Trade – along with the accompanying fears over foreign competition, job loss and reduced wages – is a hot issue for the US presidential campaign and elections elsewhere. Ajai Gaur and Ram Mudambi, professors of international business strategy at Rutgers University and Temple University, analyze four fallacies associated with trade, globalization and manufacturing in advanced economies. Manufacturing jobs are no longer the basis of US prosperity. “Most advanced economies have become primarily service economies,” they explain. “Rich countries are service economies, focused on finance, engineering, design and health care, and this is dictated by their comparative advantage.” Also, imports do not make a country poor, and the most competitive companies both import and export to attract foreign investment and capital. Foreign firms can provide immense benefits for the economies of other nations, and the global supply chain allows domestic firms to become exporters by proxy without the risks of international activity. Gaur and Mudambi urge politicians to reject the fallacies and citizens to make informed decisions before voting.
http://yaleglobal.yale.edu/content/four-fallacies-about-trade-and-globalization?utm_source=YaleGlobal+Newsletter&utm_campaign=a8acc36c6b-Newsletter9_14_2010&utm_medium=email&utm_term=0_2c91bd5e92-a8acc36c6b-207760089
