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Brock and Dobbelaere (2003) demonstrate that wage price competition from overseas reduces wages in the developed world, even when jobs are maintained.
However, international trade based on comparative advantage should also create opportunities and indeed it does. The reallocation of resources to improve efficiency means that less manual labor is conducted in the West because on a comparative basis Western nations perform better at innovation, and at knowledge-intensive businesses in general. This is because we have better access to education and to information, and our cultures are more attuned to innovation and entrepreneurship than perhaps is the case in other parts of the world. International trade means that our knowledge can be used to earn money all over the world, whereas for most of the 20th century it was likely that most firms in the West earned most of their money in the West. Today one video game impresario can have his company move him to Beijing to start an entire studio based on his ideas and Chinese labor. Thus, on an individual level international trade can be seen either as a threat or an opportunity. On an aggregate level, however, international trade is a net positive, because an economy that works more efficiently will invariably create more opportunities than it does threats, because there are more opportunities for synergies between inputs when people, goods, services and capital can come together more freely.
Works Cited:
Brock, E. & Dobbelaere, S. (2003). Has international trade affected workers' bargaining power? LICOS Discussion Paper No. 13603.
Harrison, a. & McMillan, M. (2011). Offshoring, international trade, and American workers. National Bureau of Economic Research Reporter No. 4: Research Summary. Retrieved May 13, 2012 from http://www.nber.org/reporter/2011number4/harrison.html
Works Cited:
Brock, E. & Dobbelaere, S. (2003). Has international trade affected workers' bargaining power? LICOS Discussion Paper No. 13603.
Harrison, a. & McMillan, M. (2011). Offshoring, international trade, and American workers. National Bureau of Economic Research Reporter No. 4: Research Summary. Retrieved May 13, 2012 from http://www.nber.org/reporter/2011number4/harrison.html
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