The social footprint of globalization: towards the introduction of strategic industries in quantitative trade models

Colantone, Italo, Ottaviano, Gianmarco Ireo Paolo and Stanig, Piero (2024) The social footprint of globalization: towards the introduction of strategic industries in quantitative trade models. CEP Discussion Papers (CEPDP1973). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

We argue that our understanding of industrial policy in the presence of 'strategic' industries that exert positive externalities on the national economy may benefit from an extension of quantitative general equilibrium trade models making the extent and pattern of trade-induced re-allocations more salient. To make these features relevant for national welfare, we introduce the notion of the 'social footprint' of globalization as the result of suboptimal trade-induced structural transformation in the presence of externalities. For proof of concept, we use simple workhorse models featuring two countries and two industries (only one of which is 'strategic') to highlight the role of the 'scale elasticity' of the strategic industry and the consequences of the most common assumptions on market structure in quantitative trade analyses.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2024 The Author(s)
Divisions:	Economics LSE
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HF Commerce
JEL classification:	F - International Economics > F1 - Trade > F11 - Neoclassical Models of Trade F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies F - International Economics > F1 - Trade > F17 - Trade Forecasting and Simulation
Date Deposited:	19 Feb 2025 11:36
Last Modified:	19 Feb 2025 11:57
URI:	http://eprints.lse.ac.uk/id/eprint/126837

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