St. Louis Fed's The Regional Economist: Bird Flu Pandemic; Trading Barbs: A Primer on the Globalization Debate; U.S. Exporters: Rare but Beneficial; Community Profile: Jasper, Ind.
ST. LOUIS — The October edition of The Regional Economist, the Federal Reserve Bank of St. Louis' quarterly publication of economic and business issues, features the following articles. (The publication is also available on the Bank's web site: http://stlouisfed.org/publications.)
- "Bird Flu Pandemic." The U.S. Department of Health and Human Services estimates that a flu outbreak would cause 1.9 million deaths in the United States and result in initial economic costs of about $200 million. Economist Thomas A. Garrett analyzes the possible economic and social impact of such a catastrophe, using the flu epidemic of 1918 as a potential parallel. He finds that residents in cities most likely would suffer greater mortality rates than rural residents, and some businesses could see a decrease in revenues, while others, such as healthcare firms, could gain.
- "Trading Barbs: A Primer on the Globalization Debate." Recent polls show that Americans are undecided whether globalization is mostly positive or negative. Economist Kevin L. Kliesen analyzes the effects of globalization on economies, consumers and employees. In general, research over many decades shows that international trade is beneficial because it allows a country to specialize in activities in which it excels, as well as boosting workers' productivity and households' overall income. There are also costs associated with free trade, however. In particular, some economists point to rising income inequality between low-skilled and high-skilled workers. Kliesen finds that achieving an efficient outcome may sometimes require the winners to compensate the losers, and he analyzes several proposals that have been put forth to do that. In the end, he concludes that policymakers, confronted by the rising forces of protectionism, may have to balance the costs of imposing trade restrictions or expanding public programs to compensate the losers of free trade against continuing the benefits of a global economic system that has produced so many benefits for so many people.
- "U.S. Exporters: Rare but Beneficial." The United States stands out as one of the world's leading exporters, yet data from 2000 shows that only about 4 percent of the nation's 5.5 million firms were exporters. Economist Rubén Hernández-Murillo and researcher Christopher J. Martinek analyze U.S. exports, including export concentration in the Federal Reserve's Eighth District. They cite studies which show that, in general, exporting firms are more productive than non-exporting firms in terms of value added per worker. They also find that exporters use more sophisticated technology, which requires more skilled workers, as well as more workers in general. Hernández-Murillo and Martinek emphasize that high productivity is a requirement for, and not a consequence of, becoming an exporter because the high entry costs for exporting may be a barrier to all but the most efficient firms.
- "Community Profile: Jasper, Ind." Expert craftsmen building desks, cabinets and other furniture have helped to keep this small Midwestern town's economy humming. Looking at Jasper's formula for success, editor Glen Sparks finds a collaboration between county economic development officials and Purdue University that has encouraged area companies to streamline supply chains and do a better job of competing in the global marketplace.
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