It's a Big World After All

41 Pages Posted: 26 Apr 2007

See all articles by Steven Brakman

Steven Brakman

University of Groningen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Charles van Marrewijk

Utrecht University - School of Economics

Date Written: April 2007

Abstract

Thomas Friedman's book the world is flat has been a bestseller since it appeared in 2005. The remarkable success of the book reflects to a certain extent the present fears with respect to increasing globalization. Using many examples, Friedman argues that distance (however defined) is no longer a dominant characteristic of the world economy, or will cease to be so in the very near future. Competition is thought to be a race to the bottom, with the lowest-wage countries as the big winners. We disagree, and with us many other economists (see, for example, Leamer, 2006). Distance dominates all aspects of international trade and many stylized facts of international trade can only be understood by pointing towards the importance of distance. Furthermore, there is little evidence of income convergence. Using various methods and data sets, we show that many threats of global competition for the position of the traditionally developed (OECD) countries are unwarranted.

Keywords: income levels, convergence, trade, distance, leapfrogging

JEL Classification: E0, F0, N0, O0

Suggested Citation

Brakman, Steven and van Marrewijk, Charles, It's a Big World After All (April 2007). CESifo Working Paper Series No. 1964. Available at SSRN: https://ssrn.com/abstract=982790

Steven Brakman

University of Groningen - Department of Economics ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
+31 50 363 3746 (Phone)
+31 50 363 3730 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Charles Van Marrewijk (Contact Author)

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands
*31-(0)30-2539810 (Phone)

HOME PAGE: http://www.charlesvanmarrewijk.nl

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