Farewell, Flat World by Jean Pisani-Ferry - Project Syndicate

Farewell, Flat World by Jean Pisani-Ferry - Project Syndicate



The single most important economic development of the last 50 years has been the catch-up in income of a large cohort of poor countries. But that world is gone: in an increasingly digitalized global economy, value creation and appropriation concentrate in the innovation centers and where intangible investments are made.



...in an increasingly digitalized economy, where a growing part of services are provided at zero marginal cost, value creation and value appropriation concentrate in the innovation centers and where intangible investments are made.



...Digital networks also contribute to asymmetry. A few years ago, it was often assumed that the Internet would become a global point-to-point network without a center. In fact, it has evolved into a much more hierarchical hub-and-spoke system, largely for technical reasons: the hub-and-spoke structure is simply more efficient. 



...The same hub-and-spoke structure can be found in many fields. Finance is perhaps the clearest case. 




...the standard approach would make, say, the won-real exchange rate a prime determinant of trade between South Korea and Brazil, the reality is that because this trade is largely invoiced in dollars, the dollar exchange rate of the two countries’ currencies matters more than their bilateral exchange rate. Again, this result highlights the centrality of US monetary policy for all countries, big and small.



...“weaponized interdependence”: the mutation of efficient economic structures into power-enhancing ones.