Globalization often gets painted as a tug of war where one side's gain feels like another's loss. But a new study published this year by the U.S. National Bureau of Economic Research turns that idea on its head, showing that as emerging giants rise, everyone can win.
Accommodating Emerging Giants in the Global Economy, by Zhuokai Huang, Benny Kleinman, Ernest Liu, and Stephen J. Redding, analyzes six decades of global trade and productivity data from 1960 to 2020. It asks: what happens when economies like the Chinese mainland outpace advanced economies such as the United States? The answer is clear: even as the United States' share of global GDP falls, U.S. welfare rises, meaning Americans become richer in real terms.
The mechanism behind this result is simple. When emerging economies boost productivity, they expand global production possibilities – leading to lower prices, more variety, and more efficient supply chains. U.S. consumers enjoy cheaper goods, and U.S. firms benefit from cost-effective inputs and access to larger markets. Relative rankings may shift, but living standards improve.
Consider clothing: over the past six decades, the real price of apparel in the United States has plunged, making fashion, durable children's wear, and activewear affordable for households across all income levels. These savings effectively raise real incomes, especially for low- and middle-income families.
The same trend applies to appliances and electronics. Refrigerators, washing machines, microwaves, smartphones, and televisions are not only cheaper but more reliable than they were a generation ago – thanks in part to global supply networks where the Chinese mainland plays a central role.
By lowering the cost of everyday items, globalization delivers tangible welfare gains. The NBER paper captures these benefits at scale, showing that expanding trade and productivity lifts standards of living rather than merely reshuffling economic shares.
For young global citizens, entrepreneurs, and changemakers, this insight highlights the value of cooperation in a connected world. As debates over trade policies continue, remember: globalization is not a zero-sum game – it's a pathway to shared prosperity.
Which everyday product do you think has become more affordable thanks to global trade? Share your thoughts in the comments below!
Reference(s):
cgtn.com
