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Four Fallacies About Trade and Globalization

October 27, 2016 //

(Republished with permission of YaleGlobal Online)

By Ajai Gaur and Ram Mudambi

Fox's Ram Mudambi
Fox’s Ram Mudambi
NEWARK, PHILADELPHIA – Trade typically figures prominently in U.S. presidential election, and 2016 is no exception. While campaigning, politicians tend to adopt anti-international business positions that are theoretically unsound and lack empirical evidence.

Four fallacies underline these common political arguments.

  • Fallacy 1: Manufacturing jobs are the basis of American prosperity.
  • Fallacy 2: Imports make us poorer.
  • Fallacy 3: Success of foreign firms always helps foreign countries, success of U.S. firms always helps the US economy.
  • Fallacy 4: To export, firms must sell to buyers in foreign countries.

For more from the Fox School’s Dr. Ram Mudambi on the ties between politics and international business, click here.