This increase in labor productivity can occur due to a few factors such as specialization which forces workers to focus on similar repetitive tasks to increase production. Another form of increased labor productivity arises from the new technologies and knowledge that free trade brings to the home country. This new knowledge can take the form of new and faster production processes and better capital, which increase production. Or it may come from increased foreign competition, which forces domestic producers to improve their production processes in ways that make their products cheaper in order to be competitive. The experience of European Union (EU) countries shows that a 1% increase in economic openness leads to a 0.6% increase in labor productivity the following year (Luxembourg, 2014 ). This article shows a definitive link between trade openness and increased labor productivity. This is because as the European Union or any country in general becomes more open, with more free trade, there is more openness to information and technology passing through by the country. This new knowledge and information can be transformed into more innovations and technological advancements, leading to increased labor productivity in the long term.