President's Blog

Global trade matters

One of the points that I emphasized last week at The Global Entrepreneurship Export Exchange (E3)  in Washington D.C. is that universities have an integral role to play in educating and developing a new kind of global leader, one who can help build bridges of understanding and partnerships to drive economic prosperity and solve some of our most pressing problems.

Here are some other thoughts that I shared with the group of business leaders and government officials:

  • The world has never been wealthier and healthier than it is today. During my own lifetime, extreme poverty has gone down from about 50% of the world population to less than 10%. Globally, per capita income has grown 10 times, from less than $1,000 to more than $10,000. And life expectancy has gone up by 25 years, from 50 to 75.
  • These improvements have benefited billions of people, not only in developing countries, but also in the richer parts of the world. Over my lifetime, life expectancy in the U.S. has gone from 60 to 80 years and, per capita income, from $5,000 to more than $50,000.
  • Technology has played a key role in this historic improvement in life conditions. Not only the Internet and mobile technology, but vaccines, antibiotics, clean water and agricultural innovation among many other advances.
  • But key among those innovations is the construction of institutional systems that enable international trade. Free trade zones like NAFTA or the EU, bilateral trade agreements, and multilateral institutions like the World Trade Organization, have made it easier than ever to sell goods and services to customers around the world who need them and value them the most. And global financial institutions have made it easier for capital to be deployed in places where it can be most productive.
  • Global trade today has reached a historic record of 60% of GDP, up from 25% when I was born in 1967. Without global trade, the world would not be as healthy or as wealthy as it is today. And while there are losers in trade, the winners far outnumber them.
  • The United States has not been a victim of global trade. It has been its main driving force and one of its foremost beneficiaries. It has been the leading importer and exporter, it is the source of the biggest stock of foreign direct investment and the recipient of the biggest stock of FDI from other countries. Even today, the U.S. still ranks number one in imports and FDI stock (in both directions), and ranks second in exports.
  • Technology and trade have reduced economic inequality across countries but have increased inequality within countries. Left unaddressed, increased domestic inequality can and has threatened social support for trade. It can indeed be politically convenient to blame international trade for local issues. But protectionism is bound to make those issues worse, not better.
  • Universities have a central role to play in educating a new kind of global leader, entrepreneurial individuals who can build connections across cultures, find creative ways to leverage commonalities or bridge differences to create economic value, and contribute to the well-being of all parties involved.
  • In Being Global (my 2012 book with Gregory Unruh), we offered some ideas of the core competencies to drive a more inclusive and sustainable form of globalization: Global mindset, global entrepreneurship and global citizenship.