The world crisis: the implications of globalised finance

The term “globalisation” has survived its first significant sell-by date in modern times. Rightly, it continues to attract policy attention and debate at the very highest levels. Together with just a handful of others—economic growth and inequality, financial crisis, climate change—with all of which it remains inextricably intertwined, only globalisation among economic phenomena has both effects and causes observable from outer space. Its impact on the welfare of humanity is therefore singular. This is even before one considers the sweeping changes in culture and politics that ever greater global integration both requires and engenders. This article cannot hope to cover the massive body of modern thinking that surrounds globalisation. Instead, what it seeks to do is two-fold: first, flag, with the benefit of hindsight, some of the key background points that any continuing discussion of globalisation needs to keep in mind; and second, offer conjecture where the most likely contentious issues in the near future might be. To keep within space constraints, careful and exhaustive discussion of empirical evidence is omitted. Instead, just the largest salient facts are provided where needed

The invisible hand and the weightless economy

As modern economies grow, production and consumption shift towards economic value that reside in bits and bytes, and away from that embedded in atoms and molecules. This paper discusses the implications of such changes for the nature of ongoing growth in advanced economies and for the dynamics of earnings and income distributions - polarization, inequality - across people within societies

What Do We Learn from Unit Roots in Macroeconomic Time Series?

It is often argued that the presence of a unit root in aggregate output implies that there is no "business cycle": the economy does not return to trend following a disturbance. This paper makes this notion precise, but then develops a simple aggregative model where this relation is contradicted. In the model output both has a unit root, and displays repeated short-run fluctuations around a deterministic trend. Some summary statistical evidence is presented that suggests the phenomena described in the paper is not without empirical basis.

Internet Cluster Emergence

Internet development holds the promise of transmitting economic value across physical space at zero marginal cost. In such a 'weightless economy', what factors matter for the location of economic activity and thus for economic development? This paper sketches a model of spatial dynamics over a three-dimensional globe, where transportation costs don't matter. The paper develops conditions under which clusters of activity emerge.Distribution dynamics, economic geography, internet, location, space, time, Toepitz, weightless economy

One Third of the Worlds Growth and Inequality

This paper studies growth and inequality in China and India û two economies that account for a third of the world's population. By modelling growth and inequality as components in a joint stochastic process, the paper calibrates the impact each has on different welfare indicators and on the personal income distribution across the joint population of the two countries. For personal income inequalities in a China-India universe, the forces assuming first-order importance are macroeconomic: growing average incomes dominate all else. The relation between aggregate economic growth and within-country inequality is insignificant for inequality dynamics.China, distribution dynamics, Gini coefficient, headcount index, India, poverty, world individual income distribution

Digital Goods and the New Economy

Digital goods are bitstrings, sequences of 0s and 1s, which have economic value. They are distinguished from other goods by five characteristics: digital goods are nonrival, infinitely expansible, discrete, aspatial, and recombinant. The New Economy is one where the economics of digital goods importantly influence aggregate economic performance. This Article considers such influences not by hypothesizing ad hoc inefficiencies that the New Economy can purport to resolve, but instead by beginning from an Arrow-Debreu perspective and asking how digital goods affect outcomes. This approach sheds light on why property rights on digital goods differ from property rights in general, guaranteeing neither appropriate incentives nor social efficiency; provides further insight into why Open Source Software is a successful model of innovation and development in digital goods industries; and helps explain how geographical clustering matters.aspatial, emergence, idea, information, innovation, intellectual asset, Internet, knowledge, Open Source, weightless economy

Matching Demand and Supply in a Weightless Economy: Market-Driven Creativity With and Without IPRs

Many cultural products have the same nonrival nature as scientific knowledge. They therefore face identical difficulties in creation and dissemination. One traditional view says market failure is endemic: societies tolerate monopolistic inefficiency in intellectual property (IP) protection to incentivize the creation and distribution of intellectual assets. This paper examines that tradeoff in dynamic, representative agent general equilibrium, and characterizes socially efficient creativity. Markets for intellectual assets protected by IP rights can produce too much or too little innovation.cultural good, finitely expansible, innovation, intellectual asset, intellectual property, Internet, IP valuation, IPR, knowledge product, MP3, nonrival, software

Cross Country Growth Comparison: Theory to Empirics

This paper reviews the cross-country record of economic growth, using as organizing framework how economic theory has guided that empirical analysis. The paper argues that recent studies of economic growth û both empirical and theoretical û distinguish from previous work in three distinct ways: 1. An explicit focus on cross-country growth and development experiences; 2. Improved, more extensive cross-country data; 3. A heightened need, driven by real-world topicality, for understanding the role of knowledge and technology in economic growth.Convergence, cross-section, regression, distribution dynamics, endogenous growth

Ideas are not like other assets.

Intellectual Property Rights (IPRs) are supposed to be a system to reward creative thinkers. But Danny Quah finds that all too often they fail both in theory and in practice. Here he explores other possibilities, particularly in relation to computers and software.

Is China’s Collapse Finally at Hand? Danny Quah

For three decades now many of the world’s most insightful observers have predicted imminent demise to China’s system. But these same three decades have also seen China confound expectations. China’s economy turned in double-digit growth rates. China lifted 600mn people out of poverty. While 35 years ago China’s per capita income was only US$300 (just 2 per cent that of US per capita GDP) and 800 million Chinese lived in extreme poverty, today China boasts more US dollar billionaires than any other country