Exports good, imports bad?

When analysing international trade, the usual refrain of exports good imports bad is what students learn to be the most preferred position as this leads to an improvement of the current account balance, greater injections in terms of export revenue, job creation and thanks to the multiplier and further rounds of spending a disproportionately higher rise in GDP.

In class this week, my A2 students looked at the argument that increased import penetration destroys jobs and concluded that yes, jobs are destroyed but only in certain industries. In the west, low skilled low tech jobs have been lost to countries which have an abundance of cheap labour and can produce these type of goods at a fraction of the cost. Okay so jobs have been lost in the short term but as this blog post argues, “what trade does is move jobs around, away from areas in which we don’t have a comparative advantage into areas where we do.”

The video below is an excellent example of how, out of the ashes of America’s low skilled manufacturing industries, a high tech high skilled industry as risen to replace it. This is where the US is now developing a comparative advantage. Of course these skill sets are not easy to find and this poses the next challenge, is the US education system producing people with the necessary skills this sector needs and what is the private sector doing in terms of training?

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