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The Economic Perspective: “Gains from Trade”

This is Mary Walden with economist MW welcoming you to the economic perspective.  Today’s program looks at gains from trade.  Mike, the country is currently engaged in a trade dispute with China.  But beyond the details of the disagreement is the broader question of what countries gain from trade.  Do we have any evidence for gains from our trade with China?

  • Conceptually, countries trade for two reasons – either another country has products we don’t have, or that country can make products cheaper than we can
  • A new study for the US trade with China finds about 2/3’s of our trade is based on obtaining lower cost products, and 1/3 is based on obtaining new products
  • Overall the researchers found our trade with China reduced the annual US inflation rate for consumer goods by about 10%
  • But two caveats to these findings
  • One – hard to control for quality
  • Two – are US workers who lose their jobs retrained?
  • I’m MW

 

Mary:  And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.