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Trade, Development, and Inequality

The most powerful underlying force driving increased inequality is not trade by itself but skill-biased technological change.

published by
Current History
 on October 28, 2015

Source: Current History

To trade or not to trade? Judging by the narrow vote by the US Congress in June 2015 to grant President Barack Obama fasttrack negotiating authority for trade agreements, the answer today remains in the affirmative, as it has for decades—but resistance is on the rise. According to the many opponents of such deals, trade is a bitter medicine to be taken only in small doses while guarding carefully against its dangerous side effects. If new trade deals are to go ahead at all, the critics say, they should include strict safeguards, such as provisions to uphold environmental and labor standards, and penalties for currency manipulation. Although the trade debate in the United States, the architect of the postwar global trading system, tends to draw the spotlight, the hand-wringing over trade is even more intense in the developing world. Since developing countries protect their home markets more comprehensively than the United States does, the stakes in their trade debates are higher...

This article was originally published in Current History.

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