… is from footnote 12 on page 215 of David Autor’s, David Dorn’s, and Gordon Hanson’s August 2016 Annual Review of Economics paper, “The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade “:
In a many-country world, there is no necessary connection between bilateral trade and bilateral capital flows.
DBx: There is much in this paper with which I disagree. For example, the authors wrongly treat any increase in a country’s trade (or current-account) deficit as an increase in the indebtedness of the denizens of that country. But because Autor, et al., are now rather famous in policy circles for spritzing with cold water the standard economic case for free trade, it’s especially telling that even these economists apparently (and quite correctly) would dismiss as demagoguery the current attempts in the United States to demonize countries such as China and Germany on the basis of these countries having bilateral trade surpluses with the United States.