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Reevaluating Openness to Trade: Estimating the True Potential Gains from the Service Industry

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Chicago Policy Review
In “The Tradability of Services: Geographic Concentration and Trade Costs,” Antoine Gervais and J. Bradford Jensen create a methodology to address this information gap and find that not only are many service industries as tradable as manufacturing, but the positive welfare impact of liberalizing services, or lowering their barriers to trade, is also likely highly underestimated. This finding has the potential to considerably weaken arguments against trade liberalization and is further evidence of the United States’ capacity to maintain global competitiveness due to its ability to produce at a lower cost in skill-intensive industries.