 Welcome to the wider annual lecture number 27. This year's lecture by Dr. Penelope Goldberg titled Globalization in Crisis Confronting a New Economic Reality promises to be a fascinating exploration of the history and consequences for growing and very concerning de-globalization movement. I'm Kunal Singh, Director of UniWider, and I'll be chairing the annual lecture today. I'd first like to welcome those of you who might be new to the wider annual lecture, new to the United Nations University, and new to UniWider. The United Nations University was established in 1975 to act as a research arm of the United Nations. UniWider, the World Institute for Economic Research, was the first research institute of the university nearly 40 years back in 1985. Today, UniWider serves as a unique blend of think tank, research institute, and UN agency. This is our 27th annual lecture. These lectures have been delivered by a prestigious group of scholars and policymakers, including four Nobel laureates. It's a pleasure to welcome Penelope Goldberg to this lineup. I'd also like to thank our hosts here at the University of Oslo, particularly Professor Dan Bannick, Director of Oslo as a G-initiative, and host of the very popular in-persons of the elephant podcast. Inviting us to this stunning example of neoclassical architecture, which I've learned is over 150 years old. Today's lecture will run for approximately 45 minutes, followed by a response from a discussant for the lecture Dr. Halva Malum. Afterwards, I'll return to chair the Q&A for approximately 30 minutes. Following the lecture, we invite you cordially to join us for a reception across the square at Dahmer's Bibliotheca. I'm delighted that you shared that this lecture has been live-streamed to a very large audience along with all of you here today. It's part of a mission to provide a forum for knowledge sharing, discussion, and debate on the most pressing concerns affected the world's poorest people. And we're grateful to use this technology to reach a very wide audience indeed today. If you're watching on the YouTube stream, you can submit questions directly on the YouTube, on YouTube or Twitter, and you any wider with the hashtag AL27. Let's repeat the hashtag AL27. Additionally, this lecture will be recorded and posted to Univore's YouTube channel in the coming days. I would now like to invite Professor Dan Bannick to also provide a very good remarks. Dan, over to you. Good afternoon, and welcome to the University of Oslo. On behalf of Professor Sterl, the university president, he's taking a slight break today. So I get the honor of introducing, at least, the University of Oslo, and welcoming you here today. My name is Dan Bannick. I'm a professor of political science at the University of Oslo, where I also direct the Oslo SDG Initiative at the university's center for development and the environment. And if you don't know what Zoom stands for, the kind of research. We do innovative, path-breaking work on sustainable development, looking into global, national, regional challenges, but also how to solve. How do we actually achieve sustainable development at the Oslo SDG Initiative? We're actually focusing now more on the politics of sustainable development, asking some of these uncomfortable questions. Why is it that the SDGs are so off track? Now, it is particularly nice to welcome you here to this ornate, this beautiful room called the Gamle Fessal. In English, it's called the Old Assembly Hall. And it is steeped in history. I mean, apart from it being very beautiful, it was also used between 1854 and 1866. This is where the Norwegian Parliament would meet. And by the way, Rector, we actually now have cushions in the seats. It's a little more comfortable than this place was before. So welcome again to the Gamle Fessal. But I'm particularly delighted that we are hosting this prestigious UNU-Wider annual lecture. And there are two reasons. When Professor Sen actually got in touch with me earlier this year saying, would you like to be the co-host, I jumped at the opportunity because, well, firstly, I'm a huge fan of UNU-Wider. And we have had collaborations with wider colleagues. We've published together. We've had events together. So I was a big fan. But not just because of our recent work. It was actually many years ago when I was a PhD student. I was inspired. My mentor, Mattia Sen, was very instrumental in the early years of wider's work. And when I was doing my work on famines and poverty and starvation and democracy, Sen actually wrote Professor Sen. Not this, but Professor Mattia Sen wrote seminal pieces when he was based in Helsinki. So that is how I was familiar with wider's work. But then there's another twist to the story, which is the second reason why we wanted to host this. It is 24 years ago. Exactly 24 years ago, as a young PhD student, I had the pleasure of organizing the third. This is the 27th, the third annual lecture featuring the doyen of inequality studies, Professor Tony Atkinson, the late Tony Atkinson. And his topic 24 years ago, I think, is extremely relevant today. And the title, and this is something that Professor Goldberg will surely touch upon in her talk, was Is Rising Inequality Inevitable? And that's something that I would just like to linger on. I mean, I think it's still a relevant issue for us to speak today to at least discuss. So anyway, so we are here today for the 27th UNU wider lecture. I'm particularly pleased that the Department of Economics, we've had development studies, a lot of departments at the University of Oslo showing interest in this talk. And of course, Professor Sen will shortly introduce our distinguished speaker. I could think of nobody better than Professor Goldberg to give this talk and to invite you to Oslo for the first time. This is your first visit. And it's been such a pleasure to hang out with you. And I should also mention that, of course, you've inspired many, many people over the years. But it was particularly fun to have you in my basement studio recording a podcast in pursuit of development, which will air in the next few weeks. So with those words, again, welcome to the University of Oslo. And Professor Goldberg, we're really looking forward to your talk. And I'd like to welcome Kunal Sen back, the director of UNIWIDE, back on stage. Thank you very much and welcome. Thank you, Dan. Again, very kind of to host us in this beautiful venue and also director of UNIWIDE Oslo for your kind presence and for hosting us here. So I want to now introduce the wider annual lecture for 2023. Ben Loupi Goldberg, actually, Ben Loupi's no more widely known as Benny Goldberg, is the L.U. Professor of Economics and Global Affairs and an affiliate of the Economic Growth Center at Yale University. She holds a joint appointment with the Yale Department of Economics and the Jackson School of Global Affairs. From 2018 to 2020, Dr. Goldberg served as Chief Economist of the World Bank Group. She has also previously served as a president of the Economic Society and the Vice President of the American Economic Association, the two most absolute messages, professional associations and economics. Her most recent research examines the resurgence of partitionism in the US, analyzing trade, poverty, and inequality, the interplay between formality and trade liberalization, the presence of labor market frictions, discrimination against women in developing countries. I should say that Dr. Goldberg's work has been fundamental for me and my own colleagues in UNIWIDE. And so very pleased to have Dr. Goldberg as the annual lecture today. Now, Goldberg's new book, and I think a few copies are displayed outside, published by MIT Press, The Unequal Effects of Globalization, describes the complex dynamic between globalization, international trade, and inequality. I read the book and I found it fascinating and I think you'll hear a bit more of the book in the next hour or so. So it's been a great honor to have Dr. Goldberg deliver this year's wider annual lecture. I'd also like to welcome our discussant, Professor Halva Malham. Halva Malham is the Professor of Economics and Deputy Head of the Department of Economics at the University of Oslo. He lectures macroeconomics and development economics, working primarily on the intersection between development economics and political economy. His work covers crime, corruption, and civil war, focusing on research management in rich and poor countries. His paper, Institutions in the Resource Curse, published in the Economic Journal, is one prominent example. Now to the on-to-the-on annual lecture itself. After two decades of globalization with great economic achievements in poverty reduction, a long period of peace in the Western world and increased standards of living worldwide, globalization slowed following the 2008 to the 2009 financial crisis. Eventually made a recovery in subsequent years, but recent trends in public sentiment and government policy suggest the beginning of a new and concerning backlash against globalization. What explains the shift? What are the implications of growing levels of inequality both within and between countries in the global North and the global South? What can we learn from new demands for resilience in response to the COVID-19 pandemic and the invasion of Ukraine? Is the globalization crisis, the result of this crisis, the COVID-19 pandemic and the immigration of Ukraine, or the trigger for a change that long been brewing? The lecture will conclude with thoughts about potential consequences of the shifting landscape for growth, inequality, poverty reduction, climate change, and resilience. I'd like to invite Professor Penny Goldberg to deliver the wider annual lecture. Thank you. Thank you very much for this very kind introduction and thank you all for the hospitality. This is my first time in Oslo in this wonderful city. And I cannot say enough thanks for the invitation and the hospitality as I said and also for the opportunity to speak in this incredible venue. I don't think the camera can do justice to the grandeur of this space. It's probably one of the most beautiful spaces I ever talked in. So I'm afraid that my topic is going to be a little more somber. I'm going to talk about globalization in crisis and let me jump right in with a brief roadmap of the issues I'm going to touch upon. I'm going to start by asking the question, is globalization in crisis? As the title of the talk implies and briefly my answer will be that if you look at the data, at the aggregate data, we don't see a clear deglobalization trend. We see a slowdown, but not a reversal of previous trends. On the other hand, if you look at policies and at public sentiment, it's fair to say we're in a new era. Then I'll talk about the causes of the crisis and that's what most of the talk is going to be about. And briefly, I will identify four main causes of the current trends. One is the perception that the competition among countries has been unfair. Second, an increase of within countries inequality and that'll be more specific about what I mean by that. I will talk more about the impact of the COVID-19 pandemic on sentiments about global supply chains. And finally, I will talk about the invasion of Ukraine and geopolitics, which are first order these days. And then I will conclude with some thoughts about potential consequences. So my talk is going to drone these two writings of mine. So one was already mentioned. It's a book, The Unequal Effects of Globalization that came out last August. And the other one is a more recent paper that I presented at the Brookings Conference last April. I have many slides and I don't have enough time to cover everything I want to cover. So I tend to speak very fast. In case you wonder, my accent is a Greek accent that they can speak very fast as a Greek, but I don't think I want to subject you to this fast talking. So I will go through the slides, trying to give you some taste of the issues that I think are relevant and perhaps we can talk more about them later during the discussion. And all the slides are going to be posted so you can actually study them at your leisure. So as I said before, I will start with a basic question, is the global economy de-globalizing? Again, we can use many different measures of globalization. One common measure is to look at global trade. By that we mean the sum of goods and services, exports or imports. What you see in this figure is the bottom line, the dark blue line shows the total volume of imports, world imports over time. The top line shows the total imports as a percentage of world GDP. So it's a relative measure. And the graph starts in 1989. Why 1989? So that's the year when the Berlin Wall falls. And for many people, this is the onset of a period that we call the era of hyper-globalization. Hyper-globalization, because during the time, during the next two to three decades, trade is growing very fast. In fact, it's growing faster than GDP. And you see that in the top line. So not only is trade growing, but it's growing faster than world output. So that's the era of hyper-globalization. And then in year 2008, 2009, we have the global financial crisis and then trade plummets. But after that, a year later, trade bounces back. It starts increasing again, but it never gains its previous momentum. So after that time, trade still grows, but at a slower pace. And so as a percentage of GDP, it remains constant. And that's the time when many people start worrying that maybe the era of not just hyper-globalization, maybe the era of globalization is over. But as you can see from this graph, there is no trend that suggests that we have a reversal of globalization. We have a slowdown, but we don't have a reversal. And even if you look at the year 2020, that's when COVID hits, there again, trade takes a hit. It decreases very sharply, but by 2021, trade grows again. So trade proves very resilient during that time. So once again, if we look at the aggregate data, we don't see a clear trend towards the globalization. You can do that at a more micro level for specific countries. Given time constraints, I'm not going to talk about this right now. But again, the main point I want to make is that the data don't tell a very stark story towards the globalization. On the other hand, if you look at what happens in the policy environment and public sentiment, it's an entirely different story. So what we see starting in 2016, it's a reversal of decades old liberalization agendas in some of the world's most important economies. And by that I have primarily in mind the US and the UK. Why the US and the UK? Because apart from being very large economies, these are also the two countries that have been traditionally the champions of free of open trade. And so you probably already know the main landmarks of this development. So the Brexit vote in 2016, the US tariffs that started in 2018 followed by China's retaliation. So we have the US-China trade war. In the meantime, we have the appellate body crisis and the paralysis of the World Trade Organization. And I would say in general, the demise of multilateralism. This had started earlier, but it becomes much worse after 2019. More recently, we have industrial policy in the CHIPS Act in the US that many countries, especially in Europe, have perceived as a clear departure from multilateralism. And finally, we have many export restrictions more recently in the US that target the semiconductor sector in China. So all this is happening in the US and in Britain. I would say in Europe we have a very different type of backlash against globalization. We have many concerns about immigration, but not so much about trade. At the same time, in other parts of the world, something here, mostly Asia and Africa, we still see many episodes of liberalization. So we have ASEAN, ARSEP, the African continental free trade agreement. So other parts of the world still try to integrate. It's not the case that globalization is dead, but we do see this backlash in some of the world's most important economies. So that's the policy on the public sentiment side. Things are much worse, I would say. So as of 2018 and 2019, despite the trade war, we didn't see a reversal of public attitudes when it came to trade. In fact, if you read global attitude surveys, many people still, both in advanced countries and in developing countries, but most people still express the opinion that trade is beneficial for people in general. They express concerns about the labor market effect of trade, about its effect on low-skill workers, but in general, they view trade as beneficial. By 2022, the press, the social media are full with concerns about resilience, geopolitics. The terms that pop up again and again are reshoring, French-shoring, national security. So we have an entirely different vocabulary in the context of international trade. And in my opinion, most telling is a poll conducted by the Booth School, the Chicago Booth School, of economies, so they poll various economies on several economic issues every two weeks. And in March 2018, they polled people about the merit of the tariffs that the US was imposing on China. And at that time, 100% of the respondents expressed the view that the tariffs were the wrong policy to remedy whatever was wrong with the US economy. They viewed the tariffs clearly as being welfare reducing. In January 2022, there was a different poll, again, related to international trade, but with a different wording, they asked people what they thought about the resilience of global value chains. And 76% of the respondents replied that trade had made the US, the US economy, much more vulnerable to disruptions. And there were only actually two people who disagreed with the statement that was one of them. So that gives you a sense of how much the sentiment among economists, even among economists, had changed. So given this environment, I would say we are in a different era where the attitudes towards trade and towards globalization have changed and what are the main causes of this retreat. So I would chart, broadly speaking, three phases. The first phase starts around the year 2016, and I already mentioned the two main landmarks, the Brexit vote and the Trump presidency. At that time, I think the main driver of this negative sentiment towards trade and globalization is the perception that trade has become unfair, especially trade between the US and China. And at the same time, people are very concerned about labor market disruptions caused by trade with low wage countries. And these labor market disruptions manifest themselves as an increase in regional inequality. So I will talk about these more in a moment. The consequences of these developments are, as I already mentioned, Brexit and tariffs in the US, the US-China trade war. But actually, if you look at what happens at the trade flows, trade proves extremely robust to all these developments. Then phase two starts in the year 2020 when COVID-19 breaks out. And there, we see completely different concerns about trade that don't have to do with inequality anymore. So there, the main concern is the resilience of global supply chains. And we see many strongly voiced concerns during that time. But eventually, trade bounces back and trade proves extremely robust and resilient during that time, too. And then phase three starts in 2022, in February 2022, with the invasion of Ukraine. And that brings an entirely different set of concerns into the foreground. So we start worrying about national security and, once again, the resilience of global supply chains. But now, it's a resilience to a very different type of shock, namely geopolitical shocks. And so the consequences of this event are much more serious, in my opinion. We have, in Europe, we have decoupling from Russia. And in the US, we have started a decoupling from China. So these are major developments with potentially important ramifications, important implications for trade, for globalization, and also for politics in the long run. So let me talk about these phases in a little more detail. And once again, the first phase is described in more detail in the book I already mentioned, the unequal effects of globalization. And that gives you also a sense of what I view as the most important causes causing the backlash during that period. Namely, the perception that trade with China had become unfair and the increase in inequality. And specifically, the increasing sentiment in many advanced countries that there was a trade-off between reducing global inequality and within-country inequality. So why was trade perceived as unfair? So many of these concerns are well known from the press. The expectation when the US and Europe opened up their markets to China when China entered the World Trade Organization was that China would eventually also open up its markets to other countries. This never really happened. At the same time, there were concerns about subsidies, sustained-owned enterprises, intellectual property rights, forced technology transfer, and so on. And all these concerns were primarily targeted towards China. So that is concerns that have been voiced several times. At the same time, there is this perception that I talked about that there has been a decreasing global inequality at the expense of inequality within advanced countries. So let me explain what I mean by that. So what do we mean by global inequality? So global inequality is the measure of inequality you would get if you pulled all people across the world together. So independent of where they live. And you ask the question, has globalization, has trade reduced this inequality across people, across countries, all over the world? And I think there is no question that this type of inequality has been reduced dramatically after World War II. So there are several writings on this. Among them, Deton's book The Great Escape, the World Bank's 2006 World Development Report, and Drago Milanovic's work on global inequality. And I think there was also consensus during that time that trade and globalization played an important role during that time. And it was in particular the integration of China and East Asia that accounts for this decline in global inequality. So what you see in this graph, this is a statement that it's very hard to prove based on rigorous econometric evidence. The nature of the question is such that I cannot show you a regression that is going to silence every concern. But there are correlations that are very strong and very suggestive. So if you look at this graph that shows you historically what globalization has looked like across the centuries. So in this graph, I start with 1827. And you see that trade, again, this is the measures are the same that I showed you in the first graph. It's a measure of total imports, global imports as a percentage of world GDP. So trade goes up and down over the years. It's very strong in the period before World War I. During World War I and World War II, trade, world trade takes a hit. But then after World War II, trade starts increasing. Thanks partly to many trade agreements to the God, later to the World Trade Organization, to many countries embracing multilateralism. And then there is this period that I called the hyper-globalization, starting in 89. And there you see that what happens during that period. So between 89 and 2009, in these three decades, you see this very steep increase in trade that's historically unprecedented. So we had never seen anything like that before. At the same time during that period, so again, this graph shows you what happens in global poverty between 1990 and 2020. This is a real data. And then by the World Bank projected up to the year 2030. And in the very same time span, you see a dramatic decrease in global poverty. This is primarily driven by what happens in Asia. So in this graph, Asia is represented by the orange at the bottom of the graph. And you see that essentially extreme poverty is eliminated there. In South Asia, that's the blue. Again, poverty declines dramatically. There is one continent where poverty has not declined. And this is the yellow, this is Africa. It's no coincidence that Africa is the one continent that's least connected, least interconnected. So again, these are correlations. There are many other things that are going on during that time. I'm not going to claim that this is the only reason that global poverty is reduced. But the integration of China and East Asia into the World Trade System did play an important role. Another way to see that is by displaying the so-called elephant curve. And what this elephant curve is, is what we call a growth incidence curve. So on the horizontal axis, you see the various percentiles of the global income distribution. On the vertical axis, you have the income growth rate for each of these percentiles. So you can get a sense of what parts of this global income distribution benefited most from growth. And according to this graph, the main gains were in the middle, in the 50th and 60th percentile. So these are people who perhaps not from the perspective of Europe or Norway, but from a global perspective are really poor. And these are the percentiles that are growing really, really fast. So this graph was produced by Branko Milanovic based on survey data. There is one well-known problem with survey data, namely that you miss the top of the income distribution. So there is a different way to display this data, and that's the so-called new elephant curve that doesn't look like an elephant anymore. And this was produced by different set of researchers that includes the famous trio Piketty, and Saez, and Zuckman, who have worked with tax data. And with tax data, you can capture actually the very top of the income distribution. And you see there that the picture looks a little different. So there the main gain is at the very top of the income distribution. So the top 1% is the percentile that actually captures most of the world income growth. That said, it's still the case, if you look at this graph, that the poor of the world, so the 10th and 20th percentile, they still experience very fast growth. So according to this graph, over 100% during that time. So again, it's still the case that the very poor of the world benefit tremendously from global growth. And this is the sense in which this global integration helps reduce global poverty, which at the same time reduces these global inequalities. So this is what happens at the global level. How about inequality within countries? So there the answer really depends on what kind, what dimension of inequality we are looking at. And you know, Dan reminded me that Amartya Sen famously said equality of what or inequality of what. So what exactly do we mean by inequality? When it comes to trade, it's helpful I think to think of people as consumers or as workers. And if you start with viewing people as workers, then what you worry about is the labor market effects of globalization. There we saw many important developments in the 70s and the 80s and the 90s. We have well-documented phenomena like the increase on the skill premium, polarization, the decline in manufacturing employment in many advanced countries. And many have tried to link this phenomena to the rise of globalization, to this era of hyper-globalization. So what do we know about these issues so far? For those of you who have taken trade theory, you know that probably that the workhorse model of international trade, the Heckscher-Linn model of international trade provides a very natural way of licking trade with the increase in the skill premium with a specific form of inequality. So it was very natural to look at trade at globalization to explain the increase in the skill premium. Despite this, the consensus from decades of empirical work was that trade played only a very minor role in increasing this type of inequality, so in generating an increase in the skill premium. It might have played a role, but only in interaction with technology. So it was most economists came to the consensus that it was technology, especially skill bias technological change that generated this increase in the skill premium. This consensus has started to shift in the year 2000. So there are new consensus started to emerge that actually trade and globalization had played a very important role in increasing inequality within rich countries. And why is that? So there are two views here. One is that this is all driven by China. And to remind you in year 2001, that's when China enters the World Trade Organization. So for many people, this was really a major event because that exposed many rich countries to competition from a country that not only had low wages at the time, but was also very large. So China had a huge impact by virtue of its size. There is another view that I endorse partially, which is that one of the reasons that people started finding large effects is they started looking at a different place for inequality. So instead of looking at the skill premium, they started looking at spatial inequality. So what do we mean by spatial inequality? We mean the inequality across different communities, across different regions that had different exposure to trade liberalization, to trade. And clearly, this is something that's more relevant to large countries. So it's not relevant to a country like Norway or to the country I come from, Greece. These are countries that are spatially very small, very concentrated. But for countries like India, and that's the word of Topalova, Brazil, that's the Carnero and Kovac, for the U.S., there is all the work by author and co-authors, or Koikumsek, or Washington, or NAFTA, several European countries, so forth, that are larger, for example, in the U.K. People who started comparing within a particular country counties or states or regions that had been exposed to a lot of imports from China or from other low-wage countries relative to communities that had not had this exposure. And what these studies consistently found is that counties, regions that were exposed to more import competition did worse, according to a bunch of metrics. So this was not due to China. This was due to competition from any country. And let me just show you what the point is by showing you a couple of graphs that refer to Brazil in this case, not to the U.S. So for Brazil, there is a study that shows the effects of the trade liberalization in Brazil in the early 90s. And so what this graph shows is the trend in formal employment, in employment in the formal sector. What you see is that, starting in the 90s, there is a sharp decline in employment, in formal employment. And this is not confined to one or two years. This goes on forever. This goes on for 20 years until it stabilizes. So what this graph does, when we talk about formal employment here, this is formal employment in those communities that were exposed to a lot of imports, relative to communities that were not exposed to imports. You can do the same for formal earnings. So think of wages and other forms of earnings. And it's the same picture, starting in the 90s, that's when liberalization hits these communities. These communities start experiencing a decrease in earnings. And again, this is a prolonged phenomenon. It goes on for two decades until it finally stabilizes. And what the studies show, actually, it only stabilizes because these people get absorbed by the informal sector in Brazil. This is something that's not, this is something that's specific to developing countries and has many problems on its own. So the main insight from all these graphs and similar insights have been produced in a variety of other contexts is that the effect, we always think that when a community is exposed to negative shocks, negative experiences, and adjustment, these effects are not short lived. They persist for a very long time. So the long run is very long run. And what these studies also show is they're not confined to employment and earnings. They show there are adverse effects on education, sometimes on child labor when it comes to India. There are increases in crime, worse mental health, and so on. So these are communities that are doing worse relative to other communities. So this is when it comes to people to how trade affects people as workers. And the main insight here is that if you look at this particular form of inequality, spatial inequality, then you start seeing negative effects. How about people as consumers? Again, one of the most important insights of trade is that trade benefits people as consumers in the form of lower prices and in the form of more variety. So what do the data tell us? So there are two questions you can ask there. Do prices respond to trade barriers? So do we see prices going down when we remove trade barriers? And second, if that's the case, do these price declines benefit low-income consumers relative to rich consumers? Because if that's the case, then we would have a decrease in inequality through the price mechanism. So to make a long story short, again, you can read the slides at your leisure. There is work from a variety of settings when we experience trade liberalization episodes. And the evidence suggests, including the recent trade war between the US and China, that prices do respond to trade barriers. So if you increase tariffs, prices go up. If you decrease tariffs, prices go down. Not always in full proportion because they are market-powered, but they do decline. The evidence is much more mixed when it comes to high versus low-income consumers. There, these are some of the studies that have been conducted on this topic in a variety of settings. And for the US, for example, one study by Haravell and Seger says, yes, the trade with China decreased prices and that benefited mainly low-income consumers. There is another study by Don and LaValle that says both for the US and the UK, all these price decreases were uniform across the income distribution. So it's not the case that the low-income consumers benefited the most. So the evidence there is more mixed. It's not clear. The price effects are there. They are clearly there. They benefit all of us as consumers. It's less clear that they benefited the low-income consumers more. In my view, they do because for the simple reason that low-income consumers, they save less. So they consume much more. So if the prices of consumption goods go down, they benefit more. But no matter what you think about prices, the fact is that the price effects are less salient compared to these special effects I talked about. When people lose their jobs, this is a first-order effect. It's a very salient effect compared to the price effects that are often less easy to appreciate. So this all refers to the first phase. And the point I want to make is that this perception that inequality within countries, especially inequality, is increasing while China is doing so much better. This is the main driver of this negative sentiment against globalization that produces Brexit and the US-China war. But if you actually think what are the consequences for trade flows, these are not negative. And this is some work I've done with various authors that shows what happens to third-country exports to global trade. So it's true that trade between China and the US declines during that time as the two countries engage in a trade war. But if you look at what happens at other countries, trade in other countries picks up. And in fact, you can show that global trade increases. As a result, you can show that many countries, many bystander countries, as we call them, benefited from this trade war. So some of the biggest beneficiaries were Korea, Thailand, Vietnam, Turkey, Romania. So many of these countries actually benefit in the form of increased exports to the rest of the world. So what is true during that time is that trade between the US and China declines. But trade again proves very resilient. So despite all these tensions, we don't see a reversal of globalization. That said, I think what really changes is little by little, all these measures are laying the groundwork for a subsequent shift, a major shift in policy. Then comes COVID, which was an unanticipated shock. And with that, we entered phase two. And there we see these very, these novel arguments about fragility of global chains. And basically these arguments can be summarized by the statement that the chain is as strong as the weakest link. So this is not an entirely new argument. So this was first made in the context of the great Japanese earthquake of 2011, but it gave new significance during COVID. And there, let me actually be strong in my statement that I think the evidence is at odds with this argument. Why am I saying that? So first, it's important to distinguish between resilience and robustness. And the person who has made it most clear is my colleague, Marcus Brunemeyer, who wrote the book in 2021, The Resilient Society. And he defined resilience as being the process of bending. So he said resilience means bent, but not break. And he contrasted the reed that bends when the wind blows to an oak that's much stronger. It's much more robust when the wind blows. But if the wind is strong enough, the oak is going to break while the reed is not going to break. So as an economy, we want to be a reed. We don't want to be an oak. And so of course, this is a very nice metaphor. But how do you operationalize that and how do you apply it to economics? And there I think people use these terms very liberally during the COVID pandemic resilience of global supply chains without having a particular framework in mind of what exactly resilience is and what it means in specific context. Resilience can only be evaluated with reference to specific shocks. And in this schematic, I show you some of the relevant considerations. It matters what type of shock we are considering. Is it demand or supplies, country specific or sector specific? COVID-19 was a very special shock. It was both a supply and demand shock. It was a global shock, but not synchronized across countries. And arguably it was the biggest shock that the world economy had experienced since World War II. So given the magnitude of the shock, the world economy actually proved incredibly resilient during that time. There were disruptions, but given the magnitude of the shock, conditional on the magnitude of the shock, these disruptions were relatively minor relative to what would have happened in the absence of trade. Trade in particular contributed to resilience during that time. And there are many ways to show that. Trade itself rebounded after 2020, as I argued before. Because the waves of COVID were not synchronized across countries, imports of PPE, of face masks, for example, from other countries, alleviated bottlenecks during the pandemic. Perhaps most telling is a statement that the CEO Pfizer made during that time when he pointed out that in order to produce the vaccine, you needed ingredients from 19 different countries. So it's an incredible case of international cooperation. The fact that 19 countries managed to pull their supplies together in order to get the necessary ingredients to produce this vaccine. So without trade, we would have been much worse off. And perhaps another way to show that very quickly is by showing you this graph that's produced by the IMF, the line at the bottom, the red line, shows the projection of trade according to the IMF when COVID first hit in 2020. And the top line, the black line, shows you what actually happened. So trade itself proved much more resilient than initially anticipated. So that's one of the reasons that I'm saying all these statements that the trade and the global economy let down people during COVID is not consistent with the evidence. There are other ways to show that in panel A in this graph. You can see that from afar. You see what happened to imports of face masks to the US during 2020. So this is, we start, we normalize imports to the level of one in 2018. You see in 2020, there is a huge spike in imports. Without the imports from face masks, and in this case, the face must come from China, the shortages of face masks in the US would have been worse. The same is true about electric car batteries, even semiconductor chips. So during this time, imports from other countries go up. So perhaps it's no coincidence that despite this strong rhetoric during that time, the trade rebounded in 2021. So all this negative rhetoric was not consequential. And in my opinion, if it had not been for the invasion of Ukraine, we may have gone back to normal. However, all this negative rhetoric was a further stepping stone and the attitudes towards trade are gradually shifting. And this notion that international trade is actually a liability. It doesn't make an economy stronger. It makes it weaker. It's gaining traction. And then comes phase three, the invasion of Ukraine, which is the catalyst for a series of new developments. And there, as I mentioned earlier, we have a new argument, namely the exposure of global supply chains to geopolitical risk. And it's very hard to argue with this argument, to argue with this concern. You know, in this case, what was clearly exposed was the problem of Europe's strong dependence for gas on a single country, namely Russia. By analogy, the US thought what is going to happen if China invades Taiwan and there is a single company, TSMC, in Taiwan that produces most of advanced logic semiconductor chips. So then the world production is going to stop. So that led to a series of national security concerns that led to a focus of the so-called dual goods. What are dual goods? Are goods that have dual function. They are used by civilians. They are used by the military. And they led to new demands to restrict trade in dual goods, so in goods that could potentially be also used by the militaries of unfriendly governments. So that leads to another question that's interesting for trade economies, namely are the markets for critical goods, are imports for critical goods concentrated? The answer is they are highly concentrated. If you look at the data, for most cases, for most goods, there are one or two countries that account for the majority of imports, at least in the United States. That said, most of these imports come from friendly countries, actually. So by friendly, what I mean is that people are asking government surveys to identify this country as a friend or ally and people say yes or no. So according to these responses, most of the imports come from such countries. There is one exception, one very strong exception. That's the case of face masks that I mentioned earlier. In the US, 80% of face masks come from a single country, China, which is perceived as unfriendly. But again, you can see what happens in the top graph, what happens to the imports of face masks during COVID. So in that particular case, imports from an unfriendly country saved us. And this is because we're reacting to a shock that had nothing to do with geopolitics. We're reacting to a shock that was a health shock. And in that particular case, reliance on China actually helped. Now, if there had been a different shock, it might have been a different story, but that's exactly why I'm saying that the nature of the shock really matters. And you cannot talk about resilience without being specific what kind of shock we are talking about. So in general, geopolitics and natural security lead to a bunch of valid arguments for diversification. No one can argue with the need to diversify and to de-risk. That said, as I mentioned, there are a number of issues. One is that already most of the imports in the United States and also in many European countries come from friendly countries. That led to the view, let's focus on the dual goods. So those goods that have military uses and make sure that these particular goods and semiconductors is one of them are not imported from unfriendly countries. So that led to these new demands for French shoring. So not just reshoring, but French shoring. So that means source these products from your friends. That raises a bunch of new issues, namely that friendliness is not constant over time. If you look at US data, there is a very strong cultural bias. There is a very strong pro-European bias, as expected. But for example, a country like Vietnam is considered unfriendly in the US for obvious reasons. People have not adjusted to the fact that Vietnam is very different compared to a few years ago. Another issue is that many national security concerns cannot always be verified. And there, national security, I think it's a very important issue, obviously. However, as an economist, as an academic, I have no insight into national security. And I think anything when governments appeal to concepts that we cannot independently scrutinize, this is something that fundamentally should make us uncomfortable. So what are the short-term consequences of all these developments that I promise you to wrap up here? We see a big changes in policy with natural security becoming the primary concern. We've seen several statements by the US trade representative declaring explicitly the beginning of new era. We see drastic export restrictions in the semiconductor sector, targeting specific China. In the meantime, the tariffs are still in place in the US. The World Trade Organization is still paralyzed and perhaps the person who best summarized the current environment is Ed Lewis at the Financial Times when he wrote a superpower that the US declared war on a great power that China and nobody noticed. So we do have a very different political environment and what's interesting is that trade here is used as the weapon. What are the consequences of all these? Obviously, this is all speculative at this point because this is all unfolding. In my opinion, wars, whether they're hot or cold or economic or military wars, never contribute to prosperity. Peace and prosperity go hand in hand. What we should expect in the medium run is perhaps higher prices as we have less competition, perhaps slowdown of growth and technology adoption. I'm particularly concerned about what is going to happen to developing countries. So there may be a very good justification for French shoring because of national security, but there are also other reasons for French shoring if you are concerned about labor standards or environmental standards. It's very natural to source products from countries that are like you. For example, for the US to source from European countries that have similar labor standards, that have similar environmental standards. And most of us think this is great. This, however, leaves other countries behind. It leaves developing countries behind and that raises a bunch of new concerns about how these countries can get out of poverty in the future. Will this lead to more resilience? Perhaps, yes, when it comes to geopolitical risk, but there are other risks, other type of shocks that are not going to be addressed through these measures. And perhaps the biggest risk is military conflict. And we see this unfolding every day, this fragmentation in the economic domain goes hand in hand with fragmentation in the political domain. So to conclude, the globalization has survived the financial crisis. It survived the Trump tariffs, the US-China trade war, even COVID-19. We saw a slowdown of the trend, but not a reversal. However, recently we entered a new era. And what we see is the beginning of a new Cold War where trade, in particular, export restrictions and tariff are used as the weapon. The invasion of Ukraine was clearly the catalyst. It was the beginning of this new era. I think economic historians are going to debate for many years to come whether this was just the trigger, just the catalyst or the true cause. And in my opinion, the problems were brewing for a long time. This change in attitudes happened little by little. And this rise of spatial inequality, this feeling that there are whole groups within countries that have not gained from globalization, that have been left behind, this played a very important role. So we are in an uncharted, we have entered uncharted territory here. That said, I think there are very good reasons to be alarmed. There are many parallels between what we're experiencing right now and what economic historians have called this pre-Biligence period before World War II, when there was again a lot of trade, but it was not multilateral trade. It was regional trade, bilateral trade within spheres of influence, within empires. And there is a lot of work that shows that all this has made at the time political tensions much worse. So I can only hope that I will turn out to be totally wrong about this. And or at least that there will be some reversal in policy that would lead us to a better path. So I will stop here and thank you very much for your attention. It's actually easy to speak from you as Dan did earlier. And I think that what's really interesting is the three phases of globalization that he showed. And according to what we expect with the COVID pandemic didn't seem to have a huge negative effect on trade. It's really the Ukraine crisis which seems to have this negative effect where now national security concerns are coming in to play along with issues around globalization. So that's something that's really very interesting we can pick up in the Q&A. I think the question I would have had, we can come back to this in the Q&A, is that globalization has had this huge positive effect on reducing poverty, as he showed. What is the future then where in many parts of the world especially in Africa, we see very high rates of poverty for the future of globalization is going to be not as strong as before. So that's a really important question for us to think about here. So we'll also have a minimum to not provide his comments as discussed and how do you want to come and speak from here? Do you want to go to the podium? Okay, great. Thanks a lot for this opportunity to be the discussant and thanks for a very interesting talk and a very good book which I recommend to all of you. So you had a careful investigation into globalization trends over the last 10, 20 years and the slowdown of globalization. So the reasons for the slowdown was mentioned and what the slowdown amounts to was at the agenda. There was a lot of detail and as an economist I appreciate a lot the excellent research that are behind every bits and piece of this discussion. So it's a bit unfair to ask for more, but I will ask for more nevertheless. You discussed fairness in trade. And of course, fairness and the perception of fairness is super important because the voters in the U.S. or the U.K. or in other inferential countries, their conception of fairness is important indeed. But when it comes to trade and fairness, there are at least two concepts of fairness. It's the fairness about the rules of the game and that was the fairness that was raised here. But it's also the idea about fairness in trade per se. Fair trade and coffee grown at decent working conditions. And I think it's a fascinating and interesting contrast between these fairness ideas and ideals that shows up in the debate about trade all the time. And so it's rules of the game, the fair procedures versus fair outcomes. And I guess they are philosophers that can discuss this in much more detail. But so it's about this alternative or these other fairness ideas about distributing the gains from trade. And of course, when there is a voluntary exchange between two parties, there will always be a gain. And that is kind of the cornerstone of trade being beneficial for everyone taking part. Of course, you have the problem that if there is a market economy on one side and maybe a market economy on the other side, there could be distributional issues within the one market economy and distributional issues within the other so that there are gains and losses on one side. But nevertheless, there will be a net gain according to standard theory. And I guess it's true in the real life also. So if we abstract from these internal distributional issues, there are issues still remaining about how are the gains that arise between two parties engage in trade, how are these gains distributed? And I think it's a good illustration is to look at the Norwegian trade vis-à-vis China. The minimum wage in China, Shanghai, could be 400 US dollars per month, I guess. In a year, maybe 10,000 US dollars would be a decent wage in China. So 10,000 dollars, we can keep that number and we can look at the Norwegian exports. The Norwegian exports is 250,000 million US dollars. That includes a lot of oil, of course. So if Norway used half of that export revenue to buy man years in China, it's possible for Norway to buy 12 million person years of labor. 12 million person years, that is four times Norway's workforce. So by using half of the exports, we command 12 million workers in another country if we want to. And if we go to Sweden, just to have a country without oil, their exports is 200 million US dollars, 200,000, sorry, 200,000 million US dollars, we should allow them to use part of that export to pay for needed imports. But if they use half of the export revenue, they can buy 10 million man years in China, which is twice the Swedish workforce. If we go to Norwegian fish exports, only fish exports, it's enough to pay for 1.5 million man years in China. So what we use this export earnings for, where we use it for garments and technology. And what do the world market get in return? Well, they get oil and fish from Sweden, high-tech machinery and steel, et cetera, et cetera. So then we can ask whether these gains from trade are fairly distributed. And I think that people living in rich countries should say no. It's unfair to our advantage generally from a moral standpoint. So cheap labor is abundant across the globe. Salmon is scarce, natural resources are scarce, tech products or patents are scarce, pharma patents are scarce, and brand names are scarce. Just to give an illustration of that, EU's most valuable companies, they are medicine companies, they are finance and they are high-tech. But on second place, you find Louis Vuitton. On fourth place, you find L'Oreal. On sixth place, you find Hermé. On tenth place, you find Dior. So you have a situation where many of the big companies, they command resources, quote, unquote, including patents and brand names that are scarce in the world market. And there are hefty profits on that. You have the countries and the citizens of those countries that receive at least part of that income. And that contributes to, in a way, unfair distribution of the games, given that the short, the things in short supply are on the rich countries side and the items on abundant supply, namely, workers, are on the poor countries side. But nevertheless, all countries gain. So then, when you came to unfair trade, you had the mentioning of forced technology transfer, which is practice in China, saying that if you are to enter the Chinese market and sell for billions and billions, you are required to hand over part of your technological skills to China. So then you can say it's unfair because it's not according to the rules of free trade, but you can also say it's completely fair that a large country use whatever power they have to get a larger part of this mutual surplus that arises from trade. So should it end up in the pockets of Apple entirely or Microsoft, or should also part of it end up in the Chinese economy? So that's a fairness discussion that follows two different paths. And of course, the important thing when it comes to, where trade and world trade and globalization will go in the future, depends a lot on which of these fairness views that are important for the people that actually are at the helm when it comes to future world trade. So whether it's important that it's unfair in one context, or whether it's important that it's unfair in another context, or whether it's not important at all because there is really decision itself for whether world trade will deepen is in the hands of someone who do not really care about fairness. So the political economy of it, who are the important players and what are their fairness ideals. So it's my second point, if I may, who is taking charge, you have the time, yeah. It's related to one of the questions that you raised. It relates to the global abundance of cheap labor again. And it's related to the Africa's workers. So you show the diagram with showing that extreme poverty would be, nine out of 10 extremely poor in the world in 2030 will live in Africa. So then the question, and it's an open question, it's not like I don't have an answer and I think it's super important, whether a slowdown in trade will mean that these extremely poor will remain poor, whether future expansion of world trade will mean that these poor will become less poor. And along those lines, you had the observation and the super important fact that in the US you have many workers who thinks that competition from cheap labor across the globe is a threat to their wages and living standards. Could there be a move to a worldwide demand for decent work conditions and safety regulations, et cetera, et cetera, that increases labor cost everywhere so that the competition is less dark, meaning that low-skilled workers in the rich world loses less and the workers in the poor countries get a very good deal. Unemployed workers in the poor countries might be left unemployed and not be very happy about this, but anyway, you could maybe see a situation where working standards is a way to, in a way, protect a requirement for global working standards will be a way for rich countries to protect their own workers to the exposure to super tough competition from super cheap labor across the globe. And if that is the case, what would then happen to the poor workers in Africa? So I guess, yeah, so there is a potential alliance maybe between reasonably paid, reasonably employed workers across the globe and then leaving others behind. And hypothesis, but anyway, I'll stop there. Thank you, Halwa. So I think Halwa has some pretty very interesting questions about fairness, what we mean by fairness of trade, issues about what's the future of globalization, especially the poor regions in the world, particularly in South Africa. I think the important question we can come back to, Penny, in the Q&A. So what I suggest now is that we all now take seats here and we have approximately about 25 minutes for the Q&A. There's also a virtual audience, hopefully also gonna ask questions at some point and of course, all of you here. So let's take a seat and I'll sit in the middle. That's okay. And I suggest that we start in the in-person audience, as all of you, and I suggest we take three questions at a time, tell us your name, your affiliation and keep your questions short. And perhaps just ask one question at the beginning so that we have more questions, right, on the floor. And you can ask both Penny and Halwa, actually, or both of them can answer questions. So let's start with three questions. Put your hand up, there'll be a microphone coming to you when you see your hand is up. And who's gonna start? First, I can't see the hands up yet. Who's going to start, who's going to break the eye, so to speak? Not at this point, let's take, we'll come back to you. Are there other, yeah, okay, yes. There are three questions now, actually. Yes, go ahead. Right, one at the end, and then the lady in the front. Yes, I'm Anna Medko from the Norwegian Institute of International Affairs, working on international economics. So I've been doing some work recently on a theme that you mentioned about the impact of trade barriers on prices. And it's a kind of untold story about the distributional impact of trade, because we used to assume that if there is a tariff, it's just a markup on the price and it will be passing through to the consumers. And there is a new research on the USA that there is complete pass-through for the Trump tariffs, but not the other way. And research in general said that there is often not complete pass-through. So there is a part of the equation is that some of the trade measures have a distributional impact by lowering, for example, lowering the prices of exports. So is this a kind of big change in the research on the impact of trade and trade barriers for international distribution? Thank you. And there was a question from the front, the lady in front, yeah. Yeah. Thank you. Hege Fisknet from the Norwegian Ministry of Foreign Affairs. I have a question regarding the global label force and sort of the relation between aging populations in the rich countries and Africa having the fastest growing population, the youngest population and the digitalization, new technologies. Do you see any sort of new trade possibilities and new dynamics and new possibilities for developing countries? Thank you. One more question. Perhaps I think Penny might be a good idea for the two questions. And then also respond to what Halvers also gives comments to. So go ahead. Right, so these are all excellent questions and thank you Halvers, these were excellent points. So I'll try to combine them. So let me start with a question on prices. So actually I spent a good part of my research is on the social question of pass through. So when you have a change in tariffs or some other cost shock does this get through pass through to prices? And the answer is it depends very often not completely. So you're absolutely right that it's not one for one but some fraction does get passed through. And so for example, in the case of Trump tariffs there was evidence that they were passed through. The big question still is in the context of imports from China. I think the consensus is that they did manage to keep prices low in most advanced countries. I think, for example, of what the smartphone costs. And what it would cost if all these components had been produced in Europe or the US relative to China. So the fact that they are produced in low wage countries has kept the cost down. So I think there is a lot of evidence that there were positive effects on prices. Even if these were not completely one for one and the reason they're not one for one is because companies make profits. So they increase their profit margins. There is no question that this is happening. So there's another dimension of inequality, firms versus consumers. There is no question that firms have benefited but still consumers I think do benefit to a certain extent. The question about Africa, many people raise the question about Africa and I think it's a very important one because we do have a lot of evidence from Asia that trade helped reduce poverty there. We have this backlash against trade these days and that raises the question where will this leave Africa right now? Regarding this suggestion that perhaps we can raise labor standards in the rest of the world and at the same time this wouldn't hurt our low-skill workers here. I do think we need to take into account the changing demographics that you mentioned. So one problem in many advanced countries is we have low fertility. We have fewer and fewer people entering the workforce and at the same time as countries become richer there are many jobs, populations, workers in rich countries do not want to do anymore. So this notion of low-skill workers is becoming less relevant in my opinion over time and apart from trade we also have automation. So jobs get replaced by computers. So I think low wage labor from developing countries is a necessity for advanced countries whether it happens through immigration or through trade simply because there is no one else to produce these goods anymore. So eventually I think we will have to open up to other countries including Africa because otherwise there will be no way to produce goods here unless we decide to adopt robots and automation at an unprecedented rate. That said Africa has never been so far completely integrated in the world trading system. It has had many institutional problems that make it very hard. If you look at African countries not only are they not connected to the rest of the world there are own countries that the markets within a country are not connected to each other. So it's very hard to get goods from the port to inner cities. So there are big issues, big constraints still in these countries that make trade with other countries very difficult. And raising labor standards, environmental standards I think this is a worthwhile objective and eventually this is what we should aspire to do. I also have to add and I'm not a cheerleader for multinationals but there is a lot of evidences that suggest that many multinational, many foreign companies have had positive effects on labor standards in developing countries. So at least those people who work for these multinationals get higher wages, they get better benefits. The labor environment is much better compared to other people who work for the domestic firms. So little by little there is this positive impact that you mentioned in other countries but it's a very slow process. It doesn't happen overnight. Regarding the fairness question, I completely agree actually. I think it's a very interesting point. But so right now we're at a point where many people in the US at least they don't even accept the first part of you know the one statement that most trade economies would agree upon which is that trade usually generates gain for everyone. It's just a question, how do we distribute them? Right now the mindset is if China gained it has to be the case that we lost. So this zero sum game mindset. This is prevalent in the US right now. So I think it's important just to point out there are enough gains here for everyone. So the question is how do we distribute them fairly? But right now we are fighting to even convince people there is enough for everyone and just trying to make the pie smaller in the name of some notion of fairness. This is not the right approach. But you're absolutely right, there is a lot of work that has shown that in economics that some people would prefer not to gain, to leave money on the table than to accept an outcome that's considered to be unfair. And I think part of this is happening right now in many advanced countries. We are on the verge of making our lives strictly worse just because there is this perception that China and some other countries benefited at our expense. And that part I find still irrational. But I fully agree that we should give a lot of thought about how we distribute these gains in a fair way. And regarding technology transfer, I mean my statement is simply that there is a very strong perception that this is unfair. I think this is up for debate whether this is the case. I mean, many people would point out that this is exactly how the United States grew. There was technology transfer from Britain to the United States and this is how development happens. And very often in trade, we call this learning by exporting or knowledge transfer. So there are more positive terms to describe this process, not necessarily stealing of technology. But, so this is up for debate. Thanks, Bihar. Did you also want to come in on or cut a couple of questions? Oh, I'm... Yeah, okay, you're listening. Thank you. Right, is there any question from the virtual audience? Not yet. All right, let's take a few more questions. I think there's a really interesting question really about the way things are going, at least in the US, but perhaps also elsewhere. Obviously, not only the US, but you also heard about Brexit in the UK, which was a strong deal on what happened. There was certainly a situation with trade with the UK and the rest of Europe fell quite sharply after the Brexit vote. So let's take some more questions from the audience. Dan has got a question. And maybe, Dan, you can start off and you get some more. And there's one question on the other side too. Thank you. Thanks to both Penny and Halwar for a lovely presentation. So Penny, so far we've been thinking about the backlash against globalization, mainly in these developed countries. How do you see globalization today viewed from China, from India, from Vietnam, from these other countries that have traditionally benefited? You mentioned that the small countries like Norway and Greece, of course, have been traditionally very pro. And my personal view is that there isn't really much of a backlash here, right? So thinking of this backlash from these other countries, do you see a backlash or is there a fear maybe in some quarters that big countries like China and India, which with huge markets, unlike many of the African countries, could actually just become self-sufficient that they may not be as interested in trade because they already have this huge market demand. Is that something that you would be worried about? Thank you. Thank you. I think there was a question from, yeah, that's... I'm sorry? Yeah, your name and affiliation. I hope it's working. I'm Sai, I'm a student at BI, Masters in Finance. I had a question about like two questions actually. I want to wrap my head around unfairness in trade. So could you give us more examples of like, apart from the China with the masks, that was like, it was a good example, but could you like give more, to wrap my head around unfairness in trade? As well as the other question was, doesn't economics deal with it directly with the demand and supply pricing in? So should we necessarily think about fairness or does it come priced in when we are thinking about a transaction being made? Because the buyer and the seller both have agreed on a price. So in my intuition, it should include everything. So would this become a wave, so that at some point they would equalize and it would be a fair trade and we don't have to press about fairness? Good question. Let's actually take this to Wesh out there. Any other questions? But let's take these two questions and then we can come back to take that some time. Veni, did you want to respond to Dan's question? That's the question. Absolutely. So the question about market size is a very important one actually. So let me say I have a paper coming out in Econometric, that's my presidential address actually to the Econometric Society, written with my co-author Tristan Reed who's a different Tristan Reed from the Tristan Reed who helped organize the conference. But the point we are making is that market size can be a very important constraint in development, but obviously it's a constraint more for smaller countries and for smaller countries, trade is an existential issue. So if you talk about countries like Greece or Norway, for these countries, trade is important for their existence. We couldn't survive without trade. For bigger countries, it's less important. I think still trade contributes to prosperity, but China would have grown even without trade. The same is true about India. So to put it in a different way, big countries are important to trade because of their size, but they need trade less and imagine a counterfactual where all the world is one country. We would have a lot of trade within regions of that one country, but formally international statistics would have no trade. So I think there is a tendency for all these large economies to turn inward for many different reasons. So China has been pursuing a strategy of so-called dual circulation. This is even before the trade tensions, but the main objective was to increase their own domestic value. So what this means, dual circulation, means try to promote domestic demand in China while not necessarily moving away from trade. They have not turned against trade, but they emphasize trade less than in the past. And you see that very clearly in the data. So if you want to talk about deglobalization, you see that in the Chinese data actually. There are fewer imports of intermediates. Their exports are still going up, but imports are smaller. In India, I think it's a very different story. And I think many people in India, many policymakers are very critical of the fact that India has turned inward in recent years, partly because of political reasons, I think. But many attribute the slower growth of India relative to China to the fact that they have embraced trade less than China, for example. But we clearly see also this trend in India of less engagement with trade. We, as I mentioned in the talk, we see it in the US and the UK for different reasons. So I think it teach through that in these large countries, in these large economies, we see this movement away from trade. But matters simply because of the size of the countries while other parts of the world are still trying to engage. So I think that's definitely true. In terms of fairness, so the main complaints have always been about technology transfers. So for example, and you know, how we mentioned this, you have a company that wants to sell in China, for example, automobiles. And then the requirement is that you start a joint venture with China. And as part of this joint venture, you turn over your technology. So all your technology secrets are then available to the other parties. And many perceive that as unfair. Another example is in China, you have many stained-owned enterprises. Now, these are not strictly outlawed by the World Trade Organization. However, there is this fundamental question. How do you compete against an economy that is not a market economy? So it's not subject to the same pressures, market pressures that the firm in the West is. And where this becomes very clear is when it comes to industrial subsidies. So subsidies are outlawed by the World Trade Organization. But when you deal with state-owned enterprises, it's very hard to figure out how to measure them when you have a state-owned entity. How do you measure the support of the state to this particular firm? So there is this natural perception that if I'm a small firm or if I'm a privately held firm in the West and I have to compete against the firm that's supported by the state in China, this is not a fair form of competition. And then you may ask why isn't the US or why aren't European countries supporting their own firms? And in many cases, they are. But that's why we see now the rise of industrial policy in the US and there are many who are in favor of that. And this is another very long discussion of whether... So industrial policy is justified or not. Regarding the prices, the prices don't necessarily generate a fair distribution of resources. I mean, just to give you one example, in the simple trade model, we can write down the Hexure-Lyn model. There are clearly winners and losers. So according to the price mechanism, if you let the price mechanism work without any intervention, there would be winners and there would be losers. And there is no ambiguity about that in the theory. What the theory also shows is that the pie has grown so much that in principle, it is possible to take something away from the winners, give it to the losers and everyone is better off. So the so-called Pareto criterion. But how exactly you do that, how much you take from the winners and how much you give to the losers, that's not clear at all. So there you need something else that goes beyond prices. And that raises all kinds of questions about fairness that we have not addressed. Thank you, Benny. I don't have a really hard to comment on the fairness question. I liked the question you had about these prices, taking care of fairness. And one way to look at it is, of course, the market for the goods you are talking about. But you can also think about the market for... Or the permit to enter a market. So then also that could be seen as having a price. And then some high-tech company wants to penetrate the Chinese market and the willingness for getting that access is so much. So how much will China demand? Well, probably less than that. But this technology transfer is to get part of that profits. If you just say, please come on. And there is massive patents and massive rents due to a monopoly situation, then you hand over everything to the company. So this technology transfer, to me, is a way for the Chinese government to negotiate a price for the market access. And then you have a bilateral negotiation and then you cannot really rely on frictionless, atomistic market because there is a massive margin to negotiate inside. And then China is doing, to me, a devised thing, using its muscle to squeeze out as much as they can. It makes a lot of sense. Yeah. Unless there are any more burning questions and there are, there is actually, Ruby, go ahead. Someone that's coming from YouTube, from, we've got Frank in the Economics Department in the University of Ghana, who has asked, what can Africa and its countries do to avert the projection of the deeper poverty trap through instruments of intra-Africa trade and global trade? Very good question, Benny. Well, I think Africa is taking the right steps, which are trying to integrate within Africa. I think creating a bigger regional market in Africa is important and perhaps that's the only alternative Africa has right now. I'm afraid I'm still pessimistic about the future because historically countries grew faster and they made more progress when they had access to lucrative markets. This is something that comes out very strong in the data. So the China's and the Korea's and the East Asian Tigers, they did well partly because they were selling their goods to the United States and Europe. If these markets are not available to African producers, they won't have the same trajectory that Asian countries had in the past. So having a big regional market is the right step forward, but I'm not sure if it is going to be sufficient. So I wish I had answers, but these are all things that actually worry me. Just let me mention that there is another vision for development that people are putting forward that has less to do with trade and this is the service sector. So maybe we can grow through services. Services tend to be less tradeable. That in principle sounds great, but we haven't seen much evidence that services alone can jumpstart development. That said, apart from creating these other regional markets, the other path towards development is to invest in fundamental, so human capital, education, health to the extent that this is possible, invest in better educations. So the things that are within the power of these countries and I'm fully aware that this is easier said than done, but I think in the current environment, this is perhaps more important than ever. Okay, I would like to bring the annual lecture to a close and I want to do that by first thanking Penny and Halver, both the wonderful annual lecture with Penny and also Halver for very insightful comments. I also wanted to thank three individuals. One is already mentioned actually, Tristan Reeves sitting right there with his laptop and Ruby Richardson falls in front with the laptop too and Bella Reid, I don't know where Bella is, but she's also been very much part of this both from the UN, University of Oslo and also from UNU wider. So thank you so much and also the wonderful technology we have here to livestream this lecture across the world. And so that's also, we're very thankful for that. So finally, we're going to go and have a get together and have a chance to talk to Penny and Halver directly on a one-to-one basis. We're going to go to her for a reception. I think that's just across the square, Jan in Thomas Bibliotheker. All right, so maybe hopefully it's very easy to find, it is, and there will be people to take you there also. So let's go to go and have a nice, whatever that we have at the reception. Food and drinks. Food and drinks, fantastic. And also Dr. Penny and Halver also at that time, great. Thank you so much. Thank you.