| Title | International trade since the Washington Consensus: the gains and the pains |
|---|---|
| Contributor | Dave Donaldson (author) |
| DOI | https://doi.org/10.31389/lsepress.tlc.d |
| Landing page | https://doi.org/10.31389/lsepress.tlc.d |
| License | https://creativecommons.org/licenses/by-nc/4.0/ |
| Copyright | Author(s) |
| Publisher | LSE Press |
| Published on | 2025-10-16 |
| Short abstract | Controversy has always swirled around ‘trade liberalisation’ – and perhaps more so than for any other policy on Williamson’s original Washington Consensus list. Anti-globalisation protests in the 1990s and early 2000s sharpened scepticism of the idea that developing countries could reliably grow if they opened their markets to foreign imports. And two decades later, globalisation remains as divisive as ever. This chapter discusses accumulating evidence that liberalising a nation’s international trade gives rise to substantial aggregate gains and yet also substantial costs of adjustment and displacement. However, the trade-off involved is no different from any other policy change that strives to raise aggregate efficiency. While there are no easy options for policymakers who must balance the gains and pains from trade, lessons from recent research offer tentative recommendations for policymakers who are evaluating the prospects of trade liberalisation and seeking to resolve the tension between aggregate gains and concentrated losses. This chapter includes responses to Dave Donaldson by Thomas Sampson and Anthony Venables. |
| Long abstract | Controversy has always swirled around ‘trade liberalisation’ – and perhaps more so than for any other policy on Williamson’s original Washington Consensus list. Anti-globalisation protests in the 1990s and early 2000s sharpened scepticism of the idea that developing countries could reliably grow if they opened their markets to foreign imports. And two decades later, globalisation remains as divisive as ever. This chapter discusses accumulating evidence that liberalising a nation’s international trade gives rise to substantial aggregate gains and yet also substantial costs of adjustment and displacement. However, the trade-off involved is no different from any other policy change that strives to raise aggregate efficiency. While there are no easy options for policymakers who must balance the gains and pains from trade, lessons from recent research offer tentative recommendations for policymakers who are evaluating the prospects of trade liberalisation and seeking to resolve the tension between aggregate gains and concentrated losses. This chapter includes responses to Dave Donaldson by Thomas Sampson and Anthony Venables. |
| Language | English (Original) |
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Dave Donaldson is the Class of 1949 Professor of Economics in the Economics Department at MIT. A native of Toronto, Canada, he obtained an undergraduate degree in Physics from Oxford University and a PhD in Economics from LSE. His research focuses on trade, both international and intranational, with applications in the fields of international economics, development economics, urban economics, economic history, environmental economics, and agricultural economics. He has studied, among other topics, the welfare and inequality effects of market integration, the impact of improvements in transportation infrastructure, how trade can mitigate and exacerbate the effects of climate change, and how economists can quantify market failures and the interventions (such as industrial policy) that attempt to fix them. He was awarded the 2017 John Bates Clark Medal as well as an Alfred P. Sloan Research Fellowship and several grants from the National Science Foundation. He has served as a co-editor at Econometrica and the American Economic Journal: Applied Economics, and is a fellow of the Econometric Society and a member of the American Academy of Arts and Sciences.
Thomas Sampson is an Associate Professor of Economics at LSE. He is also an Associate in the Trade programme at the Centre for Economic Performance, where he has worked extensively on the implications of Brexit for the UK economy. Thomas has a PhD in Economics from Harvard University and previously worked as an Overseas Development Institute Fellow at the Bank of Papua New Guinea.
Anthony Venables is a Senior Research Fellow at the University of Oxford and part-time Research Professor at Monash University, Melbourne. He is a fellow of the Econometric Society, the Regional Science Association International, and the British Academy. Former positions include Professor of Economics at Oxford University and at LSE, and chief economist at the UK Department for International Development. He has published extensively in the areas of international trade, spatial economics, natural resources, and economic development.