U.S. Share of World Economic Growth: Implications for U.S. Trade Policy

Between 1980 and 1985, the U.S. accounted for 24.6% of world economic growth. Since then, 2 distinct periods emerge, with the millennium being the break point. Until 2000, U.S. share fluctuated around a very slight downtrend. U.S. share of world economic growth was still 24.1% from 1995 to 2000. Since 2000, U.S. share has dropped at an annual rate of around -0.7 percentage point per year. U.S. share was 12.6% of world growth between 2012 and 2017. A common measure of a country’s economic size is its gross domestic product, but arguably a more important measure is its contribution to world economic growth.Economics has clearly established that free trade increases economic growth. However, free trade also produces losers, specifically firms and their workers who do not have competitive advantage.Economics has clearly established that a factor, such as freer trade, which spurs economic growth leads to even more growth. While less than the initial growth, the additional growth can be notable.As the U.S. role in world economic growth has shrunk, its share of freer trade’s additional growth has shrunk. This dynamic has changed the math of the U.S. position on freer trade.When the U.S. share of world economic growth was larger, it could consider whether it might take a smaller initial share of the benefits of freer trade since it was a major beneficiary of the additional world growth. Since its share of additional growth is now smaller, the U.S. is likely to focus more on capturing a larger share of the initial benefits of freer trade.