Doug Irwin: evaluation

Transcript context

…Globalization theorists used to write about the death of distance, it was called. That doesn’t actually seem to be true — what we call the gravity equation, how much trade depends on distance, it doesn’t seem to have changed much over time. That is, you still tend to trade with countries that are close to you. If you look at real estate values, what’s really gone up are a few major cities, such as New York City, London, San Francisco/Silicon Valley. It seems location matters more than ever before, and yet there’s more trade. What’s the right way to think about that apparent paradox? The death of distance may have more of an impact in terms of trade in services. For merchandise, there are shipping costs and things like that, and they have come down, of course. With services, either you need direct investment or it can be transmitted over the internet. So there, distance doesn’t matter quite as much. As you know, containerization was a big breakthrough for trading a lot of manufactured goods. It made it easy to automate, lowered a lot of costs. But services are much harder to trade, along many dimensions. How optimistic are you about future series of technological breakthroughs — analogous to containerization but for services — that will make them much easier to trade and give us a fairly rapid trade boom in services?…

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