Since 1995, productivity in the United States has grown substantially faster than in other advanced industrial countries. For example, a recent study by van Ark and Inklaar (2005) indicates that while productivity in the United States accelerated after 1995, average productivity in Europe actually decelerated--indeed, they estimate that the trend in the fifteen countries that made up the European Union before 2004 has been decelerating since the mid-1980s...
Increased trade liberalization, which lowers barriers to the international flow of goods, financial capital, and direct investment, also spurs innovation and creativity....
I draw two conclusions from this work. First, trade liberalization appears to have made it possible for multinational firms to institute highly efficient cross-border supply chains within their firms that seem to have allowed them to boost significantly the efficiency of their worldwide operations. Second, U.S. firms, on average, have more flexible and innovative business practices, sometimes called organizational capital, that a liberalized trade regime apparently allows them to transfer to their foreign operations.