Echanges

Trade and Economic Effects of Responses to the Economic Crisis

 

 

    
Publication date:
9 September 2010

 

 

 

Global trade fell by 12.5% in 2009, a collapse explained by factors such as a decrease in demand and the drying-up of trade finance. Although protectionism was not a major factor in this fall in trade, governments have faced pressure to implement protectionist policies and measures as a way of 'saving' domestic jobs and enterprises in the face of the economic crisis.

However, such measures would be counter-productive. Direct trade-restricting measures have the most negative impacts on growth and employment. An increase of $1 in tariff revenues results in a $2.16 fall in world exports and a $0.73 drop in world income.

This study argues that open markets will be necessary for a sustained economic recovery. It recommends that governments continue to resist protectionist pressures and work towards a level playing field for trade.

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See also:

 Trade, policy and the economic crisis
 How imports improve productivity and competitiveness
 Why open markets matter

 

 

 

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