How Imports Boost Employment

MEXICO CITY – According to today’s populists, “good jobs” in US manufacturing have been “lost” to competition from imports and preferential trading arrangements. But this narrative does not fit the facts, because imports create jobs, too.

For starters, many jobs are directly connected to trade. Think of the longshoremen who load and unload cargo, the pilots and crews who transport goods by air, the truckers who do so by land, and the wholesale and retail workers who stock and sell those goods.

Second, imports often provide cheaper inputs than what is available in the United States, which enables American manufacturers to compete better with foreign firms in export markets, and to maintain their share of domestic markets. Third, foreign direct investment (FDI) helps American companies acquire some inputs at less cost, while engaging in more research and development and other activities.

Last but not least, exporting to the US gives foreigners more income with which to buy imports from the US and other countries. Because export-industry jobs usually require more valuable skills, and thus pay more than jobs in industries that compete with imports, the additional exports generated by imports create better jobs overall.