Globalization is not a zero-sum game

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Perhaps nothing makes a better headline these days in the American press than China gains and America loses in globalization.

In the United States, China's rise is often remembered through the lens of factory closures, job losses, and community decline. This narrative is emotionally powerful, but it lacks fundamental evidence.

New research by Zhuokai Huang, Benny Kleinman, Ernest Liu, and Stephen J. Redding, published by America's National Bureau of Economic Research (NBER) and titled Accommodating Emerging Giants in the Global Economy, offers a more scientifically grounded perspective. The central finding of this paper is clear: Globalization, even when it reduces a country's relative economic standing, can still make that country absolutely better off. In short, globalization is not a zero-sum game.

Using six decades of global trade and productivity data from 1960 to 2020, the authors ask what happens when large emerging economies such as China grow faster than advanced economies like the United States. Their findings challenge popular intuition. As global trade frictions declined and emerging economies became more productive, the United States' share of global GDP fell. Yet at the same time, U.S. aggregate welfare rose. Americans became richer in real terms, even as America appeared relatively smaller in the global economic hierarchy.

The mechanism behind this result is straightforward and grounded in basic economic theory. When countries like China become more productive, they expand global production possibilities. This leads to lower prices, greater variety, and more efficient supply chains. American consumers benefit from cheaper goods, and American firms benefit from lower-cost inputs and access to larger markets. Relative income comparisons may shift, but Americans' living standards improve.

These abstract findings become much clearer when viewed through the lens of everyday American life. Consider clothing. Over the past several decades, the real price of apparel in the United States has fallen dramatically. Items that were once expensive or scarce – seasonal fashion, durable children's clothing, athletic wear – are now affordable to households across the income distribution. This is not a trivial gain. Lower clothing prices effectively raise real incomes, especially for low- and middle-income families who spend a larger share of their budgets on basic goods.

The same is true for household appliances and electronics. Refrigerators, washing machines, microwaves, smartphones, and televisions are vastly cheaper and more reliable than they were a generation ago. Many of these products rely on global supply chains in which China plays a central role, whether through final assembly or as an intermediate supplier. American households benefit every time they replace an appliance at a lower cost or access technology that was once considered a luxury. These welfare gains are precisely what the NBER paper captures in its aggregate analysis.

Yet despite this evidence, political rhetoric in America often frames globalization as a rigged game. Claims such as "China is taking advantage of globalization" or "developed countries inevitably lose when they trade with poorer ones" are not unpopular. These statements may resonate with some of the American public on a superficial emotional level, but they do not withstand scientific examination. The NBER research shows that China's productivity growth did not impoverish the United States; it expanded global output and increased U.S. welfare. Trade is not theft; it is exchange. Both sides participate because both expect to gain.

What these rhetorics reflect is not economic reality but political incentives. Losses from trade are concentrated and visible, while gains are dispersed and largely invisible. A closed factory makes headlines; lower prices at Walmart do not. Politicians respond accordingly, often amplifying zero-sum narratives to mobilize voters or justify protectionist policies. Economics, however, is not a branch of moral storytelling. It is an empirical discipline, and its findings consistently show that openness to trade raises overall welfare.

This is not to suggest that governments should abandon affected workers and communities. On the contrary, acknowledging that globalization creates net gains strengthens the case for better redistribution, retraining programs, and place-based policies. To confuse failures of domestic policy with failures of global integration is a failure itself.

In the end, respecting basic economic principles – and grounding trade debates in evidence rather than fear – creates space for dialogue instead of confrontation. In an era of rising trade frictions, the goal should be to build a more inclusive and resilient global economy, one that accommodates emerging giants not as threats, but as partners in creating a larger, more prosperous world for all.

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