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Rising Tide: Is Growth in Emerging Economies Good for the United States?

Author

Listed:
  • Lawrence Edwards

    () (School of Economics, University of Cape Town)

  • Robert Z. Lawrence

    () (Peterson Institute for International Economics)

Abstract

In 1963, US President John F. Kennedy said that "a rising tide lifts all the boats. And a partnership, by definition, serves both parties, without domination or unfair advantage." US international economic policy since World War II has been based on the premise that foreign economic growth is in America's economic, as well as political and security, self-interest. The bursting of the speculative dot.com bubble, slowing US growth, and the global financial crisis and its aftermath, however, have led to radical changes in Americans' perceptions of the benefits of global trade. Many Americans believe that trade with emerging-market economies is the most important reason for US job loss, especially in manufacturing, and is detrimental to American welfare and an important source of wage inequality. Several prominent economists have reinforced these public concerns. In this study, Lawrence Edwards and Robert Z. Lawrence confront these fears through an extensive survey of the empirical literature and in depth analyses of the evidence. Their conclusions contradict several popular theories about the negative impact of US trade with developing countries. They find considerable evidence that while adjusting to foreign economic growth does present America with challenges, growth in emerging-market economies is in America's economic interest. It is hard, of course, for Americans to become used to a world in which the preponderance of economic activity is located in Asia. But one of America's great strengths is its adaptability. And if it does adapt, the American economy can be buoyed by that rising tide.

Suggested Citation

  • Lawrence Edwards & Robert Z. Lawrence, 2013. "Rising Tide: Is Growth in Emerging Economies Good for the United States?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 5003.
  • Handle: RePEc:iie:ppress:5003
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    Cited by:

    1. repec:bla:worlde:v:40:y:2017:i:2:p:314-335 is not listed on IDEAS
    2. Joerg Mayer, 2017. "How Could the South Respond to Secular Stagnation in the North?," The World Economy, Wiley Blackwell, vol. 40(2), pages 314-335, February.
    3. Thomas Kemeny & David Rigby & Abigail Cooke, 2015. "Cheap Imports and the Loss of US Manufacturing Jobs," The World Economy, Wiley Blackwell, vol. 38(10), pages 1555-1573, October.
    4. Robert Z. Lawrence & Lawrence Edward, 2010. "Do Developed and Developing Countries Compete Head to Head in High Tech?," Working Paper Series WP10-8, Peterson Institute for International Economics.
    5. Kamal, Fariha & Lovely, Mary E., 2017. "Import competition from and offshoring to low-income countries: Implications for employment and wages at U.S. domestic manufacturers," Journal of Asian Economics, Elsevier, vol. 48(C), pages 100-119.
    6. Lawrence Edwards & Robert Lawrence, 2010. "US Trade and Wages: The Misleading Implications of Conventional Trade Theory," Working Papers 180, Economic Research Southern Africa.
    7. Gary Clyde Hufbauer & Cathleen Cimino & Tyler Moran, 2014. "NAFTA at 20: Misleading Charges and Positive Achievements," Policy Briefs PB14-13, Peterson Institute for International Economics.
    8. Adrian Wood, 2017. "Variation in structural change around the world, 1985–2015: Patterns, causes and implications," WIDER Working Paper Series 034a, World Institute for Development Economic Research (UNU-WIDER).
    9. Arvind Subramanian & Martin Kessler, 2013. "The Hyperglobalization of Trade and Its Future," Working Paper Series WP13-6, Peterson Institute for International Economics.
    10. Robert Z. Lawrence & Lawrence Edwards, 2013. "US Employment Deindustrialization: Insights from History and the International Experience," Policy Briefs PB13-27, Peterson Institute for International Economics.
    11. Martin Neil Baily & Barry P. Bosworth, 2014. "US Manufacturing: Understanding Its Past and Its Potential Future," Journal of Economic Perspectives, American Economic Association, vol. 28(1), pages 3-26, Winter.
    12. Douglas L. Campbell, 2013. "Relative Prices, Hysteresis, and the Decline of American Manufacturing," 2013 Papers pca584, Job Market Papers.
    13. Francesca Barbiero & Michael Blanga-Gubbay & Valeria Cipollone & Koen De Backer & Sébastien Miroudot & Alexandros Ragoussis & André Sapir & Reinhilde Veugelers & Erkki Vihriälä & Guntram B. Wolff & Ge, . "Manufacturing Europe’s future," Blueprints, Bruegel, number 795.
    14. Robert Z. Lawrence & Tyler Moran, 2016. "Adjustment and Income Distribution Impacts of the Trans-Pacific Partnership," Working Paper Series WP16-5, Peterson Institute for International Economics.
    15. David H. Autor & David Dorn & Gordon H. Hanson, 2016. "The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 205-240, October.
    16. Robert Z. Lawrence, 2017. "Recent Manufacturing Employment Growth: The Exception That Proves the Rule," NBER Working Papers 24151, National Bureau of Economic Research, Inc.
    17. Theodore H. Moran & Lindsay Oldenski, 2014. "The US Manufacturing Base: Four Signs of Strength," Policy Briefs PB14-18, Peterson Institute for International Economics.
    18. Lorenzo Rotunno & Adrian Wood, 2015. "Wages and endowments in a globalised world," Economics Papers 2015-W11, Economics Group, Nuffield College, University of Oxford.
    19. Jonathan Haskel & Robert Z. Lawrence & Edward E. Leamer & Matthew J. Slaughter, 2012. "Globalization and U.S. Wages: Modifying Classic Theory to Explain Recent Facts," Journal of Economic Perspectives, American Economic Association, vol. 26(2), pages 119-140, Spring.

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