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News Release

Globalization Increases Wages, Productivity, and Growth of American Firms, Workers, and Communities

October 11, 2001

Contact:    J. David Richardson    (202) 328-9000

Washington, DC—A large number of Americans who have chosen to link to the global economy enjoy benefits that otherwise similar Americans do not, according to Why Global Commitment Really Matters! by Howard Lewis III and J. David Richardson. The principal findings of this new research include:

  • Jobs and sales in globally engaged American firms grow more strongly and stably.
  • Their workers are 5 to 20 percent better paid and more productive.
  • Their employment and market shares grow over time, by several percent per year, rejuvenating entire industries in the process.
  • The communities in which the globally engaged firms and workers locate also experience higher wages and productivity.

The new research also shows that a variety of forms of global activity, such as foreign investment and technology transfer, yield many of the same benefits as had been revealed earlier for exports. The patterns of higher wages, productivity, and growth also:

  • characterize Americans involved with inward and outward global investment—Americans who are linked in various ways to corporate parents, partners, and affiliates abroad;
  • seem to characterize Americans who depend on imports for productivity-enhancing components and capital equipment; and
  • characterize foreign as well as American firms, workers, and communities who commit to global engagement.

The new research also suggests that the future may be bleak for Americans and others who are unwilling or unable to engage in the global economy. But many of them may benefit from sensible new government policies that empower them to do so, and thus help them to share the significant gains from deeper global integration.

The report demonstrates, for example, why the United States should push forward with new trade negotiations in the World Trade Organization (WTO) and in various regional and bilateral forums, and why the US Congress needs to pass Trade Promotion Authority (TPA) as soon as possible. It also demonstrates the pressing need for policies in both the public and private sectors to ensure that managers and workers have the necessary training and skills. Passage of Trade Adjustment Assistance (TAA) is an obvious first step but the United States also needs to consider new programs of wage insurance, as proposed by Lori Kletzer in Job Loss from Imports: Measuring the Costs, and to look at ways of encouraging the innovative public-private job training initiatives that are springing up around the country.

About the Authors

Howard Lewis III, visiting fellow since April 2000, directed the international trade department at the National Association of Manufacturers for over ten years. He has worked on international trade and US export policy issues in a variety of positions since coming to Washington in 1975.

J. David Richardson, senior fellow, is also professor of economics in the Maxwell School of Citizenship and Public Affairs at Syracuse University. He has written extensively on trade and international economic policy issues including Global Competition Policy and Competition Policies in the Global Economy, both with Edward M. Graham (1997), Why Exports Matter: More! (1996), and Why Exports Really Matter! (1995), both with Karen Rindal, and Sizing Up U.S. Export Disincentives (1993).

About the Institute

The Institute for International Economics is a private, nonprofit research institution for the study and discussion of international economic policy. The Institute, directed by C. Fred Bergsten, provides fresh analyses of key economic, monetary, trade and investment issues and recommends practical policy approaches for strengthening public policy toward these important topics. The Institute receives funding from a large number of private foundations and corporations.