In Pop Internationalism, Krugman defends international trade. Several ideas are put forward. The shrinking in manufacturing sectors (and its related jobs) has domestic causes, in particular the growing share of the sectors of services in the GDP. International trade with low-wage countries has nothing to do with this. The United States buys most of its imports from other advanced countries, whose workers have similar skills and wages. Imports are not so much greater than exports in the United States. While foreign competition can reduce domestic income through the terms of trade effect, it had negligible effect on the United States notably because importation represents a small share of the U.S. GDP. A country tends to export more when his relative advantage is greater than the other countries. Comparative (rather than absolute) advantage is only what matters; that is, a country with lower productivity than another country in all of his…
View original post 18,470 more words
Utopia, you are standing in it! 
Recent Comments