“ we are suffering just now from a bad attack of economic pessimism. it is common to hear people say that the epoch of enormous economic progress which characterised the nineteenth century is over ; that the rapid improvement in the standard of life is now going to slow down – at any rate in great britain ; that a decline in prosperity is more likely than an improvement in the decade which lies ahead of us. i believe that this is a wildly mistaken interpretation of what is happening to us. we are suffering, not from the rheumatics of old age, but from the growing - pains of over - rapid changes, from the painfulness of readjustment between one economic period and another. the increase of technical efficiency has been taking place faster than we can deal with the problem of labour absorption ; the improvement in the standard of life has been a little too quick ; the banking and monetary system of the world has been preventing the rate of interest from falling as fast as equilibrium requires. ” ( john maynard keynes, economic possibilities for our grandchildren, 1930 ). bis central bankers ’ speeches reoccurs year after year. a look at historic data reveals that national per capita income 2 in western european countries has grown by a factor of almost 15 since the onset of the industrial revolution. this continuous growth in the last two centuries has fundamentally changed the economic environment : the range and quality of consumption goods, the means and possibilities of production, the available types of technology and the ways how people communicate, interact and conduct their lives. for now, i would like to somewhat confine our view and look at no more than the past 45 years. in the chart you can see the real growth rates for austria and ( by comparison ) for the united states for the period from 1970 to today. this chart contains three interesting messages. first, up to 2007 growth rates followed a clear trend in both countries : 2. 7 % in austria and 3. 1 % in the u. s. a. second, there are considerable fluctuations around these trend growth rates ; the standard deviation in both countries is around 2 %. third, it is extremely difficult to disentangle the two elements – trend growth and fluctuations around the trend – in real time. this is particularly relevant for the period after the onset of the great recession in 2007, when the strongest deviation from the trend path occurred. there are two ways to interpret the developments following the great recession. the first one is to consider them a dramatic example of severe and

robert holzmann governor oesterreichische nationalbank introduction vienna, november 26, 2020 globalization and pandemics – pol antras global economy lecture 2020 ladies and gentlemen, on behalf of the vienna institute for international economic studies ( wiiw ) and the oesterreichische nationalbank, i welcome to this year ’ s global economy lecture, which is the 25th of its kind. we have a very distinguished speaker today, professor pol antras from harvard university, who is joining us from cambridge, massachusetts. a very warm welcome to you, professor antras, we are very honored that you are taking your time today, on thanksgiving day, to present your views on “ globalization and pandemics. ” the global economy lecture series has existed since 1999, but this is the very first time that it takes place online. while we would certainly have preferred meeting you all in person at the oenb premises in the usual setting, with a reception and informal networking after the lecture, i have to admit that the new format also has its merits. pol antras would probably not have agreed to fly over to europe for a lecture on thanksgiving day. and, besides, a physical meeting would probably not have attracted as many participants as we can welcome today. over the twenty years of its existence, the global economy lecture has hosted a number of very distinguished speakers, and it has featured all the major trends in international economics, and in particular in international trade and global value chains : from the transition process in central and eastern europe or in asia to the effects of major trade agreements, the emergence of multinational enterprises, and the digital revolution of production processes. today ’ s lecture is going to cover another new phenomenon in global trade : the covid - 19 pandemic has led to a temporary collapse of world trade links. supply disruptions occurred mainly at the beginning of the crisis. demand increased markedly for a number of specific items, e. g. health products and it equipment. these goods are produced in highly organized global value chains, which were subject to severe disruptions due to restrictions in transport and labor mobility. industries with shorter safety stocks were hit hardest. more recently, the largest problems have resulted primarily from weak global demand for final goods. publisher : oesterreichische nationalbank communications division otto - wagner - platz 3, 1090 vienna the pandemic itself is a tail event, with enormous short - to medium - term implications for global growth and trade. but we would