policymakers demonstrate

Introduction 13
An overarching theme is that globalization benefits some more than others.
In fact, some may even become worse off as their country becomes more
open to the flow of goods, ideas and people. For example, workers in importcompeting
industries stand to lose when countries open up to trade. There is a
need for better understanding the redistributional effects of globalization and
to develop policies to mitigate the negative effects. Economists find it difficult
to give definite answers to trade policy challenges, partly because the remaining
policy barriers to cross-border transactions are difficult to quantify. There
is broad-based evidence that these frictions are large, but many of them cannot
be captured by taxes and quotas, which are the standard tools to model them for
policy analysis. We need to better understand not only protectionist, but also
precautionary motives for trade policy.
There are also important challenges in measurement. Recent initiatives to
match data from various national sources are very promising, but the national
fragmentation of data collection remains the primary data challenge facing analysts
of globalization. To be more specific, the most relevant tasks in this area
are to:
1. harmonize firm-level trade and balance sheet data across countries;
2. develop statistical methods and computational tools to work with multidimensional
data;
3. develop new datasets on workers within firms, while ensuring privacy and
consistency across studies;
4. build harmonized firm-level data on services trade;
5. collect data on buyer-supplier links within the EU;
6. link national administrative data, harmonize data collection and reporting;
7. synthesize research based on ad-hoc proprietary data; and
8. construct international input-output accounts from the ground up.
There are some important challenges for theory as well. We need to:
1. reeconcile model-based and reduced-form estimates of gains from trade;
2. identify losers from globalization and quantify their losses;
3. understand and quantify nontax, nonquota frictions in trade;
4. develop a toolbox for quantitative analysis of redistribution;
5. understand and quantify the effects of standards and harmonization on trade
and welfare; and
6. develop a quantitative theory of supply-chain trade and of multinationals.
Chapter 7 deals with the economic approaches to energy, environment and
sustainability. Different schools of economic theory hold differing views on
the basic characteristics of the relationship between the economy and the
environment. The two principal schools are ‘environmental and resource economics’,
which considers environmental concerns as an aspect of broader economic
issues to which the approaches of rationality, marginalism and efficiency
may be suitably applied, and ‘ecological economics’, which considers the