Human Machine Interface / Control Systems

Did trade with China make U.S. manufacturing less innovative?

By Walter Frick for the Harvard Business Review

Dec 12, 2016

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In early 2016 economists David Autor, David Dorn, and Gordon Hanson published an influential paper that highlighted some of the costs of global trade. They reviewed the literature and reported that trade with China had cost the U.S. as many as one million manufacturing jobs since 1999, had lowered wages, and had not led to the new jobs and industries that trade proponents had promised.

The main case for trade, though, was always that it would improve overall welfare by allowing a greater variety of products to be produced more efficiently. Last week the same economists plus two coauthors published new research that complicates the story, finding that U.S. manufacturers exposed to competition from Chinese imports became far less innovative.

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