Question

As the United States has opened up to trade, it has lost many of its low-skilled manufacturing jobs, but it has gained jobs in high-skilled industries, such as the software industry. Explain whether the United States as a whole has been made better off by trade.

Answer 1

Answer: The United States is better off

Explanation: Although jobs have been lost in the import competing industries, demand for skilled labor has driven up wages for these workers. The United States is relatively inefficient.

Answer 2

The United States has been made better off by trade. International trade benefits all countries, because the winners are more numerous than the losers.

While it is true that some manufacturing jobs have been lost due to globalization, it is also true that many more jobs have been gained, specially in the service sector, some of them being well better paid than previous manufacturing jobs.

The reason why all countries gain from international trade is that international trade allows each country to specialize in what they do best, something that is known as comparative advantage.