelaide, Princeton, Benguet
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 5 Some of my books: The Economics of International Transfers Cambridge University Press, 1998 (with Steven Brakman) An Introduction to Geographical Economics Cambridge University Press, 2001 (with Steven Brakman and Harry Garretsen) Translated into Chinese by Southwest University of Finance and Economics Press
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 6 Some of my books: International Trade & the World Economy Oxford University Press, 2002 Translated into Chinese by Shanghai University of Finance and Economics Press, to appear 2006 Nations and Firms in the Global Economy: An Introduction to International Economics and Business Cambridge University Press, 2006 (with Steven Brakman, Harry Garretsen, and Arjen van Witteloostuijn)
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 7 Erasmus Najaarsdag 2005 International Bachelor Economics & Business Economics IBEB In-depth programme Lecture Globalisation Lecture Hall C3, Saturday 5 Nov. 11.40-12.10 and 13.20-13.50 Introduction and overview About me Current perspective Historical perspective Globalization Conclusion www.charlesvanmarrewijk.nl
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 8 We have become accustumed to steady growth rates (Note on a log scale constant growth is a straight line) 100000 USA; per capita GDP (1990 G-K $), log scale per capita GDP 10000 1000 1870 1900 1930 1960 1990 year
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 9 16 Rapid growth in China Economic developments in China Export of goods and services (% of GDP, right scale) 28 12 21 8 14 4 GDP/cap (% of world average, left scale) 7 0 GLF CR Mao ER SP&TS 1960 1970 1980 1990 2000 0
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 10 This week s ESB (Economisch Statistische Berichten) I make some remarks about recent developments and China s economic growth rates
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 11 Tired of globalisation?
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 12 Tired of globalisation! poor working conditions in LDCs Workers in developing countries should get fair wages otherwise we should not trade with them!
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 13 Tired of globalisation! poor countries grow slowly a. Initial income level and economic growth (1980-2002) annual growth rate (%) 8 4 other countries trendline 0-5,000 40,000-4 Sub-Sahara African countries -8 per capita GDP in 1980 (constant 1995 US dollar)
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 14 Erasmus Najaarsdag 2005 International Bachelor Economics & Business Economics IBEB In-depth programme Lecture Globalisation Lecture Hall C3, Saturday 5 Nov. 11.40-12.10 and 13.20-13.50 Introduction and overview About me Current perspective Historical perspective Globalization Conclusion www.charlesvanmarrewijk.nl
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 15 World population in historic perspective (millions) 6000 How many people How many in are alive today? 5000 the year 0? the year 1000? 4000 the year 1500? 6057 3000-500 2000 1000 170 0 30 years war, Ming collapse Mongol invasions 265 500 Black death 425 1000 1500 2000 data: Kremer (1993) + Maddison (2001) year
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 16 World population, UN projection (2001): 2000-2050 10000 8000 6000 4000 population (millions) high estimate low estimate 8919 2000 realisation projection 0 1800 1850 1900 1950 2000 2050 year
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 17 World GDP per capita; Maddison (2001), The World Economy: A Millennial Perspective, OECD (1990 international $) $6000 NB: you need $ 400 to stay alive $5709 $5000 $4000 $3000 What was it in the year 0? How about the year 1000? What is average world GDP per capita now? $2000 $1000 $444 0 500 1000 1500 year 2000
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 18 Erasmus Najaarsdag 2005 International Bachelor Economics & Business Economics IBEB In-depth programme Lecture Globalisation Lecture Hall C3, Saturday 5 Nov. 11.40-12.10 and 13.20-13.50 Introduction and overview About me Current perspective Historical perspective Globalization Conclusion www.charlesvanmarrewijk.nl
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 19 Globalization what is it? Cultural globalization; we are increasingly exposed to the same culture? Harry Potter, McDonalds, Toyota. Economic globalization; we experience increased interdependence of national economies and greater integration of labour, goods, and capital markets. Geographical globalization; feelings of compressed time and space resulting from more rapid transport and (electronic) exchange of information, allowing disentanglement of production processes. Institutional globalization; spread of neo-liberal institutions and regulations promoted by IMF/Worldbank/WTO (free trade, free movement of capital). Competition forces multinationals to adopt similar policies. American regulations imposed on others. Political globalization; power of multinationals versus the nationstate. Race-to-the-bottom in tax rate or environmental policies.
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 20 Trade Merchandise exports, % of GDP in 1990 prices data: Maddison (2001) 17.2 15 13.4 10 10.1 5 2.5 4.6 0.2 0 1870 1900 1930 1960 1990 world USA Japan
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 21 Trade Has been going on for some time ; O Rourke, Williamson (2001) Handel = trade; BBP = GDP Maddison (2001) annual 4 growth 3,5 rates 3 2,5 2 1,5 handel BBP 1 0,5 0-0,5 1500-1599 1600-1699 1700-1799 1800-1899 1900-1992
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 22 Capital flows Source: based on Obstfeld and Taylor (2003). 0.6 Foreign capital stocks; assets / world GDP 0.4 0.2 0 1860 1880 1900 1920 1940 1960 1980 2000
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 23 Maddison (2001) countries and regions Austria Belgium Denmark Finland France Germany Italy Netherlands Norway Sweden Switzerland United Kingdom 12 Countries Total Portugal Spain Other Total Western Europe Eastern Europe Former USSR United States Other Western Offshoots Total Western Offshoots Mexico Other Latin America Total Latin America Japan China India Other Asia Total Asia (excl. Japan) Africa World
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 24 Leaders and laggards 500 Leaders and laggards in GDP/capita; index relative to world average 400 300 leader 1500? 200 100 next leader? next leader? laggard 1500? other laggard? next leader? Italy Netherlands Africa United Kingdom Western Offshoots laggard 1960s? 0 1500 1600 1700 year 1800 1900 United States data: Maddison (2001) China 2000
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 25 Open economies grow faster average ec. growth, percent/year 5 4 3 2 1 0 Growth rates in open and closed economies, 1970-1989 Developed countries Developing countries Open Closed Data source: Sachs and Warner (1995, p. 36)
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 26 Erasmus Najaarsdag 2005 International Bachelor Economics & Business Economics IBEB In-depth programme Lecture Globalisation Lecture Hall C3, Saturday 5 Nov. 11.40-12.10 and 13.20-13.50 Introduction and overview About me Current perspective Historical perspective Globalization Conclusion www.charlesvanmarrewijk.nl
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 27 Remember this? a. Initial income level and economic growth (1980-2002) annual growth rate (%) 8 4 other countries trendline 0-5,000 40,000-4 Sub-Sahara African countries -8 per capita GDP in 1980 (constant 1995 US dollar)
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 28 How about correcting for size? b. Initial income, population, and ec. growth (1980-2002) annual growth rate (%) 8 4 China India USA size of bubble is proportional to population size in 1980 Japan 0-5,000 40,000-4 Sub-Sahara African countries -8 per capita GDP in 1980 (constant 1995 US dollar)
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 29 16 Remember this? (China) Economic developments in China Export of goods and services (% of GDP, right scale) 28 12 8 China is able to grow fast because (and since) it opened up to the outside world 21 14 4 GDP/cap (% of world average, left scale) 7 0 GLF CR Mao ER SP&TS 1960 1970 1980 1990 2000 0
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 30 So do you really want to help the developing countries?
Erasmus University Rotterdam, Dep. of Economics; Charles van Marrewijk, 2005; 31 This week s The Economist Tired of globalisation But in need of much more of it Thank you for your attention!