Competition builds trust

Patrick Francois, Thomas Fujiwara, Tanguy van Ypersele, 27 August 2009

Recent research argues that culture affects economic outcomes. Do markets instil cultural values that support good outcomes? This column provides evidence that more competitive markets raise employees’ trust levels. That suggests that competitive markets build the values that support them.

Recent empirical evidence gleaned from a number of different sources and countries using different methods plausibly suggests that culture affects economic outcomes (see Tabellini 2008 for a recent survey).

Topics: Competition policy, Institutions and economics
Tags: Culture, monopolistic competition, trust

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Why large American gains from globalisation are plausible

Gary Clyde Hufbauer, Matthew Adler, 24 July 2008

A popular headline figure quantifying the US payoff from globalisation at $1 trillion per year has been criticised by Dani Rodrik and other sceptics. Here is an explanation and defence of the Peterson Institute’s big number.

The Peterson Institute calculates that the US economy was approximately $1 trillion richer in 2003 due to past globalisation – the payoff both from technological innovation and from policy liberalisation – and could gain another $500 billion annually from future policy liberalisation (Bradford, Grieco, and Hufbauer 2005).

Topics: Global economy, International trade
Tags: comparative advantage, economies of scale, globalisation, monopolistic competition, partial equilibrium, productivity gains, safety net, US economy