Myth-busting: Why 3-D printing might actually be good for trade

Is 3-D printing a trade killer? In an era of growing concern over technology’s impact on manufacturing jobs, this is an emotionally charged question.

3-D printing brings production closer to consumers, enables faster and cheaper production of goods, and promotes customization. Because of these benefits, many argue that it could usher in a future in which fewer and fewer goods are traded internationally. That would be a grim future: it would kill opportunities for the type of export-led growth that has driven development for so many countries. But are such fears warranted?

To get to the bottom of these questions, we recently took an empirical look at exactly how 3-D printing is affecting trade. Our subject? Hearing aids. Why hearing aids? This is an industry that was completely reinvented in a short time in the mid-2000s -one company shifted to 3-D printing in less than 500 days. What was once a time-intensive nine-step process that involved casting molds and detailed sculpting work by multiple artisans and high-skilled workers is now surprisingly fast. A hearing aid can now be completed in just three steps: scan, blueprint, and print. What was once a bulky, stigmatized, and uncomfortable item to wear is now small, inconspicuous, and customized for each individual ear.

So how did this new production process transform trade in the hearing-aid industry? Our research shows that following the introduction in 3-D printing in 2007, exports of hearing aids increased by roughly 60 percent over nearly a decade.  We also observed that innovation helped make hearing aids less expensive—by 20 percent in the US, for instance. When we study the impact on imports, we find that the introduction of 3-D printing led to a 116 percent increase in imports of hearing aids by developing countries, benefiting people in these countries who suffered from hearing loss. 

Figure: A first look at trade data suggests that 3D printing boosted trade in hearing aids. The chart below shows that after 2007, when production was shifted to 3-D printing, trade in hearing aids increased more than other categories of products.  

What we didn’t find is perhaps more important: We found no evidence that 3-D printing displaced trade.  Countries that were already producing hearing aids leveraged the technology to produce and export even more of them. Countries that did not produce hearing aids started importing more of them. We also found some new exporters entering the fray—including China, Vietnam, and Mexico.

But this is just one specialized industry. Is it a special case? Or can these results be applied to trade in general? To answer this, we considered what is unique about hearing aids: their small size. Finished hearing aids are light and easy to ship to customers regardless of where they are located. We wanted to find out if these effects would be limited to similar-sized products. We researched 35 other products which are at least partly 3-D printed. On average, with 3-D printing, trade also increased in these products. But the impact was less pronounced for heavier products.  

Our research turned out to be a bit of a myth-busting exercise. While it might be instinctual to worry about trade diminishing as a result of 3-D printing, it appears that for the foreseeable future at least, the ability to produce more of something at a lower price and in a shorter timeframe actually helps generate trade—not kill it.

 We talked with Chad Bown and Soumaya Keynes about this in a recent episode of their podcast Trade Talks. To find out more, listen to the podcast or download our paper.