In our globalized economy, expanding the size of the market not only means more customers, it also means more competition for U.S. consumers’ dollars, a greater variety of products and services, increased access to intermediate goods, and more opportunities for supply chain collaboration, innovation, and so on. When trade barriers come down, the factory floor can span borders and oceans, enabling production to be organized in new and more efficient formats, leading to more value creation and greater wealth.
Globalization means that companies have growing options with respect to where and how they produce. So governments must compete for investment and talent, which both tend to flow to jurisdictions where the rule of law is clear and abided; where the business and political climate is stable; where the specter of asset expropriation is negligible; where physical and administrative infrastructure is in good shape; where the local work force is productive; and where there are limited physical, political, and administrative frictions.
To ensure continued progress, our globally integrated economy requires policies that are welcoming of imports and foreign investment and that minimize regulations or administrative frictions based on some vague or ill-defined “national interest.” Policies that reduce barriers throughout the supply chain–from product or service conception to consumption–should be embraced.
On this page you will find Cato’s work on cross-border investment, transnational supply and value chains, and global interdependence.