Richard Baldwin of the Graduate Institute, Geneva, presented his new book, The Great Convergence: Information Technology and the New Globalization, at a launch event held by the Peterson Institute for International Economics on November 15, 2016. Sherman Robinson, new nonresident senior fellow at the Institute, provided commentary.
Baldwin argues in The Great Convergence that revolutionary advances in information and communications technology (ICT) transformed globalization around 1990 in ways that few governments and companies have yet to fully understand. Better communication allowed rich-nation firms to move manufacturing to developing nations. But the key change was not the offshoring of factories—it was the offshoring of the ideas, intellectual property, and knowledge that went with the jobs.
These new information flows broke the monopoly that rich-nation workers had on the use of advanced industrial-manufacturing intellectual property—firms could now combine high-tech ideas with low-wage workers in developing nations. While this change was profitable for the offshoring firms and spurred spectacular growth in some developing nations, it also disrupted the livelihoods of rich-nation workers. In some communities, this disruption led to economic fragility and uncertainty, spurring anti-elite, anti-government, and anti-globalization sentiment in Europe and the United States.
ICT-enabled offshoring means that international competition is helping or harming individuals with little regard to sectors or skill groups. Fast-paced technological change and production fragmentation means New Globalization's impact is more sudden and unpredictable, presenting governments in developed and developing nations alike with unprecedented economic and social policy challenges in their efforts to maintain reliable growth and social cohesion.
About the author: Richard Baldwin has been professor of international economics at the Graduate Institute, Geneva, since 1991, a part-time visiting research professor at the University of Oxford since 2012, president of the Centre for Economic Policy Research (CEPR) since 2014, and editor-in-chief of VoxEU.org since he founded it in June 2007. He was comanaging editor of Economic Policy from 2000 to 2005, and program director of CEPR’s international trade program from 1991 to 2001.