What explains the international division of labor between nations, for example, at the beginning of the XNUMXth century for Portugal to produce only wine and for England only fabrics? Comparative advantages, that is, the specialization in the production of those goods for which a nation has a lower relative (not absolute) cost, answered David Ricardo almost two hundred years ago. It was convenient for England to produce only fabrics and to import wine and vice versa for Portugal, because in this way England would have had more wine and Portugal more cloth than if they had produced them internally. And for decades it has continued to be thought that where there is an abundance of skills and professionalism, manufactured goods that require more high technology are exported, and where there is an abundance of work, goods that require less are produced and exported, with imports they travel in the opposite direction.
Thirty years ago this idea was challenged by Paul Krugman, based on the observation that things did not work out this way. More than 60% of world trade took place between the most industrially advanced countries. Firms specialized in varieties of the same commodity that were exported and imported: Germany exported Mercedes to France and imported Renault from there. But even this idea has been challenged in the last six to seven years by the observation of the facts.
Much international trade does not take place within the same industry, but within the same (multinational) company. The German parent company exports the production inputs (engine, tyres) to its subsidiary in Slovenia and imports the finished product (the car) from there. Why is this happening, asked the economists of the "new new trade theory" (twice as new as those of Krugman and Ricardo)? Because companies are desperately trying to retain skilled labour, which is in short supply on the market; international competition does not concern low-wage labour, but highly skilled labour: it is a "war for talent", in which each company seeks to retain or capture the best of human capital.
Germany's success as an exporting country lies precisely, the new wave economists explain, in its ability to exploit the pool of highly skilled labor in Eastern Europe that communism left behind, thus managing to keep wages low skilled work in Germany. (Another story between the United States and Mexico, where the hegemonic country exploits cheap labor there and imports computer engineers from Asia).
The "twice new" theory of international trade is not just an explanation of the global division of labor and the success of some countries as exporters. It is also an analysis of the consequences for the internal life of these same countries. This type of organization has disruptive effects on income distribution, because it generates a growing wage gap between high and low levels of education, a dramatic increase in the compensation of top managers and low wages for medium-skilled workers.
Such great inequality in income distribution, which has not been seen since 1929 in the US, is according to some the cause of the enormous private sector debt that triggered the explosion of the crisis that began with the chain of bankruptcies of subprime mortgages. But there is more: the important boundaries have become those of the multinational company, not those of the nation and it is not enough to be able to displace production offshore in search of low wages, one must be able to retain and train talent and professionalism. Perhaps in Italy this seed of economic truth does not germinate because it does not find the right soil to take root.
