Libertarian Twitter trumpeted the publication of a new study this week on the positive effects of “service imports” on Finnish businesses. Like its cousin, manufacturing imports, service imports move companies to import the skills of service workers or export tasks abroad. The study finds these shifts increase firm competitiveness and accelerate demand for higher skill levels among technical workers and managers.
It is important to understand why free-traders were so enthusiastic in their reception of the study. The authors examined the impact of service imports on the Finnish economy between 2002 and 2012 and analyzed employment impacts in the manufacturing and services sector. They also looked at the employment outcomes by worker education level and occupation (see chart below). They found that service imports had increased 300 percent over the 10 year period to about 5 percent of total Finnish GDP. The authors put this growth in context by noting that the so-called “China Shock” on the U.S. manufacturing sector was about 2 percent of GDP. In other words, over the 10 year period of the study, the Finnish labor market experienced a massive influx of overseas service-sector and service-occupation talent.
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