Globalization and Inequality

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.

About the Author :
Elhanan Helpman is the Galen L. Stone Professor of International Trade at Harvard University.

Review :
A very well done survey of what we know about this issue, from a leader in the field. No one with any interest in current trade policy debates could ask for a better summer read…There is an almost voyeuristic joy in learning [Helpman’s] thoughts on one of the most pressing questions of our times. In the U.S., there is a backlash against free trade. Many believe globalization is responsible for rising income inequality. The central purpose of this book is to clarify that this belief is not based on evidence…Helpman concludes that the existing evidence does not support the position that increasing free trade has given rise to growing inequality. A wonderful work of great contemporary importance. Elhanan Helpman has produced a magisterial account of the study of globalization, earnings, and income inequality. Deftly weaving discussion of economic theory, empirical analysis, and quantitative modeling, Globalization and Inequality brings social science to life. Globalization is simultaneously heralded as the engine of economic progress and maligned as a prime cause of job loss and inequality. In this wonderfully readable book that brings some sanity to this debate, Elhanan Helpman summarizes and extends what we have learned from decades of economic research. A must-read for anyone interested in understanding how our economy is changing and how we can hope to benefit from globalization without suffering some of its nasty side effects.