One of the world's leading experts on international trade explains that we must look beyond globalization to explain rising inequality. Globalization is not the primary cause of rising inequality. This may come as a surprise. Inequality within nations has risen steadily in recent decades, at a time when countries around the world have eased restrictions on the movement of goods, capital, and labor. Many assume a causal relationship, which has motivated opposition to policies that promote freer trade. Elhanan Helpman shows, however, in this timely study that this assumption about the effects of globalization is more myth than fact. Globalization and Inequality guides us through two decades of research about the connections among international trade, offshoring, and changes in income, and shows that the overwhelming conclusion of contemporary research is that globalization is responsible for only a small rise in inequality. The chief causes remain difficult to pin down, though technological developments favoring highly skilled workers and changes in corporate and public policies are leading suspects. As Helpman makes clear, this does not mean that globalization creates no problems. Critics may be right to raise concerns about such matters as cultural autonomy, child labor, and domestic sovereignty. But if we wish to curb inequality while protecting what is best about an interconnected world, we must start with a clear view of what globalization does and does not do and look elsewhere to understand our troubling and growing divide.

This book contains fifteen major essays on international economics. The authors investigate five principal themes: theory, and empirics, of financial issues in open economies; economic growth; public economies; and political economy. Written to honor Professor Assaf Razin of Tel Aviv and Cornell Universities on the occasion of his sixtieth birthday, the essays pay close attention to policy issues as well as formal analysis. The contributors include renowned specialists in international economics based in North America, Europe, Israel, and China. This volume of advanced research will be of interest to scholars, policy makers, and advanced students alike.

This volume presents a representative collection of state-of-the-art papers on international trade, one of the dynamic sub-fields in economics. The contributions range over all the major areas of current research, including articles on the geographical aspects of international trade by Paul Krugman and Alan Deardorff, on dynamic stochastic economies by Avinash Dixit, and on endogenous growth by Gene Grossman and Elhanan Helpman. In addition to the theoretical acontributions, the book also contains work on important policy issues such as auction quotas, discussed by Kala Krishna, and the role of government in economic development, by Anne Krueger. Also included is an assessment by Bill Ethier of the theoretical achievements of a leading authority in international trade theory, Ronald Jones, in whose honour the essay was written.

The papers in this collection give an overview of the latest work in international trade theory. The contributors include many of the most innovative contemporary theorists, and they provide an unrivaled introduction to the latest developments in one of the most dynamic subfields of economics. Distinctive features of the book include a section on the role of historical and geographical considerations in international trade; an emphasis on dynamic aspects of trade; and an assessment of the work of Ronald Jones, in whose honor the book is published.

Fifteen major essays on international economics investigate five principal themes: theory, and empirics, of financial issues in open economies; economic growth; public economies; and political economy. Written to honor Assaf Razin of Tel Aviv and Cornell Universities on the occasion of his sixtieth birthday, the essays pay close attention to policy issues and formal analysis. The contributors include renowned specialists in international economics based in North America, Europe, Israel, and China.

What conclusions can be drawn from recent advances in international trade and international macroeconomics? New datasets, theoretical models, and empirical studies have resulted infresh questions aboutthe world trade and payment system. These chapters--six on trade and six on international macroeconomics--reveal the richness that researchers have uncovered in recent years. The chapters on foreign trade present, among other subjects, new integrated multisector analytical frameworks, the use of gravity equations for the estimation of trade flows, the role of domestic institutions in shaping comparative advantage, and international trade agreements. On international macroeconomics, chapters explore the relation between exchange rates and other macroeconomic variables; risk sharing, allocation of capital across countries, and current account dynamics; and sovereign debt and financial crises. By addressingnew issues while enabling deeper and sharper analyses of old issues, this volume makes a significant contribution to our understanding of the global economy.
Systematically illuminates and interprets recent developments in research on international trade and international macroeconomicsFocuses on newly developing questions and opportunities for future researchPresents multipleperspectives on ways to understand the global economy"

"Institutions and Economic Performance" explores the question of why income per capita varies so greatly across countries. Even taking into account disparities in resources, including physical and human capital, large economic discrepancies remain across countries. Why are some societies but not others able to encourage investments in places, people, and productivity?

The answer, the book argues, lies to a large extent in institutional differences across societies. Such institutions are wide-ranging and include formal constitutional arrangements, the role of economic and political elites, informal institutions that promote investment and knowledge transfer, and others. Two core themes run through the contributors' essays. First, what constraints do institutions place on the power of the executive to prevent it from extorting the investments and effort of other people and institutions? Second, when are productive institutions self-enforcing?

"Institutions and Economic Performance" is unique in its melding of economics, political science, history, and sociology to address its central question.

Far more than an intellectual puzzle for pundits, economists, and policymakers, economic growth--its makings and workings--is a subject that affects the well-being of billions of people around the globe. In "The Mystery of Economic Growth," Elhanan Helpman discusses the vast research that has revolutionized understanding of this subject in recent years, and summarizes and explains its critical messages in clear, concise, and accessible terms.

The tale of growth economics, as Helpman tells it, is organized around a number of themes: the importance of the accumulation of physical and human capital; the effect of technological factors on the rate of this accumulation; the process of knowledge creation and its influence on productivity; the interdependence of the growth rates of different countries; and, finally, the role of economic and political institutions in encouraging accumulation, innovation, and change.

One of the leading researchers of economic growth, Helpman succinctly reviews, critiques, and integrates current research--on capital accumulation, education, productivity, trade, inequality, geography, and institutions--and clarifies its relevance for global economic inequities. In particular, he points to institutions--including property rights protection, legal systems, customs, and political systems--as the key to the mystery of economic growth. Solving this mystery could lead to policies capable of setting the poorest countries on the path toward sustained growth of per capita income and all that that implies--and Helpman's work is a welcome and necessary step in this direction.

"The Organization of Firms in a Global Economy" presents a new research program that is transforming the study of international trade. Driven by the availability of new micro data sets and innovative theoretical models, it focuses on the level of firms, products, and stages of production rather than on countries and industries. It addresses such questions as why only a small proportion of firms in a given industry export and why an even smaller proportion invest abroad; why exporters tend to be more productive than nonexporters; why almost one-third of international trade takes place between units of the same firm and why as much as two-thirds involves multinational firms as exporter, importer, or both; and why international trade may have been the most important driver of organizational changes in the corporation that have been taking place in the last decade.

Until a few years ago, models of international trade did not recognize the heterogeneity of firms and exporters, and could not provide good explanations of international production networks. Now such models exist and are explored in this volume.

Traditional growth theory emphasizes the incentives for capital accumulation rather than technological progress. Innovation is treated as an exogenous process or a by-product of investment in machinery and equipment. Grossman and Helpman develop a unique approach in which innovation is viewed as a deliberate outgrowth of investments in industrial research by forward-looking, profit-seeking agents.Gene M. Grossman is Professor of Economics and International Affairs at Princeton University. Elhanan Helpman is Archie Sherman Professor of International Economic Relations at Tel Aviv University.

This sequel to Market Structure and Foreign Trade examines the new international trade's applied side. It provides a compact guide to models of the effects of trade policy in imperfectly competitive markets, as well as an up-to-date survey of existing knowledge, which is extended by the authors' useful interpretations of the results.Elhanan Helpman is Archie Sherman Professor of International Economic Relations at Tel Aviv University. Paul R. Krugman is Professor of Economics at the Massachusetts Institute of Technology and a member of the Group of Thirty.

Global trade is of vital interest to citizens as well as policymakers, yet it is widely misunderstood. This compact exposition of the market forces underlying international commerce addresses both of these concerned groups, as well as the needs of students and scholars. Although it contains no equations, it is almost mathematical in its elegance, precision, and power of expression.

"Understanding Global Trade" provides a thorough explanation of what shapes the international organization of production and distribution and the resulting trade flows. It reviews the evolution of knowledge in this field from Adam Smith to today as a process of theoretical modeling, accumulation of new empirical data, and then revision of analytical frameworks in response to evidence and changing circumstances. It explains the sources of comparative advantage and how they lead countries to specialize in making products which they then sell to other countries. While foreign trade contributes to the overall welfare of a nation, it also creates winners and losers, and Helpman describes mechanisms through which trade affects a country's income distribution.

The book provides a clear and original account of the revolutions in trade theory of the 1980s and the most recent decade. It shows how scholars shifted the analysis of trade flows from the sectoral level to the business-firm level, to elucidate the growing roles of multinational corporations, offshoring, and outsourcing in the international division of labor. Helpman s explanation of the latest research findings is essential for an understanding of world affairs.

Gene Grossman and Elhanan Helpman are widely acclaimed for their pioneering theoretical studies of how special interest groups seek to influence the policymaking process in democratic societies. This collection of eight of their previously published articles is a companion to their recent monograph, "Special Interest Politics." It clarifies the origins of some of the key ideas in their monograph and shows how their methods can be used to illuminate policymaking in a critical area.

Following an original introduction to the contents of the book and its relationship to "Special Interest Politics," the first three chapters focus on campaign contributions and candidate endorsements--two of the tools that interest groups use in their efforts to influence policy outcomes. The remaining chapters present applications to trade policy issues. Grossman and Helpman demonstrate how the approaches developed in their monograph can shed light on tariff formation in small and large countries, on the conduct of multilateral trade negotiations, and on the viability of bilateral free trade agreements. They also examine the forms that regional and multilateral trade agreements are likely to take and the ways in which firms invest abroad to circumvent trade barriers induced by political pressures.

The articles collected in this volume are required reading for anyone interested in international relations, trade policy, or political economy. They show why Grossman and Helpman are global leaders in the fields of international economics and political economy.