Globalisation, Comparative Advantage and the Changing Dynamics of Trade
The effects of globalisation have been at the forefront of public debate in recent years, fuelled on the one hand by the large benefits of integrated markets, and on the other hand, by the detrimental adjustment effects often experienced by many economies as a result. Knowing how trade has been evolving over time and the role policy has played in this evolution are critical to understanding the globalisation debate and grasping the lessons for future policy development. The comparative advantage hypothesis has been suggested as one of the principal explanations of international trade and of the benefits associated with openness. It has also provided the intellectual underpinnings for most trade policy in the past 50 years. This book collects OECD work that builds on recent contributions to the theory and empirics of comparative advantage, putting particular emphasis on the role policy can play in shaping trade.
Changing patterns of trade in processed agricultural products
This chapter is split into two parts. The first part focuses on monitoring recent trends in the trade of processed agricultural products and examines the leading exporting and importing countries of processed products. The second part examines which countries have a comparative advantage in exporting processed products and how these may have changed over time. Utilising information on comparative advantage and the methodology from Hausmann, Hwang and Rodrik (2007), the study assesses whether a country’s export basket matters in generating growth.