09/12/2004 7:22:27 am
American Gains From Globalisation. In the latest edition of The Economist, an interesting new paper from the Institute for International Economics is described. It attempts to calculate the size of the gains of past and future globalisation for the US, an important topic during these days of discussion about offshoring of jobs and protectionist tendencies. And for a country like Sweden, which is smaller and very dependent on foreign trade, the argument gets even stronger. A study cited in the paper suggests that trade has boosted consumer?s purchasing power in the US by 2,8 % of GDP a year, or $300 billion, since World War II. This is due to the greater product variety brought by free trade. Increased competition leads to an additional yearly gain of 5,8 % of GDP. Taking the average of all the estimates in the cited studies, the conclusion is that the American economy is about $ 1 trillion better off today thanks to global integration. When the same techniques are used to estimate the future gains of further liberalisation, the result end up between $ 450 billion and $ 1,3 trillion. A safe estimate is said to be that the average American household would gain about $ 4500 a year.