Globalization-related issues.

America to Become # 2 Global Economy—And That’s Not Great News

January 24, 2014
| Blogs & Op-eds

Economists anticipate that China will surpass the United States as the world’s largest economy sometime in 2016 or 2017. Some, such as Charles Kenney writing recently in the Washington Post, argue that this does not constitute cause for concern, primarily since per-capita U.S. incomes will remain higher. But ceding a position that the United States has held since 1871 should not be taken lightly. In fact, the United States’ loss of the global economic pole position is quite concerning, first because it brings into stark relief the economic underperformance of the U.S. economy over the past decade and a half—the fundamental causes of which have yet to be ameliorated by enacting policies that would improve the competitiveness of the U.S. economy, its firms and industries. Second, the country poised to take the lead, China, has grown so rapidly in no small part by practicing economic mercantilism on an unprecedented scale, embracing a broad and deep range of mercantilist policies, everything from massive subsidies for state-owned enterprises, abuse of anti-trust policy, currency manipulation, and standards manipulation, to the theft of intellectual property and forced transfer of technology as a condition of market access. But such innovation mercantilist policies harm other nations and cause them to seek to enact similar policies in response, leading to degradation of a global economy characterized by liberalized, market-based trade that will ultimately reduce global consumer welfare. Thus, the United States should not relinquish its position as the world’s leading economy without competing fiercely for that title. It should start by implementing a comprehensive range of innovation, productivity, and competitiveness enhancing policies, as ITIF has long argued, and by continuing to push back aggressively when other nations use trade-distorting policies while pushing for stronger global trade rules that promote market-based economic competition.

In the United States alone, exports of digitally enabled services totaled $356 Billion in 2011.

With the development of cloud services and mobile computing, digital trade has exploded over the last decade. Unfortunately, efforts by certain nations to promote domestic producers over foreign companies along with fears from PRISM threaten the continued growth of the sector.     

From 1996 to 2008, China boasted a 34 percent compound annual growth rate in exports of products covered by the Information Technology Agreement (ITA)

China's participation in the ITA has deepened its role in global value chains, boosted its exports of information and communication technology (ICT) goods and services, and enhanced the innovation capacity of Chinese firms, including those in its manufacturing sector. However, China's recalcitrance to expand the agreement will keep tariffs high on a number of newly developed innovative technology products, reducing global market size, balkanizing production and ultimately hampering the Chinese economy as a whole.   

Canada Must Protect Intellectual Property

January 6, 2014
| Blogs & Op-eds

On a number of measures, Canada is one of the leading nations in the world. On several, they lead the United States: Canadians are better educated, more physically fit, enjoy more social mobility, and have greater economic freedom. And yet, surprisingly, Canada has a long tradition of providing intellectual property (IP) protections on a level with that of the developing world.

The 10 Worst Innovation Mercantilist Policies of 2013

January 6, 2014
| Reports

Innovation is a central driver of growth. As a result, an increasing number of countries are seeking to become innovation leaders. Unfortunately, the methods that many choose are grounded in “innovation mercantilism”: a strategy that sees technology-based exports as the key to success while relying on distortive and protectionist tactics. These practices do not just damage other economies; they damage the entire global innovation system, leading to less innovation and productivity. Moreover, they often do not even help the countries embracing the practices; instead, mercantilist policies lead them to neglect the greater opportunity to spur growth by raising the productivity of all sectors of their economies, not just a few high-tech ones.
This first annual report documents what ITIF believes to be the ten worst innovation mercantilist practices proposed, drafted or implemented in 2013. Only one policy was chosen per country in order to document the pervasive nature of innovation mercantilism globally. 

The Ten Worst Innovation Mercantilist Policies of 2013

Advocates Should Focus on Our Real Competitiveness Problems

January 2, 2014
| Blogs & Op-eds

Manufacturing advocates are not aiding U.S. manufacturers by opposing trade agreements such as the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP). These agreements, if done right, will strengthen the ability of the U.S. government to fight mercantilism, open up new markets to American businesses and create a more robust global innovation ecosystem.

Digital Trade Act of 2013 Instrumental to Protecting and Empowering the Global Digital Economy

December 12, 2013
| Blogs & Op-eds

Digital trade has become one of the global economy’s strongest drivers of growth, especially as it’s estimated that half of all value in the global economy will be created digitally by 2025. Unfortunately, an increasing number of countries are introducing digital barriers to trade such as local data center requirements, which mandate that Internet services companies locate data centers in-country as a condition of market access, or local data storage requirements mandating that companies must store and process data locally, thus cutting off cross-border data flows, and precluding the provision of Web-based services such as cloud computing. To address this, last week Senators John Thune and Ron Wyden introduced legislation in The Digital Trade Act of 2013 that articulates key principles U.S. trade negotiators should adhere to—such as prohibiting localization requirements for data and computing infrastructure—in order to protect the Internet from restrictive measures that obstruct the free flow of data in the global economy.

Canada at a Crossroads

December 12, 2013
| Presentations

While Canada currently lags behind many developed countries in terms of IP protections, the recently concluded Canada-EU Trade Agreement (CETA) and the ongoing Trans-Pacific Partnership (TPP) negotiations represent opportunities for Canada to adopt globally-accepted IP protections and to improve its enforcement efforts. Michelle Wein will participate in this panel discussion, which will explore Canada's weak IP environment and consider measures for improvement going forward. It is sponsored by the U.S. Chamber of Commerce’s Global Intellectual Property Center.

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