INTERNATIONAL ECONOMICS...
The United States’ openness to the global economy can be measured by the cross-border flows of goods and services (trade); of capital (foreign direct investment and other types of financial assets); and of people (immigration). By some of the most central measures, depicted in the figures below, US disengagement from globalization has been significant, particularly in comparison to the general trend in and behavior of other large high-income democracies.
Former President Donald J. Trump may have pursued that decoupling with his policies discouraging offshoring of US manufacturing and imposing tariffs on imports. But the trend of US deglobalization began with US administrations well before Trump took office in 2017.
The figures also illustrate that these successive US governments’ efforts to protect selected domestic workers by insulating them from the global economy have already failed—the US workforce is no better off, and in many ways worse off, than other advanced democracies, which increased their openness to the global economy at the same time: Labor force participation in general and for women in particular is lower; manufacturing jobs have declined as a share of employment at the same rate; and labor earnings as a share of GDP have followed the same path.
In his newly published article “The Price of Nostalgia: America’s Self-Defeating Economic Retreat” in Foreign Affairs, the bimonthly journal published by the Council on Foreign Relations, Adam S. Posen argues that making life better for American lower-income workers depends on the United States reopening to global economic cooperation and integration. The figures below showing signs of the deteriorating US role in the world economy were adapted from research for that article.
The figures also illustrate that these successive US governments’ efforts to protect selected domestic workers by insulating them from the global economy have already failed—the US workforce is no better off, and in many ways worse off, than other advanced democracies, which increased their openness to the global economy at the same time: Labor force participation in general and for women in particular is lower; manufacturing jobs have declined as a share of employment at the same rate; and labor earnings as a share of GDP have followed the same path.
In his newly published article “The Price of Nostalgia: America’s Self-Defeating Economic Retreat” in Foreign Affairs, the bimonthly journal published by the Council on Foreign Relations, Adam S. Posen argues that making life better for American lower-income workers depends on the United States reopening to global economic cooperation and integration. The figures below showing signs of the deteriorating US role in the world economy were adapted from research for that article.
A common way to measure a country’s openness to trade is to add imports and exports in goods and services and divide the sum by its GDP. The larger the ratio, the more the country is integrated into international trade. Once seen as a force driving increased global trade openness, the United States is now lagging behind international trade expansion, more so since 2000.
Global trade—i.e., total world exports plus imports of goods and services—increased from 38.8 percent of world GDP in 1990 to 60.8 percent in 2008. The United States has not kept up with this trend, however: US trade as a share of its GDP has risen more slowly than that of other countries, from 19.8 percent in 1990 to 29.9 percent in 2008 (panel a). The gap between global and US trade as a portion of the respective GDPs thus increased from 19.0 percentage points in 1990 to 30.9 percentage points in 2008 (panel b).
Global trade as a share of world GDP plunged during the global financial crisis but has recovered slowly since then. US trade as a share of its GDP also plunged but after a short rebound has continued to fall. This decline expanded the difference between global and US trade openness to 34 percentage points in 2019, the largest gap in half a century. TO READ ENTIRE ARTICLE, CLICK HERE...
Global trade as a share of world GDP plunged during the global financial crisis but has recovered slowly since then. US trade as a share of its GDP also plunged but after a short rebound has continued to fall. This decline expanded the difference between global and US trade openness to 34 percentage points in 2019, the largest gap in half a century. TO READ ENTIRE ARTICLE, CLICK HERE...
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