Globalization III: The Moving Window

John Sutton

in Competing in Capabilities

Published in print October 2012 | ISBN: 9780199274536
Published online January 2013 | e-ISBN: 9780191746123 | DOI:

Series: Clarendon Lectures in Economics

Globalization III: The Moving Window

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Chapter 1 introduced the idea of a ‘window’ defined in terms of the firm's wage-adjusted capability u/wc, i.e., the reciprocal of the firm's ‘effective cost level’. Chapter 2 showed that the process of trade liberalization leads to an upward shift in the threshold level of the wage-adjusted capability required for a firm to be viable in the global market. This chapter shows that the third phase of globalization leads to an upward shift in the top of the window, defined as the highest level of the wage-adjusted capability in the global market. The first half is concerned with technological competition among firms whose efforts redefine the top of the window. The second half turns to the opposite end of the spectrum. It focuses on those firms and countries that were more or less left behind when global markets began to liberalize during the 1990s and who now face the challenge of ‘getting into the window’. It is here that we meet with the challenges, and the new-found hopes, of the economies of Sub-Saharan Africa.

Keywords: wage-adjusted capability; cost; trade liberalization; global market; competition; Sub-Saharan Africa

Chapter.  3967 words.  Illustrated.

Subjects: Economic Development and Growth

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