Gary Hufbauer and Matthew Adler explained "Why Large American Gains from Globalisation are Plausible" over at VoxEU today. I'm going to direct you instead to Mark Thoma's post, which provides the Hufbauer and Adler text as well as very helpful background on an ongoing debate: "Why Large American Gains from Globalisation are Plausible".
How do we benefit from globalization? Hufbauer and Adler count the ways:
...powerful forces that enormously expand the payoff from policy liberalisation and technology innovation for a country that participates in the global economy.
What are these forces?
- "Rightsizing" inputs to the needs of industrial producers;
- lowering the true cost of household purchases below the advertised inflation rate;
- "sifting and sorting" firms so that the most efficient expand and the least efficient shrink;
- curtailing the markup margins associated with monopolistic competition;
- stimulating laggard industries (remember autos and steel) to match the productivity of foreign competitors;
- reducing the enormous international differences that prevail in prices for traded goods,
- and enjoying the benefits of internal and external returns to scale...
The Peterson Institute study combines the payoff from these powerful forces with traditional comparative advantage...
Comments