Can Globalisation Benefit All?
Hub Leader: Stephen Kinsella Follow @stephenkinsella
Stephen Kinsella is an economist at the University of Limerick in Ireland and currently a research fellow at the University of Melbourne in Australia. Stephen’s research is in macroeconomic modelling and the economics of austerity. As Globalisation Hub leader Stephen will assess grants, organise physical and online events around themes related to the question of ‘can globalisation benefit all?’ and contribute to the policy debate around these issues.
Macroeconomists typically approach globalisation in terms of greater market access. More goods and services are available for consumption, budget constraints are loosened by the ability to borrow and lend overseas and access to external asset markets allows greater diversification of risk. Yet the domain of economic policy is primarily the nation-state; fiscal and monetary policies operate mostly through the domestic economy. At this simple level, globalisation can be shown to lead to higher standards of living.
Economists also have specialised models for specific markets, which can raise challenges to this macroeconomic approach. The current age of globalisation – deeper integration of economic activity across national borders – began after the Bretton Woods era. For the most part, it has supported rising prosperity, particularly in large low-income countries.
China’s Premier Xi recently emerged as its unlikely champion. As long as prosperity is broadly aligned with other social objectives, such as inclusion, fairness and environmental sustainability, then globalisation is likely to be supported. However, several recent surveys of public opinion have indicated doubts about its efficacy. Western politicians have responded with increasingly nativist agendas, implying globalisation may have gone too far.
The foundations of this Hub were formed in our Discovery Meeting, and the below questions emerged as particularly interesting.
1. Economists have long argued the case that trade is beneficial. But the gains from trade do not necessarily benefit all without a complementary domestic policy. Why should changes in relative prices from trade as opposed to, for example, technology justify a policy intervention and what would constitute fair and effective compensation? Is financial compensation enough or is something else required?
2. Macroeconomics does not fully integrate international trade and international finance theories. Can the distributional and spatial consequences of trade be incorporated into standard macroeconomic models? Does global finance intensify rather than diminish risk, and is the comovement of capital markets preventing countries from operating an independent monetary policy?
3. Macroeconomics takes its primary objective to be the nation-state. Is this appropriate in a globalised economy and what might be the welfare benefits? We also look for research which examines the legitimacy and political economy of the Nation-State in the world economy when the domain of domestic policymaking is diminished.
These points acted as the starting point for the Globalisation Public Consultation on 27 September 2017, in Manchester, where we sought feedback from members of the public. Other research questions may be developed as a result of these discussions. Globalization was the subject of our first Discovery Meeting, held at the National Institute of Economic and Social Research on 2 June 2017.
Agendas and information from our previous workshops can be found below.