IMF WEO: No anti-trade arguments here

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Clive Crook reports on the IMF’s World Economic Outlook:

The IMF splits globalisation into two components of economic openness: trade and foreign investment. Trade openness actually tends to reduce inequality and financial openness tends to increase it, the report finds. For the developing countries, the two roughly cancel out: their net effect is slightly pro-equality. For the rich countries, the balance is anti-equality: the disequalising influence of cross-border investment outweighs the equalising influence of trade. So although these numbers do provide a rationale of sorts for curbing cross-border flows of investment – harmful as that would be for growth – they offer no support for trade barriers. There is nothing here for the anti-trade lobby. Trade barriers inhibit growth and worsen inequality, in rich countries and in poor countries, says this report.

Read the full column, titled “End global inequality: become a Luddite,” to learn of Crook’s frustration with coverage of reactions to the report.

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