The Social Footprint of Globalization: Towards the Introduction of Strategic Industries in Quantitative Trade Models

Italo Colantone, Gianmarco Ottaviano and Piero Stanig

No 18820, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We argue that our understanding of industrial policy in the presence of `strategic' industries that exert positive externalities on the national economy may benefit from an extension of quantitative general equilibrium trade models making the extent and pattern of trade-induced reallocations more salient. To make these features relevant for national welfare, we introduce the notion of the `social footprint' of globalization as the result of suboptimal trade-induced structural transformation in the presence of externalities. For proof of concept, we use simple workhorse models featuring two countries and two industries (only one of which is `strategic') to highlight the role of the `scale elasticity' of the strategic industry and the consequences of the most common assumptions on market structure in quantitative trade analyses.

JEL-codes: F11 F12 F15 F17 F62 (search for similar items in EconPapers)
Date: 2024-02
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Related works:
Journal Article: The social footprint of globalisation: towards the introduction of strategic industries in quantitative trade models (2024)
Working Paper: The social footprint of globalization: Towards the introduction of strategic industries in quantitative trade models (2024)
Working Paper: The social footprint of globalisation: towards the introduction of strategic industries in quantitative trade models (2023)
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