The Factory-Free Economy: what next for the 21st century?

Conference organized by Lionel Fontagné (PSE, Univ. Paris 1) and Ann E. Harrison (Wharton & NBER) 

Paris 17-19 June 2013 

Objective of the conference

De-industrialisation was accelerated by the 2008-2009 crisis in most high income countries. Yet the trend began decades earlier, as comparative advantage of emerging economies shifted towards more advanced goods and their growing populations commanded an increasing share in global demand. This shift towards a factory-free economy in high income countries has drawn the attention of policy makers in North America and Europe. Some politicians have articulated alarming views, initiating mercantilist or beggar thy neighbour cost-competitiveness policies. Yet companies like Apple, which concentrates research and design innovations at home but no longer has any factories in the United States, may be the norm in the future. This ongoing transformation of the industrial economies may be consistent with evolving comparative advantage, but has significant short run costs and requires far-sighted investments. These include the costs to workers who are caught in the shift from an industrial to a service economy, and the need to invest in new infrastructure and education to prepare coming generations for their changing roles.

This conference aims at providing an economic analysis of this phenomenon. To do so we will consider what recent economics advances can tell us about five topics. We will address trade issues (specialization, offshoring, and impact on the labour market) as well as structural transformation, concluding with a macro perspective on rebalancing the current account and policy implications for the public and private sectors.