Globalization: The Long-Run Big Picture
Globalization: The Long-Run Big Picture
• Summary
• Introduction
• The Economic World Today and in a Hundred Years (Table 1)
• Ricardo to the Rescue: "Value and Riches, Their Distinctive Properties"
• The Contributions of Globalization: Extending the Division of Labor
• Globalization and Capital Accumulation
• Ricardo on Capital Accumulation: An Answer to the Fears of Capital Transfer (Table 2)
• The Anti-Globalization Arguments of Gomory and Baumol
• Outsourcing
• Competition, Comparative Advantage, and Capital Accumulation
• Notes
Summary
Globalization, in conjunction with its essential prerequisite of respect for private property rights, and thus the existence of substantial economic freedom in the various individual countries, has the potential to raise the productivity of labor and living standards all across the world to the level of the most advanced countries. In addition, it has the potential to bring about the radical improvement in productivity and living standards in what are today the most advanced countries, and to provide the strongest possible foundation for unprecedented further economic advance everywhere.
These overwhelmingly beneficial results are often hidden from view by the fact that at the same time globalization implies a substantial decline in the relative or even absolute nominal GDPs of today's advanced countries, the experience of which engenders opposition to the process. What is not seen is that to whatever extent globalization might reduce absolute nominal GDP in today's advanced countries, it reduces prices many times more, with the result that it correspondingly increases their real GDP, and that to whatever extent it reduces merely their relative nominal GDP, it again increases their real GDP many times more.
This article shows that by incorporating billions of additional...
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