EconTalk Dani Rodrik on Globalization, Development, and Employment
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Apr 11, 2011 Dani Rodrik, the Rafi Kariri Professor of International Political Economy at Harvard, shares his insights on trade, labor, and globalization. He discusses how countries uniquely respond to productivity increases, highlighting the challenges faced by displaced workers. Rodrik emphasizes the need for poor nations to subsidize innovation to better navigate uncertainties. He contrasts China's successful globalization strategy with the struggles of Latin American and African economies, underlining the importance of effective policies and entrepreneurship in overcoming these hurdles.
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Understanding Structural Change
- Structural change involves shifting labor from traditional sectors like agriculture to more productive urban sectors like manufacturing.
- Such shifts drive overall productivity growth when workers move to more modern industries.
Productivity Gains Can Reduce Employment
- Productivity gains in manufacturing often result in fewer workers, as technology and capital replace labor.
- Displaced workers frequently move to less productive service sectors, limiting overall productivity growth.
Fix Failures to Boost Growth
- Address both government and market failures to promote transitions to more productive sectors.
- Policies should reduce red tape and improve coordination to encourage new industries and investments.