This is the first work I’ve seen that comes down unequivocally on both the the benefits and the dis-benefits of China’s (and others’ by implication) rise as a trading nation to the rest of the world; part of the process often sloppily summarized as ‘globalization’.
First, the benefits. The authors of this IMF Working Paper, JaeBin Ahn and Romain A Duval, identify a 1.9% gain for the world’s largest and most advanced economies in Total Factor Productivity (TFP) over their study period from the mid-1990s to the mid-2000s, directly attributable to China. That’s equivalent to 12.3% of the overall gain. So, xie-xie China, we’re all (a lot!) better off thanks to you.
All? Here’s the dis-benefit. As the authors so delicately put it ‘..we find adverse employment effects of Chinese imports in exposed country-industries,..’. This isn’t new but the authors’ suggestion on how to deal with it is perhaps something for policy-makers to more urgently consider. They don’t advocate a specific response but suggest instead governments help the adversely affected by ‘..easing workers’ transition between jobs and industries.’
My two pennyworth; if nativism, ascendant from Catalonia to Charlottesville, is to be better addressed a more focused dialogue on easing that worker transition is required (Hil., dubbing some voters ‘deplorable’ was, ahem, a mistake).
Besides, the lower skilled in developed economies have no time for highfalutin arguments about TFP progress. They do though have time to vote; which many recently in the U.S. did in favor of their idea of a better TFP outcome. TFP, in that case, the less obviously beneficial acronym of Trump For President.
You can access the paper in full via this link Trading With China.
Happy Sunday.