Capital, Technology, and Labor in the New Global Economy

Capital, Technology, and Labor in the New Global Economy

Capital, Technology, and Labor in the New Global Economy

Capital, Technology, and Labor in the New Global Economy

Excerpt

James H. Cassing and Steven L. Husted

International economics is broadly the study of global economic activity. In particular, the focus is on movements of such activity--trade and finance--across national borders. In models of international trade, dating back at least as far as Adam Smith and David Ricardo, a functional distinction was made between goods and factors of production--including knowledge of technology and most financial capital services--in that the former were traded between countries and the latter were not. Any discussion of marketing and distribution techniques was, at best, relegated to a footnote. Thus free international trade was modeled as a situation in which commodity markets were globally integrated while factor markets were wholly domestic. While it was generally recognized that such a view of the world strained credulity, the stylized model did clearly elucidate the potential gains from international commerce driven by comparative cost differences. Indeed, the welfare case for international trade was all the stronger because technology and factor flows--seemingly obvious sources of welfare improvement--were disallowed.

In the two hundred years since Smith and Ricardo, international economics has surely accommodated many additional aspects of reality. We still study the causes and consequences of trade in commodities, but the modern course in trade theory and finance makes clear mention of the evolving globalization of production, distribution, and financial services. What seem to be less clear, however, are the extent and precise nature of the globalization process and whether the traditional classroom focus on globalized commodity trade should be subordinated a bit to the emerging globalization of the factor markets.

This volume presents papers, comments, and floor discussion from a colloquium held at the University of Pittsburgh in March 1987 in honor of the bicentennial of the university. The colloquium focused on reforming the international economics curriculum in light of the rapidly changing world commercial environment. The papers in this . . .

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