MILAN – Digital technologies are once again transforming global value chains and, with them, the structure of the global economy. What do businesses, citizens, and policymakers need to know as they scramble to keep up?
Non-interference was probably the most important thing that happened in my professional life.
Emerging economies may have a bigger impact on the American economy and in particular they are powerful enough to take away the lower value added jobs in the tradable sector to an extent that may have an impact on work opportunities for a subset of our fellow citizens.
What’s been going on in the world economy since World War II – it’s a wonderful story with America in the lead. The international community set out to open up the global economy. That turns out to be the key element that allows developing countries to grow at very high rates, the way they have. And because many of these countries were poor and relatively small, you could grow at very high rates and they didn’t have a very big impact on the global economy, but you just know that over time, that impact is going to get larger and larger, not because the growth is higher, but because the size is bigger.
Michael Spence is a Nobel-prize winning economist, whose most famous research focuses on the job-market signaling model. In this model, employees signal their respective skills to employers by acquiring a certain degree of education, which is costly to them. Employers will pay higher wages to more educated employees, because they know that the proportion of employees with high abilities is higher among the educated ones, as it is less costly for them to acquire education than it is for employees with low abilities. For the model to work, it is not even necessary for education to have any intrinsic value if it can convey information about the sender (employee) to the recipient (employer) and if the signal is costly.
Spence, whose current scholarship focuses on economic policy in emerging markets, the economics of information, and the impact of leadership on economic grow is Chairman of the independent Commission on Growth and Development, a global policy group focused on strategies for producing rapid and sustainable economic growth, and reducing poverty.
Spence graduated from Princeton in 1966 with a degree in philosophy and went on to study mathematics at Oxford as a Rhodes Scholar. Spence is also the former Dean of the Stanford Graduate School of Business and is a professor of economics at New York University's Stern School of Business.