Global trade integration reshapes production networks, boosting technology and welfare.
The article explores how trade between countries affects the way firms connect with each other to produce goods. By studying trade data between the US and the rest of the world, the researchers found that trade integration can change the structure of global production networks. This can lead to technological advancements and welfare gains. Moving away from trade to self-sufficiency could result in a loss of about 4.11% in welfare, with a significant portion of this loss coming from changes in how firms are linked together.