Trade liberalization, employment and global inequality

Abstract

Trade liberalization is popularly seen as responsible for growing international economic inequality, adverse trends in employment and low- skilled wages in industrialized countries, and lowered global labour standards. Analysing data on employment and trade between Japan and the United States and six large developing countries, the author concludes that growing international economic inequality is attributable not to trade liberalization but to factors such as non-liberalization of trade in agricultural products, and poorer economies' inadequate infrastructure and dependence on exporting primary commodities. The global net effect of international trade on overall employment is positive, and helps raise labour standards in developing countries.