There is ongoing debate about the impact of technological progress on the geography of trade and production. One view is that cheap technology has attenuated the effect of distance, while others argue that location still matters. This column explores the issue in the context of foreign exchange markets. It examines how submarine fibre optic cables that link locations to financial hubs have affected the location of transactions. The findings suggest, on balance, that technological progress has made proximity to a trading centre more important.
Barry Eichengreen, Arnaud Mehl, Romain Lafarguette, 22 January 2016
Michael Spence, Danny Leipziger, James Manyika, Ravi Kanbur, 04 November 2015
The global economy is not working properly. This column argues that to overcome suboptimal results, global aggregate demand must be expanded, the gap between excessively large pools of capital and huge unmet infrastructure needs must be bridged, and finally, the distributional downside of rapid technological advances and global integration must be addressed. Change will come only when a global vision is put forth, coupled with political will.
Jeremiah Dittmar, Skipper Seabold, 19 August 2015
Internet-based communications technologies appear to be integral to the diffusion of social movements today. This column looks back at the Protestant Reformation – the first mass movement to use the new technology of the printing press to drive social change. It argues that diffusion of the Reformation was not driven by technology alone. Competition and openness in the media were also crucial, and delivered their biggest effects in cities where political freedom was most limited.
Charles A.E. Goodhart, Philipp Erfurth, 04 November 2014
Most of the world is now at the point where the support ratio is becoming adverse, and the growth of the global workforce is slowing. This column argues that these changes will have profound and negative effects on economic growth. This implies that negative real interest rates are not the new normal, but rather an extreme artefact of a series of trends, several of which are coming to an end. By 2025, real interest rates should have returned to their historical equilibrium value of around 2.5–3%.
Aleksi Aaltonen, Stephan Seiler, 31 October 2014
Many organisations are developing open platforms to create, store, and share knowledge. This column analyses editing data by Wikipedia users to show how content creation by individuals generates significant ‘spillover’ benefits, encouraging others to contribute to the collective process of knowledge production.
Marius Zoican, 20 September 2014
Technological advances in equity markets entered the spotlight following the Flash Crash of May 2010. This column analyses the advantages and disadvantages of algorithmic and high-frequency trading. Ever-faster exchanges do not always improve liquidity. Following a speed upgrade in the Nordic equity markets, effective spreads posted by high-frequency traders increased by 32%.
Avner Offer, 19 September 2014
Victory in World War I relied on three types of energy: renewable energy for food and fodder, fossil energy, and high explosive. This column argues that the Allies had a clear advantage in manpower, coal, and agriculture, but not enough for a quick decision. Mobilisation in continental economies curtailed food production, occasionally to a critical level. Technical competition was a matter of capacity for innovation, not of particular breakthroughs. Coercive military service and rationing of scarce energy and food had egalitarian consequences that continued after the war.
Susan Ariel Aaronson, 14 July 2014
The internet promotes educational, technological, and scientific progress, but governments sometimes choose to control the flow of information for national security reasons, or to protect privacy or intellectual property. This column highlights the use of trade rules to regulate the flow of information, and describes how the EU, the US, and their negotiating partners have been unable to find common ground on these issues. Trade agreements have yet to set information free, and may in fact be making it less free.
Masayuki Morikawa, 19 June 2014
Headquarters play important strategic roles in modern companies, but downsizing of headquarters is often advocated as a cost-cutting measure. This column presents evidence from Japanese firm-level data that the size of headquarters is positively associated with firms’ overall productivity. Moreover, the benefits of ICT are greater for companies with relatively large headquarters. Downsizing headquarters to cut costs may thus be harmful for long-term company performance.
Masayuki Morikawa, 26 August 2014
Headquarters play important strategic roles in modern companies, but downsizing of headquarters is often advocated as a cost-cutting measure. This column presents evidence from Japanese firm-level data that headquarters size is positively associated with firms’ overall productivity. Moreover, the benefits of ICT are greater for companies with relatively large headquarters. Downsizing headquarters to cut costs may thus be harmful for long-term company performance.
Joshua Gans, 11 June 2014
Netflix recently agreed to pay Comcast for faster access to Comcast’s customers, intensifying the debate over ‘net neutrality’ – the principle that internet service providers should treat all data equally. This column argues that without net neutrality regulation, ISPs can capture the benefits of higher-quality content, thereby discouraging innovation from content providers. To be effective, net-neutrality regulation must prevent content-based price discrimination on both sides of the market.
Chris Forman, Avi Goldfarb, Shane Greenstein, 23 May 2014
The diffusion of the internet has had varying effects on the location of economic activity, leading to both increases and decreases in geographic concentration. This column presents evidence that the internet worked against increasing concentration in invention. This relationship is particularly strong for inventions with more than one inventor, and when inventors live in different cities.
Julia Cagé, Valeria Rueda, 14 May 2014
African regions where Protestant missionaries were active had indigenous newspapers a century before other regions. This column argues, based on new research, that this difference has had lasting effects. Proximity to a mission that had a printing press in 1903 predicts newspaper readership today. Population density and light density (a proxy for economic development) is also higher today in regions nearer to missions that had printing presses. The results suggest that a well-functioning media – not Protestantism per se – was important for development.
Carl Kitchens, 29 January 2014
Economists have found that large-scale infrastructure investments tend to increase economic growth and reduce poverty. However, there has been relatively little research on the effects of smaller, more targeted investment projects. This column discusses recent research on the effects of the US Rural Electrification Administration, which provided subsidised loans for connecting farms to the electric grid. Counties that received electricity through the REA witnessed smaller declines in agricultural productivity, smaller declines in land values, and more retail activity than similar counties that did not.
Joel Mokyr, 08 September 2013
Has technological progress slowed down? Have we really picked all the low-hanging fruit? This column argues that technological progress is in fact not a thing of the past. Far from it. There are myriad reasons why the future should bring more technological progress than ever before – perhaps the most important being that technological innovation itself creates questions and problems that need to be fixed through further technological progress. If we rethink how innovation happens, we have every reason to suspect that we ain’t seen nothing yet.
Diego Comin, Martí Mestieri, 28 May 2013
Cross-country inequality is persistent. This column draws on economic history to explain the mechanisms by which dramatic cross-country differences in income emerge. We can reduce inequality through policies that facilitate the penetration of new technologies in poor and middle-income countries. Such policies can go a long way towards reducing existing cross-country income disparities.
Aaditya Mattoo, Arvind Subramanian, 04 May 2013
Global climate cooperation has collapsed but the need for action has not disappeared. This column argues that only radical technological progress can reconcile climate-change goals with development. It argues that four changes in WTO trade rules could facilitate climate-change action and technological advances without unduly damaging trade.
Laurits R. Christensen, Federico Etro, 24 March 2013
The EU is planning to harmonise data protection. This column balances the benefits of harmonisation against the estimated costs to business – especially small and medium-sized enterprises – and the macroeconomic costs more generally. The net compliance costs will perhaps be larger than the EU predicts.
Daniel S. Hamermesh, 20 February 2013
Publishing in economics is a very tough game, especially for young scholars trying to establish a research record while on a tenure clock. This column discusses new research that shows the age profile of authors in top journals has distinctly shifted away from young scholars. In 1993, half the authors of top-level articles were under 35 and 90% were under 50. Today, only a third are under 35.
Allan Collard-Wexler, Jan De Loecker, 03 February 2013
This paper measures the impact of the minimill, a drastic new technology for producing steel. The authors find that the sharp increase in the industry's productivity is linked to this new technology, and operates through two distinct mechanisms. First, minimills displaced the older technology, called vertically integrated production, and this reallocation of output was responsible for a third of the increase in the industry's productivity. Second, increased competition, due to the expansion of minimills, drove a substantial reallocation process within the group of vertically integrated producers, driving a resurgence in their productivity, and consequently of the industry's productivity as a whole.