Analyzing Economic Integration GCP-97-11

David C. Ranney
David C. Ranney is a professor in the College of Urban Planning and Public Affairs at the University of Illinois at Chicago

Analysis of economic integration should evaluate the dominant form of development which emphasizes growth through exports, high capital mobility, privatization, and governmental deregulation. This form of integration, termed neoliberalism, has its roots in the structural adjustment programs of the 1980’s and has been generalized globally. Thus its impact should consider a period that includes at least the past decade. Because integration includes non- contiguous nations and supra-national corporations, units of analysis should be conceived as transnational spaces that include data from an appropriate configuration of nations and corporations.
There are many topics that should be included in a study of the impacts of neoliberalism. While the focus of this paper is on the study of trade, I argue that it is misleading to isolate trade analytically as many studies do. Trade should be considered in relation to capital flows, and impacts should include many variables that constitute the broad concept of social wage. It is also misleading to isolate the export side of the trade relation. The net impacts of exports and imports should be estimated. When imports are considered, some researchers have argued that negative impacts of imports are overstated unless one considers the extent to which they are product complements rather than substitutes. The paper cautions that models which are sensitive to elasticities of substitution should consider factors that could cause elasticities to vary over time. Furthermore, it is important to estimate opportunity costs of non-domestic product complements by considering potential benefits of import substitution. Finally the paper critically evaluates efforts in the U.S. to estimate export supported jobs and wages. I am specifically critical of some estimating methodologies and the tendency to view export growth rather than social wage as the policy goal.

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