Documents Petersen, Thiess 13 results

"Increases in income inequality have both growth-promoting effects (stronger performance incentives, as well as incentives to invest in one's own human capital, to take risks, and to make investments) and growth-dampening effects (demotivating incentives, social tensions and political unrest, declines in demand as a brake on growth). While increases in income inequality in the 1950s and the 1960s still led to growth-promoting effects, current studies increasingly identify growth-dampening effects. Particularly in highly developed economies such as Germany, Japan and the United States, these studies indicate that increasing income inequality has reached a level that is becoming a brake on growth. For this reason, there is no fundamental contradiction between state-led income redistribution and economic growth. The reduction of income inequality should not be limited to a pure redistribution through the tax-transfer system, but should also include a rebalancing of the supply-side policies of the past 30 years."

"Two main consequences have arisen from the increasing cross-border exchange of goods, labor, capital and technologies: A better distribution of scarce production factors, resulting in positive growth effects for the economies of all countries involved. On the other hand, there have been changes in scarcity conditions within the individual economies. This leads to price changes in each country – both for material goods and services, as well as for the production factors of labor and capital. As a result, there are winners and losers of globalization within each country.

In advanced economies, the international division of labor and the associated cross-border trade activities lead to an increase in gross domestic product (GDP) in all of the economies involved. If real per capita gross domestic product is taken as an indicator for globalization-driven growth, then it is the advanced economies such as Japan, Switzerland, Finland, Denmark, Ireland and Germany that benefited the most from advancing globalization between 1990 and 2014.

In emerging and developing countries too, there has been a positive impact on growth from advancing globalization. In particular, these effects are reflected in the steep reduction in absolute poverty in Asia, South America and Eastern Europe. By contrast, for the least developed economies in Africa, the results are less positive when the pros and cons of globalization are weighed up. The gap in per capita GDP is widening between Africa and the rest of the world – not only in absolute terms, but also in relative terms.

At the same time, market processes of economic globalization produces losers as well as winners within every country. In advanced economies, it is workers who lose out, in particular the low-qualified and those employed in industries which are competing particularly intensely with emerging countries (especially China and Eastern European economies). In emerging economies, the relative scarce factor (capital) suffers from a lower demand.

This means that although the advancing globalization and international division of labor has increased growth in advanced economies, criticism of globalization has increased considerably in these countries over recent years.

The deciding factor for how globalization should be shaped in the future is whether the dividends of globalization can be distributed in advanced economies in such a way that globalization's losers can also benefit from the resulting gains in growth. This requires policies that reduce income inequality and strengthen the social security systems, in order to alleviate citizens' fear of change. In addition to compensating for lost income, it is also important to implement further training for the unemployed in order to facilitate their transition into sectors which have benefited from globalization.

A cross-society consensus has to be struck on how exactly these policy instruments should be designed – both in terms of expenditure and in terms of income. This consensus must take into account unintended effects and reciprocal effects as well. However, in the first instance, the deciding factor will be a fundamental commitment across society to place more focus in policy-making upon those who have lost out under globalization. Unless we compensate them, there is the threat of serious social and political tensions, which will threaten prosperity across the entire economy."

"This publication deals with the all-encompassing question of winners and losers of globalization. The goal, in tackling such a controversial issue, is to go beyond taking stock of the impact of globalization on economic, political and social systems around the world and to make policy recommendations based on sound scientific analysis.

This publication engages with a problem of historical proportions that has structurally affected the shape of the world as we used to know it, from the global economy to the social fabric of all countries involved, from the legitimacy and power of liberal democracies to the international institutions governing issues transcending national borders.

It therefore identifies a number of main features that characterize globalization and analyses them in separate policy papers: International trade, the challenges national labour and welfare policies face when confronted with globalization, and finally the growing difficulty faced by political institutions and governments in managing the consequences of globalization.

By increasing cross-border exchange of goods, labour, capital, and technologies, the liberalisation of global trade has allowed a better distribution of scarce production factors. This has resulted – as suggested by the Introduction prepared by Thieß Petersen (“Economic globalization – who's winning, who's losing out?”) – in growth effects for the economies of all the countries involved.

The other side of the coin, however, consisted of changes in scarcity conditions within the individual economies. This has led to price changes in each country – both for material goods and services, as well as for the production factors of labour and capital. As a result, there are winners and losers of globalization within each country. The deciding factor for how globalization should be shaped in the future is whether the dividends of globalization can be distributed in advanced economies in such a way that globalization's losers can also benefit from the resulting gains in growth.

The EU – as Maurizio Ferrera, Manos Matsaganis, and Pier Domenico Tortola point out in their paper (“Globalization, economic inequality and political instability: What future for Europe's welfare?”) - is the appropriate sphere in which to devise such solutions, for it works at a scale large enough to preserve the gains from openness while constituting an arena for the legitimate and viable creation of new tools for market corrections.

Based on these suggestions, it will be interesting to read the paper by Grégory Claeys and André Sapir (“Easing Pain from Trade: the European Globalization Adjustment Fund”), discussing the European Globalization Adjustment Fund, established to co-fund EU member states' labour market policies that facilitate the re-integration into employment of workers who have lost their jobs as a result of globalization. The paper suggests ways to improve the fund and to make it more effective at easing the negative effects of globalization on EU workers.

The role of institutions in dealing with globalization and its impact on our economies is discussed in the paper presented by Christopher A. Hartwell (“Do Poor Institutions Create More Losers from Globalization?”). It studies the conditions under which extra “losers” are generated during the process of economic liberalisation via an examination of the role of institutions in economic transition.

The impact of globalization on the legitimacy and resilience of Western liberal democracies was examined by Thomas Raines (“Europe, democracy and globalization: Can the EU counter the illiberal turn?”) and by Yves Bertoncini (“Democratic Crises in the EU: Towards ‘New Frontiers'”). European societies are increasingly divided by their attitudes to liberal values and by their views on the effects of liberalism on society and the economy. In addition, publics and elites are divided over the direction national and European politics should take, which has important implications for European democracy in the future.

While liberalism is challenged at home, it is also struggling abroad. The connections between the international and the domestic challenges to liberalism are important. The increasingly integrated global economy places structural pressures on the Western democratic model. Those countries, which are champions of liberal rules-based international order, must be able to demonstrate that it can deliver for citizens at home."

"There is growing uncertainty in industrialized countries as to whether globalization
means more opportunity or more risk. Trump, Brexit and increasing populism are
direct consequences of this development. However, our Globalization Report 2018
shows for the third time in a row, as in 2014 and 2016, that: when measured in terms
of per capita gross domestic product, industrialized countries in particular continue to
be the biggest winners as a result of increasing globalization. "

"A central aspect of globalization is that the production of goods and services is divided into different stages of added value at home and abroad. While direct supplier relations can be understood reasonably well, the direct and indirect added value contributions of domestic and foreign suppliers often remain hidden. Using the German automotive industry as an example, we show the extent to which other countries contribute directly and indirectly to added value in this industry's production."

"Der Megatrend-Report beschreibt nach einer kurzen Einleitung ausgewählte Kernindikatoren der drei Megatrends Globalisierung, Digitalisierung und demografischer Wandel. Auf dieser Basis gibt der Report Antworten auf drei Leitfragen: Wie beeinflussen sich diese drei Trends gegenseitig? Wie hat sich das Zusammenspiel der drei Trends bisher auf die Teilhabechancen der Menschen ausgewirkt? Welche zentralen Wechselwirkungen können wir in Zukunft zwischen Globalisierung, Digitalisierung und demografischem Wandel erwarten? Abschließend werden fünf Thesen und Fragen zur Zukunft der Megatrends (auf-)gestellt."

Although globalization is not a new phenomenon, making the best of it requires a deep understanding of its direct and indirect effects on the global and national economy, on policymaking, and most importantly on society. However, the economic analysis of globalization is not a simple task, not least because it is a controversial topic. Supporters of globalization see it as a source of economic growth and prosperity, while its opponents claim that global integration is eroding our natural environment and causing global inequality to increase. We believe that the debate surrounding global integration should go beyond the perception of whether globalization is good or bad. Most importantly, it should be based on empirical evidence. This evidence should promote transparency, break down the complexity behind the economic dynamics of globalization and allow evidence-based policymaking.

This is the pursuit of the project “Global Economic Dynamics” (GED) of the Bertelsmann Stiftung. Through our quantitative and qualitative work, we attempt to provide a deeper understanding of globalization, by learning its determinants, as well as its social and economic effects. Without neglecting the possible economic and social problems that may arise as markets become more integrated, our work tries to identify the channels through which Germany, Europe and the world can profit even stronger and wider from economic integration. Most importantly, it aims at fostering a future global integration that is fairer, economically sustainable and serves the interests of the whole population. Our “Roadmap 2030” presents an overview of our findings from the past five years of our project work. From our study, we have derived areas of action that will be crucial for Germany's and Europe's success in the next decade of globalization."