LSE LSE Research Laboratory LSE
LSE Research Laboratory (RLAB)

Globalisation, emerging markets, inequality and growth

We live in a world where globalisation has made economies more interdependent than ever before, where the changing pattern of competition facing companies profoundly affects the stability of employment for workers, with low skilled workers in Europe in direct competition with billions of low-skilled workers around the world. A key issue for research is how changes in world trade and global financial markets affect where firms locate, where growth takes place and the forces widening inequalities between nations. Within the UK, our research focuses on how these economic changes impact on regional employment, long term unemployment and deprivation. Further afield, it looks at economic development in poorer parts of the globe and determinants of progress through institutional innovation and exploitation of social networks for technology improvements and capital formation.

Joint projects underway include the following:
A trade and investment project studies the impact of globalisation and regional integration on the location of production, on production structure, and on income levels. Which activities are relocating from established industrial centres to peripheral regions in Europe and to developing countries? How are traditional patterns of industrial development being changed by the growth of production networks and by outsourcing of stages of the production process? How are trade and domestic policies to be reformulated to take into account increasing levels of overseas investment and more internationally mobile economic activity?

Another project links insights from industrial organisation with those from geography and trade. This asks to what extent the gap between industrialised economies and the industrialising countries in the World Bank's 'middle group' reflects a late entrant disadvantage suffered by the latter group. Here the challenge is to pin down an estimate of the penalty suffered by latecomers to global markets. The research will also consider to what extent joining international supply chains offers a way of circumventing trade and technology barriers for industrialising countries.

Globalisation also has implications for the design of government institutions. Many commentators emphasise the dual need for more effective local and global institutions to deliver policy solutions. There are also broader issues of constitution design in the future Europe. Our political economy research programme will investigate the link between institutional design and economic performance. International competition in regulation and tax regimes will affect the future structure of bond and equity markets and patterns of investment. This will also necessitate thinking about global financial architecture.