Users Conference 30.9.2019, Statistics Finland

1. International trade: good
on average but not for
everyone?
Figures for tomorrow 30 September 2019, Statistics Finland
Mauri Kotamäki (@mau_and)
Chief Economist, Finland Chamber of Commerce

2. Contents
1. International trade is an excellent thing
2. International trade is not only an excellent thing
3. How excellent is international trade?

3. International trade is a
good thing

4. Goods and services are more mobile
than ever

5. Why international trade?
Economy of scale, benefits of
cumulation and other virtuous
circles
Differences in factors of production (incl.
skills), technology, institutions and policy
between countries
Price differences of commodities between
countries
Countries specialise in production where they
have a relative advantage.
International trade in commodities in which
countries specialise

6. People are also mobile
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2014
Numberofimmigrants,millionpeople
Source: The World Bank

7. The world is smaller than ever
…and yet it seems to be bigger than ever

8. Global economy and uncertainty
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Valueoftheuncertaintyindex
Source:
policyuncertainty.com

9. International trade is not
only a good thing
Two examples

10. China shock - the exposure to China of the
labour market regions of the United States
• Regions that were exposed to
imports from China
experienced the biggest drops
in employment
➢Regional migration propensity
does not grow
➢Adaptation is slow
➢Increase in well-being close to
zero (Caliendo, 2015)Source: Autor et al. (2016)

11. Immigration
• Immigrants are placed in
lower skill level and lower
earnings level jobs
(compared to the country
they come from)
• At lower income levels
wage ↓, at higher income
levels wage↑
➢On average, a slight
positive effect
Source: Dustmann et al (2013)

12. Conclusion

13. Summary
• Foreign competition shakes or at least threatens some of the
traditional (domestic) actors:
'they steal our market"
• Immigration causes resentment:
'they steal our work"

14. Commodity market disruption (Autor
et al, 2016)
Using a quantitative theoretical model, Caliendo et al. (2015) find that in the
immediate aftermath of a trade shock, constructed to mimic the effects of growth
in US imports from China, US net welfare gains are close to zero.
China’s economic growth has lifted hundreds of millions of individuals out of
poverty
The ultimate and sizable net gains are realized only once workers are able to
reallocate across regions to move from declining to expanding industries.

15. Immigration (Constant, 2014)
Whether high- or low-skilled, migrants rarely substitute directly for native workers. Instead,
migrants often complement native workers or accept jobs that natives don’t want or can’t do.
They create new jobs by increasing production, engaging in self-employment, and easing
upward job mobility for native workers.
The presence of immigrants increases demand and can spur new businesses to open, creating
more jobs for immigrant and native populations.
Immigration’s positive effects far outweigh any negative impact. Migrants choose locations with
available jobs and fill labor shortages.

16. Conclusion: flexibility
Image Gerd Altmann from Pixabay

17. Thank you!
mauri.kotamaki@chamber.fi
Twitter: @Mau_and