How Technology, Culture, and Trade Intersect in International Commerce and Policy

A fundamental concern in international commerce is to understand the preferences of economic actors. This starting point about preferences then explains the performance of markets, and the paths of national and international economies. Current times of cultural turbulence and technological transformation challenge these starting points in economics. Fundamental axioms are being re-imagined and reformulated.

Issues of culture and technology feature prominently in international business. Technologies have changed the nature of work and economic performance. In the United States, technology-intensive “services” now account for nearly 80 percent of the employment and Gross Domestic Product. In 2018, the U.S. had a $260 billion trade surplus in services, while merchandise trade recorded a $887 billion deficit. At an everyday level, international platforms such as those of YouTube, with nearly 2 billion monthly users, or Uber, with $11.8 billion revenues in 2018, have changed the way we view global entertainment or travel. Most of the platform champions, from Google to Facebook, or from Uber to Airbnb, come from the United States.

‘At an everyday level, international platforms such as those of YouTube, with nearly 2 billion monthly users, or Uber, with $11.8 billion revenues in 2018, have changed the way we view global entertainment or travel.’

‘NATIONALISM AND TARIFFS’

On culture, headlines about societal and national anxieties debate the effects of the fast-moving global economy through salient issues such as employment opportunities, income inequalities, demographic change, and governance challenges from local to transnational levels. In fact, as opposed to the underlying strength of the U.S. economy in cutting-edge sectors such as services, the public policy headlines are now often about economic nationalism and tariffs. The societal worries are about the loss of manufacturing jobs and the fate of rural economies that are left behind.

What does all this mean for studying international commerce and policy? In short, it means going well beyond the early lessons of economics to complex problem-solving.

An introductory economics course begins by asking how prices affect economic preferences. Neo-classical economics, starting in the late-19th century, forged an ideational revolution in social sciences that revolved around prices and associated economic factors. More recently, “political economy” has moved toward other factors: culture, technology, organizations and institutions in accounting for the sources of interest formation.

‘TECHNOLOGY AS LEARNING’

Political economy – in examining national economies or international commerce – now increasingly analyses technology and culture as shaping economic conduct. New trade theory “endogenizes” technology. In common parlance that means technology is taken to be the source of learning for businesses or firms. Commerce is not just about getting the price right in markets. It is also about learning and the growth of firms and organizations.

Cultural models provide insights on values and institutions that affect fundamental preferences about societal trust and incentives for economic action. Again, preferences are not just about prices. Like technology, culture is also about learning – the collective human experiences in times past and present that influence economic behaviour.

In receiving the Nobel Prize in 1993, economist Douglass C. North noted the following in his acceptance speech: “It is culture that provides the key to ‘path dependence’—a term used to describe the powerful influence of the past on the present and future. The current learning of any generation takes place within the context of the perceptions derived from collective learning.”

It may seem trivial to say that current theories of political economy are ultimately about how human beings “learn” as consumers, producers, or societal agents. However, this learning sits in contrast to the view that takes economic preferences as given or static, and merely responsive to prices. Human preferences are multi-faceted. In stating that our models are about learning, political economy now attends to path dependence and adaptation, rather than only the mantra of allocative efficiency that guided neoclassical economics.

‘CULTURAL BLINDSPOTS’

My own research on international trade and development deals chiefly with technology and cultural factors. The book Negotiation and the Global Information Economy analyzed evolving rules for the cutting-edge global economy. Globalized Arts examined the role of cultural identity in the high-tech global entertainment economy, which incidentally is also the biggest export from the United States. Sweet Talk explored culturally shaped preferences in the global economy, specifically the ways they influence trade concessions in international negotiations.

The book does not depart from major insights on trade theory and policy, but it does point out their “cultural” blind spots. A forthcoming edited book is titled Cultural Values in Political Economy (Stanford University Press, 2020). My current book project, Development 2.0 (Oxford, forthcoming), deals with the role of information technologies in creating inclusive economic development.

In general, the current scholarship in political economy and international commerce enhances prices and market behavior with insights from factors such as taste, technology, culture, and institutions. In doing so, we can begin to understand both the technological and cultural upheavals of our times. These insights move us toward not just understanding international commerce but also toward designing better solutions for businesses and public policy.

Professor J.P. Singh is a faculty member in the Master’s in International Commerce and Policy program, and is a Richard von Weizsäcker Fellow with the Robert Bosch Academy in Berlin. His teaching includes a core course in the program called “Technology, Culture, and Commerce.