Trade For You Too: Why is trade more important than you think?



Lars Nilsson et al. | European Commission


This paper highlights the importance of international trade to economic prosperity based on recent economic evidence. It shows how EU trade policy supports the three key principles of the European Commission’s ‘Trade for All’ strategy. Communicating these results in a more meaningful way can ensure a wider audience, and help dispel some of the myths around globalisation and trade liberalisation. Building a successful communication strategy needs to be based on macro and micro level evidence, presenting results through data visualisation and infographics.

International trade is a part of everyone’s life. Whether it is the fruit we have at breakfast or the electrical devices we use, our daily routine depends on complex trade flows and production processes scattered across multiple countries and are hardly noticed by the final consumer. To cater for a globalized economy, thousands of companies around the world sign business deals every day, either as exporters or importers. Trade flows have evolved over time and are becoming increasingly intricate, with countless parts and components crossing multiple borders at different stages of production along global supply chains, before reaching the final consumer. These “globalisation examples” provide a quick snapshot of the realities of world trade, as it happens. But is this multifaceted reality fully accounted for in trade theories and well reflected in the statistical and analytical support available to trade policy makers?

The importance of international trade to economic prosperity is well documented and has been acknowledged for centuries. Countries open up to trade because it gives them the incentive to produce what they are relatively better at producing. This in turn leads them to import goods and services that other countries are more efficient in producing. Trade also leads to downward pressure on consumer prices and greater product variety for importing companies and consumers. Over time, openness to trade allows ideas and technologies to flow more freely and encourages innovation and productivity growth.

Trade is therefore a powerful source of economic, technological and even societal change. However, trade can also sometimes be disruptive and lead to adjustments costs. These costs are often felt in certain regions and sectors, while the benefits of trade, although larger in overall magnitude, can be more diffuse. Sometimes these benefits are so diffuse that they are dismissed by opponents of trade as purely theoretical propositions that do not materialise in reality. This makes the political economy debate around trade challenging.


[To view the original report, click here]

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