Richard Baldwin > Quotes

“The upward spiral was checked from the mid-1980s and reversed around 1990. For the last couple of decades, the G7 share has been torqueing downward at a mighty pace. Today it is back to the level that it first attained at the very beginning of the nineteen century.”
― Richard Baldwin, The Great Convergence: Information Technology and the New Globalization

“From 1990, the trend flipped; a century’s worth of rich nations’ rise has been reversed in just two decades. Their share is now back to where it was in 1914. This trend, which might be called the “Great Convergence,” is surely the dominant economic fact of the last two or three decades. It is the origin of much of the anti-globalization sentiment in rich nations, and much of the new assertiveness of “emerging markets.”
― Richard Baldwin, The Great Convergence: Information Technology and the New Globalization

“the EZ crisis should not be thought of as a sovereign debt crisis. The nations that ended up with bailouts were not those with the highest debt-to-GDP ratios. Belgium and Italy sailed into the crisis with public debts of about 100% of GDP and yet did not end up with IMF programmes, while Ireland and Spain, with ratios of just 40%, (admittedly kept artificially low by large tax revenues associated with the real estate bubble) needed bailouts. The key was foreign borrowing. Many of the nations that ran current account deficits – and thus were relying of foreign lending – suffered; none of those running current account surpluses were hit.”
― Richard Baldwin, The Eurozone Crisis: A Consensus View of the Causes and a Few Possible Solutions

“as the Game of Thrones character, Ramsay Snow, said so aptly: “If you think this has a happy ending, you haven’t been paying attention.”
― Richard Baldwin, The Globotics Upheaval: Globalization, Robotics, and the Future of Work

“Or to use the unbundling theme, globalization’s third unbundling is likely to allow labor services to be physically unbundled from laborers.”
― Richard Baldwin, The Great Convergence: Information Technology and the New Globalization

“euro denominated borrowing was akin to foreign currency debt in traditional sudden stop crises. The natural lender of last resort, the ECB, was explicitly forbidden from playing the role. This ruled out one of the classic ways out of avoiding government default – having the central bank print the money needed to service the debt. The predominance of bank financing was another amplifier of problems. European banks were thinly capitalised and extremely large relative to the countries’ GDP. They were so large that they had to be saved, but their size also created a ‘double drowning’ scenario. This is exactly what happened in Ireland. In what might be called a tragic double-drowning scenario, Ireland’s banking system went down first, and the government of Ireland went down trying to save it.”
― Richard Baldwin, The Eurozone Crisis: A Consensus View of the Causes and a Few Possible Solutions

“But the rapid industrializers did not industrialize as the G7 nations had done. They did not build up domestic know-how and put together domestic supply chains to become competitive. The I6 became competitive abroad by joining regional production networks.3”
― Richard Baldwin, The Great Convergence: Information Technology and the New Globalization

“The problem, as Daniel Gros writes is that “In Europe the banks and the sovereign are usually so closely linked that one cannot survive without the other.” As discussed above in the context of the doom loop, EZ national governments are the ultimate guarantor of their banks, but the banks are key holders of public debt. As a result: “insolvency of a government would also wipe out the capital of the banks and bankrupt them as well. But an insolvent government would no longer be able to save its banks.”
― Richard Baldwin, The Eurozone Crisis: A Consensus View of the Causes and a Few Possible Solutions

“Given the high cost of moving ideas, the resulting spatial dispersion of production dampened innovation—both on the demand side and supply side.”
― Richard Baldwin, The Great Convergence: Information Technology and the New Globalization

“Europe’s lingering economic malaise is not just a slow recovery. Mainstream forecasts predict that hundreds of millions of Europeans will miss out on the opportunities that past generations took for granted. The crisis-burden falls hardest on Europe’s youth whose lifetime earning-profiles have already suffered. Money, however, is not the main issue. This is no longer just an economic crisis. The economic hardship has fuelled populism and political extremism. In a setting that is more unstable than any time since the 1930s, nationalistic, anti-European rhetoric is becoming mainstream. Political parties argue for breaking up the Eurozone and the EU. It is not inconceivable that far-right or far-left populist parties could soon hold or share power in several EU nations. Many influential observers recognise the bind in which Europe finds itself. A broad gamut of useful solutions have been suggested. Yet existing rules, institutions and political bargains prevent effective action. Policymakers seem to have painted themselves into a corner.”
― Richard Baldwin, The Eurozone Crisis: A Consensus View of the Causes and a Few Possible Solutions

“When the Eurozone was started, a fundamental stabilising force that existed at the level of the member-states was taken away from these countries. This is the lender of last resort function of the central bank.” EZ governments, “could no longer guarantee that the cash would always be available to roll over the government debt.” Unlike stand-alone nations, EZ members did not have “the power to force the central bank to provide liquidity in times of crisis.” This created a fundamental fragility in the monetary union. Without a buyer-of-last-resort, shocks that provide re-funding difficulties in banks or nations can trigger self-fulfilling liquidity crises that degenerate into solvency problems.”
― Richard Baldwin, The Eurozone Crisis: A Consensus View of the Causes and a Few Possible Solutions

“The Uruguay Round lasted from 1986 to 1994. As Figure 22 shows, the really original element in this phase was the rapid tariff cutting by poor nations. It is important to note, however, that this developing-nation liberalization had nothing to do with the GATT since the “don’t obey, don’t object” principle was still in operation. Instead, these reductions were the beginning of a revolution in developing-nation attitudes that are really part of Phase Four and the effort by poor nations to attract offshore factories and jobs (as will be discussed in Chapter 3).”
― Richard Baldwin, The Great Convergence: Information Technology and the New Globalization

“Since we are messaging with far more people than we used to when messaging meant airmail or phone calls, we have an incentive to meet more people.”
― Richard Baldwin, The Great Convergence: Information Technology and the New Globalization

“The second unbundling changed technology boundaries. Technology became less defined by national borders and more defined by the contours of international production networks. The resulting gush of know-how from the North to the South has begun to re-equilibrate the knowledge imbalances that had been created during the Great Divergence. The result, as argued in the text, was rapid industrialization and growth take-offs in a handful of developing nations.”
― Richard Baldwin, The Great Convergence: Information Technology and the New Globalization

“To put it sharply, reducing the cost of moving goods while the cost of moving ideas remained high was the root cause of the “Great Divergence.”
― Richard Baldwin, The Great Convergence: Information Technology and the New Globalization

“Any country with a large public debt, and with no access to monetary financing, could be subject to a run on its debt, even if it was solvent in the long run. In other words, a liquidity crisis triggered by lack of confidence could push into insolvency not only banks, but also sovereigns with high public debts and no access to the printing press.”
― Richard Baldwin, The Eurozone Crisis: A Consensus View of the Causes and a Few Possible Solutions

“the chapter explains the three-cascading-constraints perspective by walking through, in sequence, the situation where all three constraints were binding (before 1820), the situation where only two were binding (up to 1990), and finally, today’s situation where only one is binding.”
― Richard Baldwin, The Great Convergence: Information Technology and the New Globalization

“By relaxing the constraints that had underpinned the vast imbalances in the global distribution of knowledge, the ICT revolution unleashed a historic transformation that might be called the Great Convergence.”
― Richard Baldwin, The Great Convergence: Information Technology and the New Globalization