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

"A rising tide lifts all boats," John F. Kennedy declared in 1963, yet many Americans, including a number of economists, believe that free trade agreements and the growth of developing economies have come at the expense of American manufacturing jobs and living standards. In this study, Edwards (economics, U. of Cape Town, South Africa) and Lawrence (trade and investment, Harvard U., US) challenge these beliefs, finding that the decline in manufacturing employment is driven more by a combination of a shift in domestic demand away from goods and faster productivity growth in manufacturing and not primarily by trade imbalances and that the association between employment growth and import growth is positive (even if international competition is responsible for some worker displacement). They further find that manufacturing trade has improved US nonoil terms of trade and increased product choices and therefore has not reduced US living standards, because economic specialization has made US and developing country growth complementary and not competitive. Annotation c2013 Book News, Inc., Portland, OR (booknews.com)

Robert Z. Lawrence was a senior fellow and also the Albert L. Williams Professor of Trade and Investment at the John F. Kennedy School of Government at Harvard University. He served as a member of President Clinton's Council of Economic Advisers from 1999 to 2000. He held the New Century Chair as a nonresident senior fellow at the Brookings Institution between 1997 and 1998.

Lawrence Edwards is a professor at the School of Economics, University of Cape Town, and research associate at the South African Labor and Development Research Unit (SALDRU) and Policy Research on International Services and Manufacturing (PRISM). His research interests focus on the effects of international trade on labor, determinants of trade flows, and trade policy.