Jobs and Incomes in a Globalizing World by Ajit K. Ghose, Geneva: International Labour Office, 2003, 130 pages, ISBN 92-2-112717-6.

This is a timely book about the labour market effects of globalization – specifically, the effects of globalization on jobs, wages and incomes in industrialized and developing countries. Ajit Ghose defines globalization as “a process of integration of national markets into a global market.” Globalization, he writes, is of such great concern now because of a new development: trade between developed and developing countries in competing products. Following an introduction and a discussion of globalization, the four core chapters of the book (Chapters 3-6) each address a major area of concern. First, the changing pattern of trade has had a differential impact on various countries’ trade performances. Second, the redistribution of manufacturing employment has affected wages and employment in both developed and developing countries. Third, there has been no liberalization of international migration. Fourth, there is concern that competition to attract trade and foreign direct investment may have set in motion a “race to the bottom.” Chapter 3 presents data on trade and global income inequality. Ghose distinguishes three concepts. The first is inter-country inequality, which considers the distribution of countries by per capita GDP. The second, international inequality, focuses on the distribution of population-weighted GDP’s. The third, world income distribution, is defined as the inequality of income received, assigning each income recipient his or her actual income. The third approach, though most desirable, cannot be implemented owing to non-availability of data. Consequently, Ghose uses the other two, with a clear preference for the second. What is striking is just how much difference the choice makes: from 1981 to 1997, inter-country inequality exhibited a substantial increase (Figure 3.2) while international inequality exhibited an even more substantial decrease (Figure 3.3). This, notes Ghose, is a novel feature of the global economy. Moreover, he writes that globalization has actually had a favourable effect on global income inequality, which in turn derives in large part from the positive impact of globalization on economic growth. Chapter 4 addresses trade, jobs, and wages. Ghose presents a theory of trade with less than full employment, which in my view is considerably more realistic than standard trade theory. He notes too that jobs in export industries are typically the best available in these economies. Wage inequality has risen in many countries, but it is skill-biased technical change, not international trade, to which Ghose assigns primary responsibility. Chapter 5 analyzes trade and international migration. The story is straightforward. International migration doesn’t help developing countries deal with their major problem, surplus low-skilled labour. International migration of the unskilled remains one of the great unmentionables in most development policy discussions today. Chapter 6 turns to trade and labour standards. Ghose asks whether standards should be evaluated for particular industries or economy-wide. He favours the latter, as do I. He then questions whether a “race to the bottom” is taking place using three possible definitions. The first is that labour standards in industrialized countries are being eroded because of trade with developing countries; Ghose finds that “there is no empirical ground for arguing that globalization has induced such a thing.” The second definition is that developing countries may be dropping their already-low labour standards to expand manufactured exports and attract foreign capital; here too, he finds “there are no good reasons to think that a race to the bottom in this sense is under way.” And third, a race to the bottom might arise if competition among exporters of primary commodities to industrialized countries can cause a fall in international prices of primary commodities; this, Ghose says, has been under way for quite some time. He then asks …