Dani Rodrik on Globalization, Development, and Employment

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🗓️ 11 April 2011

⏱️ 60 minutes

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Summary

Dani Rodrik of Harvard University talks with EconTalk host Russ Roberts about trade, the labor market, and trade policy. Drawing on a recent paper with Margaret McMillan on trade and productivity, Rodrik argues that countries have very differing abilities to respond to increases in productivity that allow production to expand using fewer workers in a particular sector. When workers are displaced by productivity increases, what is their next best alternative? Rodrik discusses how this varies across countries and policies that might improve matters. He argues that poor countries should subsidize new products as a way of overcoming uncertainty and externalities from new ventures.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	another information related to today's conversation. Our email address is mailadicontalk.org. We'd
0:33.6	love to hear from you. Today is March 11th, 2009, and my guest is Danny Rodrick, the Ruffie
0:42.8	Careery Professor of International Political Economy, at the John F. Kennedy School of Government
0:47.8	at Harvard University. Danny, welcome to Econ Talk.
0:50.3	Thank you, Russ. Thanks for your interest.
0:53.3	Our topic today is globalization and its impact, and I want to start by quoting from a recent
0:58.0	paper that you wrote with Margaret McMillan, you say, quote, clearly globalization has
1:03.8	facilitated technology transfer and contributed to efficiencies in production. Yet the very
1:09.4	diverse outcomes we observe among developing countries suggest that the consequences of
1:14.3	globalization depend on the manner in which countries integrate into the global economy.
1:19.0	In several cases, most notably China, India, and some other Asian countries, globalization's
1:23.6	promise has been fulfilled. High productivity employment opportunities have expanded, and
1:28.6	structural change has contributed to overall growth. But in many other cases, in Latin America
1:33.7	and sub-Saharan Africa, globalization appears not to have fostered the desirable kind of
1:38.0	structural change. Labor has moved in the wrong direction for more productive to less productive
1:43.3	activities, including, most notably, informality. So let's end a quote. So talk first about what
1:49.9	you mean by structural change and its relationship to productivity.
1:53.2	In the paper itself, the measure of structural change that I'm using is one that is based
2:03.4	on a nine-sector disaggregation of the entire economy. So that means I have all of agriculture
	...

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