26/12/2014: The Empirical Evidence on Globalisation

Much has been written around the alternative, and even mainstream media about the perils of globalisation. Not to discount these arguments without a serious treatment, economics mainstream tends, on the other hand, view globalisation as a net positive force for betterment of the economy. Of course, there non-linear transmissions from economics to the broader society, and there are non-linear effects of globalisation on various social and economic agents: there are winners and losers in the process.

Here is an interesting paper that looks at the core macroeconomic consequences of globalisation. Potrafke, Niklas' study "The Evidence on Globalization" (see: CESifo Working Paper Series No. 4708: http://ssrn.com/abstract=2425513) surveys the empirical literature on globalisation focusing on the KOF indices of globalisation "…that have been used in more than 100 studies. Early studies using the KOF index reported correlations between globalization and several outcome variables. Studies published more recently identify causal effects."

The evidence shows that "globalization has spurred economic growth, promoted gender equality, and improved human rights. Moreover, globalization did not erode welfare state activities, did not have any significant effect on labor market interaction and hardly influenced market deregulation. It increased however within-country income inequality."

Worth a read.