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International trade: good on average but not for everyone? chief economist, Mauri Kotamäki, Finland Chamber of Commerce

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Users Conference 30.9.2019, Statistics Finland

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International trade: good on average but not for everyone? chief economist, Mauri Kotamäki, Finland Chamber of Commerce

  1. 1. International trade: good on average but not for everyone? Figures for tomorrow 30 September 2019, Statistics Finland Mauri Kotamäki (@mau_and) Chief Economist, Finland Chamber of Commerce
  2. 2. Contents 1. International trade is an excellent thing 2. International trade is not only an excellent thing 3. How excellent is international trade?
  3. 3. International trade is a good thing
  4. 4. Goods and services are more mobile than ever
  5. 5. Why international trade? Economy of scale, benefits of cumulation and other virtuous circles Differences in factors of production (incl. skills), technology, institutions and policy between countries Price differences of commodities between countries Countries specialise in production where they have a relative advantage. International trade in commodities in which countries specialise
  6. 6. People are also mobile 72 243 0 50 100 150 200 250 300 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 Numberofimmigrants,millionpeople Source: The World Bank
  7. 7. The world is smaller than ever …and yet it seems to be bigger than ever
  8. 8. Global economy and uncertainty 0 50 100 150 200 250 300 350 400 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Valueoftheuncertaintyindex Source: policyuncertainty.com
  9. 9. International trade is not only a good thing Two examples
  10. 10. China shock - the exposure to China of the labour market regions of the United States • Regions that were exposed to imports from China experienced the biggest drops in employment ➢Regional migration propensity does not grow ➢Adaptation is slow ➢Increase in well-being close to zero (Caliendo, 2015)Source: Autor et al. (2016)
  11. 11. Immigration • Immigrants are placed in lower skill level and lower earnings level jobs (compared to the country they come from) • At lower income levels wage ↓, at higher income levels wage↑ ➢On average, a slight positive effect Source: Dustmann et al (2013)
  12. 12. Conclusion
  13. 13. Summary • Foreign competition shakes or at least threatens some of the traditional (domestic) actors: 'they steal our market" • Immigration causes resentment: 'they steal our work"
  14. 14. Commodity market disruption (Autor et al, 2016) Using a quantitative theoretical model, Caliendo et al. (2015) find that in the immediate aftermath of a trade shock, constructed to mimic the effects of growth in US imports from China, US net welfare gains are close to zero. China’s economic growth has lifted hundreds of millions of individuals out of poverty The ultimate and sizable net gains are realized only once workers are able to reallocate across regions to move from declining to expanding industries.
  15. 15. Immigration (Constant, 2014) Whether high- or low-skilled, migrants rarely substitute directly for native workers. Instead, migrants often complement native workers or accept jobs that natives don’t want or can’t do. They create new jobs by increasing production, engaging in self-employment, and easing upward job mobility for native workers. The presence of immigrants increases demand and can spur new businesses to open, creating more jobs for immigrant and native populations. Immigration’s positive effects far outweigh any negative impact. Migrants choose locations with available jobs and fill labor shortages.
  16. 16. Conclusion: flexibility Image Gerd Altmann from Pixabay
  17. 17. Thank you! mauri.kotamaki@chamber.fi Twitter: @Mau_and

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