Infrastructure, Human Capital, and International Trade

It is by now a trite commonplace that we live in an increasingly integrated global economy, in which the barriers to the free movement of goods and capital, though not labor, are rapidly disappearing as a result of both policy reforms and the progress of technology in transport and communications. The rhetoric as well as the substance of national economic policy is now preoccupied with the problem of how each country can hope to survive and prosper in a world where capital controls and trade restrictions are off the agenda. Is the simple laissez-faire principle of simply doing nothing correct, or is there anything an activist government might usefully strive to accomplish? With the global pool of capital at any instant restlessly searching for the highest return, regardless of borders, a popular prescription has come to be the provision of public infrastructure and the training and education of the labor force. With these measures the nation can attempt to secure for itself a higher share of the global capital stock and thus ensure for itself higher wages and better quality jobs for its own labor force.