week one - globalisation

Question 1

what is globalisation

Answer 1

an increase in trade, migration, capital, diffusion of technology, information and communication

Question 2

what is economic integration

Answer 2

Integration of goods and services markets, labour market and capital market

Question 3

what are the main determinants of deglobalisation

Answer 3

• COVID
• war

Question 4

when did globalisation start

Answer 4

• 1492, christopher columbus’ discovery of america in search of spices
• 1498, visco da gama made an end-run around africa with the discovery of the maritime route to india bordering africa

Question 5

what happened in 1571 regarding globalisation

Answer 5

establishment of permanent and direct connections between america and east asia through manila (spanish port)

Question 6

main summary of globalisation in the 19th century

Answer 6

• the world was fragmented before the 19th century (O-Rourke and Williamson)
• globalisation began at the beginning of the 19th century with the increase of trade in basic competing goods such as textiles and wheat

Question 7

what is trade integration

Answer 7

• foreign trade growth
• price convergence

Question 8

how is foreign trade growth measured

Answer 8

(X + M/GDP) - openess rate

Question 9

what is the current account

Answer 9

it represents a country’s foreign transactions and is a component of a country’s balance of payments

Question 10

what is convergence

Answer 10

also known as thecatch-up effect, related to models of Growth Theory and it is based on the hypothesis that if countries only differentiated on per capital level of income, poorereconomies’per capita incomeswill tend to grow at faster rates than richer economies

Question 11

what is beta convergence

Answer 11

when poor economies grow faster than rich ones (inverse relationship between income rate of growth and initial level of income)

Question 12

what does a higher beta convergence indicate

Answer 12

greater spped of convergence

Question 13

what are the conditions of the beta value

Answer 13

beta has to be greater than zero, but it cannot be greater than one, as in that case there would be “systematic overtaking” (poor countries would grow to outpace rich ones)

Question 14

what is sigma convergence

Answer 14

refers to a reduction in thedispersionof levels of income across economies

Question 15

what is absolute convergence

Answer 15

all countries tend to converge towards a stationary state. There is a single level of long-term equilibrium for the different economies

Question 16

what is relative or conditional convergence

Answer 16

each economy has a particular level of equilibrium (its own steady state), which depends on institutional and social factors, and towards which it tends over time

Question 17

how do you analyse conditional convergence

Answer 17

we have to analyse only those economies that share the same institutions and, in general, the same “steady state”

Question 18

dispersion indexes

Answer 18

Standard Deviation:
- a low standard deviation: convergence
- a high standard deviation: divergence
Coefficient of variation:
- a low coefficient of variation: convergence
- a high coefficient of variation: divergence
Gini index
GI = or close to 0, convergence
GI = or close to 100, divergence
Theil index:
- if it approaches zero there is convergence
- if distance from zero there is divergence