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

Colantone, Italo, Ottaviano, Gianmarco and Stanig, Piero (2023) The social footprint of globalisation: towards the introduction of strategic industries in quantitative trade models. Spatial Economic Analysis. ISSN 1742-1772

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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 reallocations more salient. To make these features relevant for national welfare, we introduce the notion of the ‘social footprint’ of globalisation 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:	Article
Official URL:	https://www.tandfonline.com/journals/rsea20
Additional Information:	© 2023 The Author(s)
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HF Commerce H Social Sciences > HD Industries. Land use. Labor
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 F - International Economics > F1 - Trade > F15 - Economic Integration
Date Deposited:	01 Jul 2024 10:48
Last Modified:	15 Jul 2024 23:42
URI:	http://eprints.lse.ac.uk/id/eprint/124046

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