Robert Z. Lawrence

This essay addresses the "new-new" issues on the emerging agenda for the global trade negotiations to follow the recently concluded Uruguay Round. The authors first examine the extent to which international rules in new trade areas are needed and then consider the three highest profile issues: competition policy, labor standards, and linking trade and environment. Robert Lawrence argues that if an international agreement on competition policy was possible, developing countries would derive considerable benefits. Dani Rodrik examines the evidence and concludes that labor standards-or lack thereof-have consequences for trade and foreign investment patterns. He then considers whether a social-safeguards approach can be made to work for labor standards and suggests that the risks of not negotiating such a clause outweigh the dangers of an inappropriately designed process. Finally, John Whalley argues that the central issue for trade and the environment is whether developing countries should be compensated for policies encouraging environmental restraint.

The unprecedented shifts in the U. S. dollar's exhange rate that started during the late 1970s and continued through the 1980s provide an ideal opportunity to explore how the global economy works and the role that multinational enterprises (MNEs) play in the phenomenon of globalization. In this book, Subramanian Rangan and Robert Z. Lawrence examine the international pricing, sourcing, and trade responses of MNEs to shifts in the dollar. Based upon the micro patterns they observe in MNE behavior, the authors suggest explanations for some puzzling macro patterns evident in our international economy. They conclude that the global integration of markets remains incomplete due to informational and other important discontinuities, and they refute stereotypes which portray multinational firms as either footloose or inflexible. Policy implications for exchange rates, trade, and foreign direct investment are also discussed.

"The world economy has undergone miraculous changes in the last decade, particularly in developing and former communist countries. Privatization and trade liberalization have replaced the protectionist and statist policies that were deeply entrenched in these areas just ten years ago. Today, these dynamic emerging markets offer attractive opportunities. According to Robert Lawrence, liberal international trade and investment should provide significant opportunities for gains in developing and developed nations alike. But will the developed countries be allowed to keep their markets open and absorb exports from developing countries? Many in the U. S. and Europe blame international trade for unemployment and wage inequality. But what is the real relationship? Lawrence contends that while trade has played some role in reducing the wages of poorly educated workers in the U. S. and in raising the unemployment of unskilled workers in Europe, its impact has been small compared with other causes of these changes. Lawrence examines the role of trade in developed and developing countries and its impact on labor markets and wage inequality, and discusses what he considers the more important effects of technological and organizational change. He begins by focusing on U. S. wage behavior, then moves to wage behavior in the OECD countries. Lawrence concludes that the impact of globalization on OECD labor markets has been far less damaging than many have argued and, indeed, that international trade enhances national welfare. He presents considerable evidence that the sources of poor labor market performance are essentially domestic—they reflect ongoing technological and organizational shocks that would be present even if the economy was closed. This evidence suggests that international differences in wage rates and labor standards are not major factors in OECD labor market behavior. He explains that the major challenges to policy are educating the public on the nature of these changes, emphasizing the need for worker training and education to take advantage of new technologies and new organizational structures, and developing measures to reduce earnings inequality while preserving and increasing wage flexibility. Robert Z. Lawrence is professor of international trade and investment at the John F. Kennedy School of Government at Harvard University. His previous books include A Vision for the World Economy: Openness, Diversity, and Cohesion (Brookings, 1996), the capstone volume to the Integrating National Economies series. Copublished with the OECD Development Centre"

In this capstone volume in the INE series, the authors review the growing pressure for deeper international integration, explore the strengths and weaknesses of alternative approaches to dealing with these pressures, and present concrete proposals to help achieve a global community that will balance openness, diversity, and cohesion. A volume of Brookings' Integrating National Economies Series