Trade and Inclusive Growth

Abstract

This paper surveys the literature on the relationship between international trade and inclusive growth. It examines claims that the rise in inequality in many countries can be attributed to the concurrent rise in trade competition, especially from EMEs like China, spurring trade tensions and protectionist measures. The paper investigates the conflicting literature showing the aggregate benefits of trade versus the adverse and persistent impact of trade, especially import competition, on specific industries and local communities. The paper then reviews the evidence for using trade policies and other complementary policies for adjustment and compensation to those groups adversely affected by trade.

Innovation and Globalization: Benefactors or Barriers to Inclusive Growth?

“…Globalization has long been recognized as a strategy that leads to uneven global growth (Stiglitz, 1996), often resulting in increased social polarization and income inequality (Bourguignon, 2015;Lakner & Milanovic, 2013;Milanovic, 2016). In light of the growing discussions on degrowth and deglobalization, particularly in the context of climate change (James, 2018;Samerski, 2018), there is a heightened need for policy scholars to explore pathways to inclusive growth (Cerra et al, 2021).…”

“…The impacts of this trend, encompassing the rise of globalization and advancements in science and technology, are uneven across different regions and sectors. Geographic concentration of economic activities (Dix-Carneiro and Kovak, 2017;Topalova, 2010), bias towards trade-competing sectors (Helpman et al, 2017;Helpman, Itskhoki, and Redding, 2010), and skill-biased technological changes (Cerra, 2021;Goldberg and Pavcnik, 2007;Meschi and Vivarelli, 2009;Pavcnik, 2017) all contribute to varying socioeconomic outcomes in the context of globalization.…”

“…Recent research indicates that technology's role in driving inequality is not standalone but interacts significantly with institutional factors, including labor market policies and welfare systems. These dynamics present complex challenges for policy researchers focused on achieving inclusive growth, as highlighted by Cerra et al (2021).…”

Rethinking the Inequality-Growth Nexus: Short-Term Gains and Long-Term Challenges

“…In addition, technological advancements, while pivotal in driving economic growth, have been identified as contributing to widening social inequality (Korinek et al, 2021). This issue is particularly pronounced in the context of globalization, where technological advancements are integral to the formation and operation of global value chains (Cerra, 2021;Hummels et al, 2001;Rodrik, 2018).…”

Asymmetric Spillovers in ASEAN Bond Markets

“…After decades of development, ASEAN financial markets have become increasingly integrated with global and regional markets for several reasons. First, ASEAN bonds sometimes provide a higher investment return because of Southeast Asia's relatively more rapid growth in output, investment, foreign direct investment, and trade liberalization (Zhu et al 2016, Bogmans et al 2020, Bacchetta et al 2021. Market participants and financial institutions invest in ASEAN economies seeking higher returns, leading to significant foreign capital inflows from other regions.…”