WASHINGTON, March 19 (Xinhua) -- Rapid growth in emerging economies is part of the solution to U.S. economic problems rather than their source, and international trade only accounts for a small share of U.S. manufacturing job losses, two economists said on Tuesday.
The proposition made by Lawrence Edwards and Robert Lawrence at an event hosted by the Washington-based Peterson Institute for International Economics (PIIE) contradicted some popular ideas, as free trade agreements and the surge in U.S. foreign direct investment in emerging markets have sparked fears of job losses and other negative economic effects in the United States.
Although many critics held that the decline in U.S. manufacturing jobs has been caused by trade and "off-shoring" of jobs, University of Cape Town professor Edwards and PIIE senior fellow Lawrence argued that the decline reflects a shift in U.S. domestic demand away from spending on goods and faster productivity growth in the U.S. manufacturing sector.
Trade and investment strategies that encourage growth in emerging markets will continue to be beneficial for both the United States and its trading and investment partners for the foreseeable future, the two economists said at the event releasing their new book entitled "Rising Tide: Is Growth in Emerging Economies Good for the United States?"
"Developing country growth has therefore contributed toward faster U.S. export growth, an increase in the variety of imports available to Americans, and higher terms of trade associated with any given trade balance," contended the two authors.
The rising imports are a healthy "sign of recovery" of the U.S. economy, as a major chunk of these imports are capital goods and intermediate goods that fuel U.S. economic growth, said Lawrence, a former member of U.S. President Bill Clinton's Council of Economic Advisers.