The Payoff to America from Globalization: A Fresh Look with a Focus on Costs to Workers

The Payoff to America from Globalization: A Fresh Look with a Focus on Costs to Workers. Peterson Institute for International Economics. Policy Brief, 17-16. Gary Clyde Hufbauer and Zhiyao (Lucy) Lu. May 2017

Hufbauer and Lu, updating a landmark PIIE study made in 2005, calculate the payoff to the United States from trade expansion from 1950 to 2016 at $2.1 trillion. The payoff has stemmed from trade expansion resulting from policy liberalization and improved transportation and communications technology. The sum translates into an increase of $7,014 in GDP per capita and $18,131 in GDP per household. The potential gains from future policy liberalization could be as large as $540 billion for the United States by the year 2025, or an increase of $1,670 in GDP per capita and $4,400 in GDP per household. On the other hand, 156,250 manufacturing sector jobs were lost annually over the past 13 years, representing less than a percent of the number of people involuntary separated from their jobs each year. A more generous unemployment insurance program and expanded tax credits would help displaced workers adjust, the authors argue, while preserving the large gains resulting from trade expansion. [Note: contains copyrighted material].

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International Financial Cooperation Benefits the United States

International Financial Cooperation Benefits the United States. Peterson Institute for International Economics. Policy Brief 17-10. Edwin M. Truman. March 2017

The financial crisis of 2007–09 wreaked worldwide havoc because of the interconnectedness of many countries’ economies and financial systems. To contain and stabilize these interwoven global financial systems and avert future crises thus requires international cooperation, preferably with American leadership. The Trump administration’s policies on these matters are unclear. But early indications are cause for concern over future US commitment to international regulations to prevent and manage the inevitable occurrence of future crises. [Note: contains copyrighted material].

[PDF format, 12 pages, 205.34 KB].

The Truth about Trade Agreements—and Why We Need Them

The Truth about Trade Agreements—and Why We Need Them. Peterson Institute for International Economics. Chad P. Bown. November 21, 2016

US trade agreements could be the first economic casualty of the 2016 election. One of President-elect Donald Trump’s signature campaign promises was to renegotiate the North American Free Trade Agreement (NAFTA) and even potentially pull the United States out of the World Trade Organization (WTO). And as Democratic leaders now contemplate their party’s future, they, too, are questioning the wisdom of such international deals.
Existing US trade agreements rose from the ashes of World War II and the Great Depression. Understanding how they protect the US economy, American workers, and consumers is critical to avoiding a repeat of the policy mistakes of the 1930s. [Note: contains copyrighted material].

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Seizing Opportunity in a Post-TPP World

Seizing Opportunity in a Post-TPP World. YaleGlobal, Stephen S. Roach. December 1, 2016.

Trade is the glue for globalization and without it other connections can subside. But US voters rejected a US leadership role in global trade deals and elected billionaire Donald Trump who has already signaled intent to have the United States to withdraw from the Trans-Pacific Partnership with 11 other nations. Analysts suggest that China could step into the US role, but “The baton of global leadership rarely passes in such a seamless fashion,” cautions Yale professor Stephen S. Roach. The United States has global responsibilities not easily dismissed, and China confronts multiple risks including high debt and other economic imbalances. Roach proposes that Trump could pursue another huge opportunity by concluding the US-China Bilateral Investment Treaty, under negotiation since 2008. China is the third biggest US export market. Roach concludes, “For a growth-starved US economy, there could be no better way of tapping into what promises to be the world’s greatest market expansion in the years ahead.” [Note: contains copyrighted material].

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Winners and Losers in International Trade: The Effects on U.S. Presidential Voting

Winners and Losers in International Trade: The Effects on U.S. Presidential Voting. National Bureau of Economic Research. J. Bradford Jensen et al. January 2016.

The paper studies how international trade influences U.S. presidential elections. It expects the positive employment effects of expanding exports to increase support for the incumbent’s party, and job insecurity from import competition to diminish such support. Our national-level models show for the first time that increasing imports are associated with decreasing incumbent vote shares, and increasing exports correlate with increasing vote shares for incumbents. These effects are large and politically consequential. Incumbent parties are particularly vulnerable to losing votes in swing states with high concentrations of low-skilled manufacturing workers with increasing trade exposure. [Note: contains copyrighted material].

[PDF format, 71 pages, 963.5 KB].