"Efforts to suppress open markets and globalisation through protectionism will not work," said Dudley, the president and chief executive of the Federal Reserve Bank of New York.
He was delivering the keynote address at a function organised by the US-India Business Council, the industry lobby CII and the BSE, on 'Benefits and Challenges from Globalisation' here.
Dudley, an influential voice on the US central bank's policy direction, offered a strong defence of open trade borders and said, "Countries need to compete better, not compete less. Trade barriers are a very expensive way to preserve jobs in less competitive or declining industries.
Speaking out against protectionism, he warned it can have "a siren-like appeal". "Viewed narrowly, it may be potentially rewarding to particular segments of the economy in the short-term but viewed more broadly, it'd almost certainly be destructive to economy overall in the long-term.
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Reeling out numbers to show that global economic integration has increased dramatically in recent decades, he said trade has grown from nearly 40 per cent of global GDP in 1990 to 57 per cent in 2015, and FDI has increased from roughly 10 per cent of global GDP to 34 per cent.
Though Trump has softened his protectionist rhetoric to some extent, concerns still remain over his threat to slap a border trade tax and the potential for costly trade wars, especially with China with which the US has a gaping trade deficit, Dudley said, adding "while much of Asia has benefited from more open trade relationships, the gains also reflect back to US shores."
"Consumers can benefit from lower prices, higher real incomes and greater variety and quality of goods and services," he said, adding protectionism won't secure these.
What is needed is not protectionism but stronger programmes to help displaced workers, Dudley said, adding that putting up trade barriers to protect jobs will only result in global trade wars that will hurt the global economy more.
"We also need to do better in preparing workers to deal with the challenges of globalisation and technological change," he said.
From US perspective, he said access of American companies to some foreign markets and protection of intellectual property rights (IPRs) deserve closer attention.
"But, in addressing these issues, we should take care to preserve the vital benefits of trade to higher standards of living in both advanced and emerging market economies. The focus should be on further strengthening an open trade regime," he said.
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