Public support for freer trade has eroded in the wake of the economic crisis, slow and uneven growth, and increased unemployment; some people are advocating a return to protectionist type policies. While the desire to be “protected” is understandable, it is also unfounded; but simply asserting this is not convincing. By working with nine other international organisations to compile available evidence on how trade openness, along with complementary labour market and social protection policies, have contributed to economic growth and new job creation, a more unified, coherent and convincing case can be made. And our evidence is clear: open economies grow faster than closed ones; no country has ever grown in the long run by restricting trade; and active labour market and social protection policies help to ensure that the benefits are widely shared .
Popular wisdom would also suggest that “exports are good and imports are bad”. Again, this is demonstrably not true. The reality is that you need to import in order to export. By systematically disentangling traditional trade data to identify where value is added, we can paint a clearer picture of where income is generated, where jobs are created, and how large bilateral trade imbalances are. Most trade today is in intermediate inputs. Increasingly, with the emergence of global value chains, firms import world class inputs that enable them to improve their productivity and competitiveness. Closing markets will in effect destroy the jobs that countries want so much to maintain.
Producing the evidence-based policy advice is only a start; getting the message to the right people at the right time, and informing the wider public, requires tapping into all corners of today’s information and communications world.
©OECD Observer No 293, Q4 2012