Congressional Brief: Trade
International trade — the essence of globalization — allows people, regions and nations to specialize in the production of what they do best, to enjoy economies of scale in production and to buy more cheaply those things that others do best. Freer trade — reduced tariffs, regulations and restrictions — stimulates growth and efficiency by allowing domestic producers to concentrate their resources on areas in which they have a comparative advantage over foreign producers, thereby reducing their real costs and increasing their competitiveness.
- It is the exception, not the rule, to find a country or area where international trade has not grown faster than its gross domestic product at one point or another during the last 50 years.
- Most of the “growth miracle” cases — Japan, Taiwan, Korea, Brazil, Spain, Portugal, Greece, Singapore,
Hong Kong, Thailand, Malaysia, Indonesia, China and now India — have experienced such episodes of
export-led growth. The opening of these economies to freer international trade was an important factor.
- Economists Jeffery Sachs and Andrew Warner examined the trade policies of 117 countries over 20 years and found that the rate of economic growth was three to six times higher in open economies than in closed ones.