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The Payoff to America from Globalisation

24 Pages Posted: 5 Jul 2006  

Scott C. Bradford

Brigham Young University - Department of Economics

Paul L.E. Grieco

Pennsylvania State University - Department of Economics

Gary Clyde Hufbauer

Peter G. Peterson Institute for International Economics; Institute for International Economics

Abstract

This article summarizes the economic payoff to the United States from its postwar trade opening and estimates the potential future gains from more opening going forward. To quantify these gains, we survey different methodologies and estimates. We find that trade opening since World War II has added between $800 billion to $1.4 trillion to the US economy, or about $7,000 to $13,000 per household. More speculative estimates of the potential additional gains from removing the rest of US trade barriers range from $400 billion to $1.3 trillion, or about $4,000 to $12,000 per household. Since trade opening permanently raises national income, these gains are enjoyed annually. Trade opening inevitably entails adjustment costs. We estimate that the lifetime cost of all worker dislocations that have been triggered by expanded trade in the United States could be as high as $54 billion, although probably less. The permanent gains from past and potential liberalization easily swamp the modest sums necessary to alleviate the temporary pains of adjustment. In the future as in the past, free trade can significantly raise income and quality of life in America.

Suggested Citation

Bradford, Scott C. and Grieco, Paul L.E. and Hufbauer, Gary Clyde, The Payoff to America from Globalisation. The World Economy, Vol. 29, No. 7, pp. 893-916, July 2006. Available at SSRN: https://ssrn.com/abstract=914265 or http://dx.doi.org/10.1111/j.1467-9701.2006.00828.x

Scott C. Bradford (Contact Author)

Brigham Young University - Department of Economics

130 Faculty Office Bldg.
Provo, UT 84602-2363
United States

Paul L.E. Grieco

Pennsylvania State University - Department of Economics ( email )

University Park
State College, PA 16802
United States

Gary Clyde Hufbauer

Peter G. Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036-1903
United States

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