Project Syndicate: How Imports Boost Employment

Trade – even imports – creates jobs in many ways, explains Anne Krueger, a former World Bank chief economist and a senior research professor of International Economics. Jobs include those associated with ports and retail sales as well as foreign direct investment. Companies that save money can direct more effort to innovation and R&D, and with the most efficient goods and services available, consumers can direct their funds to other endeavors. Foreign-made automobiles still require maintenance and repair, and foreign-made smart phones and pads require service contracts. “Low-cost imports, rather than ‘destroying’ Americans’ jobs, actually sustain them,” Krueger writes. “And when companies can expand as a result of their improved competitiveness at home and abroad, they create even more jobs. But if firms must purchase higher-cost domestic inputs, they will have to reduce their profits…. With reduced profits, they will be less likely to expand and hire more workers….” Protectionism reduces exports along with imports as other nations retaliate or no longer can afford to purchase foreign goods. Krueger contends that increased productivity has reduced manufacturing and other jobs as some workers increase their speed, skills and responsibilities, and she concludes that discouraging productivity is a sure path to poverty. – YaleGlobal