1. Lecture 5. GLOBALIZATION AND COMPETITIVENESS
Economics 1490
THE WORLD ECONOMY:
GROWTH OR STAGNATION?
with
Professor Dale W. Jorgenson
Lecture 5. GLOBALIZATION AND COMPETITIVENESS
September 14, 2017
Harvard University Department of Economics
Fall 2017

2. THE WORLD ECONOMY:
GROWTH OR STAGNATION?
A. Comparing Economies
B. U.S. Crisis and Recovery
C. European Slowdown
D. Asian Economic Miracles
E. Sustainability of Economic Growth
F. World Economic Outlook

3. A. COMPARING ECONOMIES
1. Course Description
2. The World Economy since 1990
3. Purchasing Power Parities
4. Sources of Growth
5. Globalization and Competitiveness

4. GLOBALIZATION OF TRADE
Steve Jobs Introduces the i-Phone
The i-Phone Supply Chain
All Roads Lead to China
Shenzhen and Singapore, Taiwan, the U.S.
Who Is Foxconn?

5. STEVE JOBS INTRODUCES THE iPHONE

6. HANDHELD

7. TEARDOWN OF THE iPHONE

8. PRODUCT OF GLOBAL TRADE

9. SHENZHEN

10. APPLE SUPPLY CHAIN The iPhone and the Software Are Designed by Apple.
Components Are Produced Globally.
The Final Assembly and Packaging Are Done in China.
Most of the Value Is Added in the United States

11. FRAGMENTATION OF TRADE
Trend 1: International Fragmentation of Production is Expanding.
Trend 2: More Value-Added from High-Skilled Labor and Capital.
Trend 3: Enhanced Specialization in High-Skilled Labor in High-Income Countries.
Trend 4: Enhanced Specialization in Capital in Emerging Economies.

12. INTERNATIONALLY FRAGMENTED VALUE CHAIN
Figure Stylized representation of an internationally fragmented value chain

13. VALUE ADDED SHARES
Table 15.1 Value added shares in final output of automotives from Germany (%).

14. ACCOUNTING FRAMEWORK FOR GLOBALVALUE CHAINS
Figure 15.2 An accounting framework for global value chains

15. WORLD INPUT-OUTPUT TABLE
Figure 15.3 Schematic outline of a World Input-Output Table (WIOT)

16. REGIONAL DISTRIBUTION OF VALUE ADDED
Table 15.2 Regional value added distribution of final output of manufactures by country-of-completion

17. REGIONAL DISTRIBUTION OF VALUE ADDED (CONCLUDED)
Table 15.2 Regional value added distribution of final output of manufactures by country-of-completion

18. GLOBALVALUE CHAIN INCOMES
Figure 15.4 GVC Incomes in Advanced and Emerging Countries, All Manufactures, 1995–2011

19. GLOBAL VALUE CHAIN INCOMES, ANNUAL CHANGE
Figure 15.4 GVC Incomes in Advanced and Emerging Countries, All Manufactures, 1995–2011

20. REGIONAL SHARES OF GVC INCOME
Figure 15.5 Regional Shares in World GVC Income, All Manufactures, 1995–2011 (%)

21. COUNTRY GVC INCOMES

22. GVC INCOME BY PRODUCTION FACTOR

23. GVC INCOME BY SKILL LEVEL

24. FRAGMENTATION OF TRADE: SUMMARY
The Domestic Share of GVC Income Has Declined and the Global Share Has Increased.
Emerging Economies Have Increased Their Share of GVC Income, Relative to Advanced Economies.
The Share of Capital in GVC Income Has Increased Relative to the Share of Labor.
The Collapse of Trade in 2009, the Peak of the Crisis, Was Quickly Reversed in 2010.

25. GREAT TRADE COLLAPSE Historical Perspective
Simultaneity of the Collapse in Different Countries
Food, Oil, and Manufactures
The Great Recession
Composition of Trade

26. SIMULTANEITY OF THE GRADE TRADE COLLAPSE

27. GLOBALIZATION OF THE VALUE CHAIN
Trade Grows Faster than Output and Also Collapses Faster than Output
The Explanation is Globalization of the Supply Chain
The i-Phone Example: All Roads Lead to China
Value Added Approach to Trade: Trade Flows and Competitiveness