NCPA - National Center for Policy Analysis


May 30, 2008

Endless campaign rhetoric over the number of American jobs lost to free-trade policies have obscured any news about jobs created by foreign trade, says The American.  Economists agree only 11 percent of overall manufacturing job losses between 2000 and 2003 were a result of trade -- and falling exports, not rising imports -- were responsible.

A recent study by economists Andrew B. Bernard of Dartmouth's Tuck School of Business, J. Bradford Jensen of Georgetown's McDonough School of Business and Peter K. Schott of the Yale School of Management, examines "globally engaged" American companies that trade goods.  The economists find numerous benefits for companies engaging in free-trade:

  • Trading firms increase employment more rapidly than non-trading firms between 1993 and 2000.
  • The average firm that opens up to trade between 1993 and 2000 experiences employment growth of close to 100 percent.
  • Exporters over this period increase their employment by 94.3 percent, from 2.9 million to 7.4 million.
  • Between 1993 and 2000, the number of workers "employed by a firm that was directly engaged in the international trade of goods" jumped from 38.1 million to 49.7 million- more than one-third of America's entire civilian workforce.
  • Firms that become importers or switch into both importing and exporting experience similar increases.

However, the economists say companies that retreat from trade during this period suffer financial difficulties:

  • Firms that quit exporting, quit importing, or quit both importing and exporting witness declines of 12.3 percent, 16.6 percent, and 10.1 percent, respectively.
  • The average firm that quits trading over this period experiences a decline of 10 percent.

Source: "The Great Trade Debate," The American, May/June 2008.

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