Reexamining the Case for Trade

My latest working paper reexamines the case for international trade.  Here is the abstract:

Since the time of Adam Smith, high tariffs have been decried by economists as counterproductive to a country’s economic growth. However, in recent years, this consensus has come under scrutiny, not just from the political sector but also the academic sector. Using GDP per Capita as a measure of economic well-being and the Economic Freedom of the World Index to measure freedom to trade, I find a distinct positive effect lower mean tariff rates have on GDP per capita. The size of the effect varies on the income of the country, with the strongest effect on the poorest nations and the weakest effect on the wealthiest nations.

As this is a working paper, any and all constructive comments are welcome!

3 thoughts on “Reexamining the Case for Trade

  1. Hi. I’ve been wondering what you think of some of what I consider the most well-thought-out critiques of free trade I’ve seen from qualified academics (Robert Atkinson and Susan Houseman)

    1: That statistics of US manufacturing strength have been skewed by the massive (and potentially misread) productivity gains of the computer industry thanks to Moore’s Law, and that the sector is considerably weaker when you consider the outlier.
    2: That the case that a lot of the 2000s manufacturing job implosion was indeed due to trade because productivity and investment in automated machines increased slowly compared to job losses.

    Now it’s not the basic economics of free trade that I’m calling into question (after all, there’s much more to an economy than manufacturing), it’s rather that I fear free traders might be making a political misstep by being too cheery and dismissive of the biggest sticking point in popular imagination.


    • Those are good critiques revolving around the question of productivity measurement (indeed this is reflective of a larger question regarding statistics use in economics over all). The Atkinson and Houseman critiques have merit to them, however, I think the fact the US remains the 2nd largest manufacturer in the world, accounts for approximately 20% of world manufacturing output, and is 167.9% higher than the closest competitor (Japan), the reports of weakness in American manufacturing have been greatly exaggerated.


Comments are closed.