Chart of the Week: Major Benefits of Free Trade

Nations that embrace international trade enjoy significantly stronger economies, achieve lower rates of hunger, and maintain a better stewardship of the environment, according to new data published by Heritage for the forthcoming Index of Economic Freedom.

There are, of course, other factors that contribute to such positive trends. But international trade undoubtedly plays a major role in determining the success of a nation and its economy. Contrary to the claims that “unfair” foreign competition hurts the jobs at home, the unemployment rate actually fares better in times of higher trade deficits. Bryan Riley and former Ambassador Terry Miller provide further clarification:

When the trade deficit increases, the unemployment rate decreases, and vice versa. For example, in 2009, the U.S. trade deficit shrank by 46 percent, and the unemployment rate increased by 60 percent.

Many critics of trade deals such as NAFTA and the WTO agreement argue that free trade benefits big multinational corporations and “the rich” at the expense of everyone else. In fact, poverty rates are much lower in countries with low trade barriers than in those where trade is restricted.

According to Riley and Miller, even poverty rates are lower with increased trade deficits:

Many critics of trade deals such as NAFTA and the WTO agreement argue that free trade benefits big multinational corporations and “the rich” at the expense of everyone else. In fact, poverty rates are much lower in countries with low trade barriers than in those where trade is restricted.

It adds up to this: Limited regulations on trade expand the economy and improve the well-being of both a nation’s citizens and its environment. With a lagging U.S. economy still bound by the recession, the expansion of trade is as important today as ever before. Trade can make everyone better off.

Daniel Nelson is currently a member of the Young Leaders Program at The Heritage Foundation.

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Source material can be found at this site.

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