Globalisation, Comparative Advantage and the Changing Dynamics of Trade

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20 oct 2011
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9789264113084 (PDF) ; 9789264113077 (imprimé)

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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.

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Ouvrir / Fermer Cacher / Voir les résumés Table des matières

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  • Foreword
    The aftershocks of the 2008-2009 financial and economic crisis continue to shake the world economy. While GDP, trade and investment have grown in each period since the second quarter of 2009, growth rates have not returned to their pre-crisis levels. Perhaps the most enduring impact of the crisis is the erosion of confidence in financial markets and economic governance. Concerns persist regarding the long-term effects of the extraordinary measures taken in response to the crisis, public debt sustainability, and financial and property markets volatility. Unemployment across the OECD area remains above 8% and youth unemployment is expected to reach 18% at the end of the 2011.
  • Breaking through on trade
    Integration of industrialised and emerging market economies through international trade and investment has been one of the major factors shaping the global economy in recent decades. Technological advances leading to reductions in trade and communication costs and pro-market reforms reducing policy-induced costs in both industrialised and emerging economies have narrowed the divide created by natural and man-made barriers. They have also enabled more efficient specialisation and greater unbundling of the production process across national borders (OECD, 2006; OECD, 2009).
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  • Ouvrir / Fermer Cacher / Voir les résumés Is comparative advantage still relevant today?

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    • Comparative advantage
      Three approaches that have been used empirically, each represented in this volume, are reviewed in this chapter to provide information about the patterns and causes of comparative advantage. Revealed comparative advantage, factor content of trade and the gravity model of trade each provide useful information, even if none of them is capable of fully delineating either the nature of comparative advantage or its causes. They can illuminate comparisons across countries that may be suggestive of directions for further research.
    • Production, consumption and trade developments in the era of globalisation
      This chapter characterises broad trends in production, consumption and trade over the past thirty years across the OECD and selected emerging market (SEM) countries and sets them in the context of economic and social events pertinent to international commerce. It provides a background for the more nuanced analyses of trade specialisation and its underlying drivers that follow in the subsequent chapters of this volume.
    • Comparative advantage and export specialisation mobility
      This chapter elaborates on the concept of comparative advantage and its role in economic policy and discusses its measurement, in particular with reference to the Revealed Comparative Advantage (RCA) indices. It investigates cross-sector and crosscountry patterns and evolution of RCA indices for a group of 56 OECD and selected emerging economies (SEM) countries at a detailed level of product classification, covering trade in agricultural and manufactured products. In order to link export specialisation developments to some of the posited sources of comparative advantage, it classifies products according to their factor intensity which distinguishes between: primary, natural resource-intensive, unskilled labour-intensive, technology-intensive and human-capital intensive products.
    • 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.
    • Have changes in factor endowments been reflected in trade patterns?
      This chapter measures trade flows in terms of their factor content to determine if this approach still has relevance for understanding trade flows. It first discusses the Heckscher-Ohlin theory, given its focus on explaining trade in terms of a country’s relative factor content. The chapter goes on to briefly examine trends in relative endowments among OECD and selected emerging economies before turning to issues of measurement. Finally, an analysis of the United States and China factor content of trade, shows how the inclusion of intermediate imports affects relevant trade balances. The chapter concludes by offering some policy considerations.
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  • Ouvrir / Fermer Cacher / Voir les résumés What kind of policies support a dynamic comparative advantage?

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    • Comparative advantage and trade performance
      This chapter establishes the relative importance of different sources of comparative advantage in explaining trade, with particular focus on policy and institutional factors. The policy and institutional areas shown to be important determinants of comparative advantage include physical and human capital accumulation (especially secondary and tertiary education), financial development, the business climate, as well as a number of aspects of labour market institutions. The results suggest that comparative advantage has been — and is likely to be in the future — relatively more important for North-South and South-South trade. Overall, the chapter concludes that when seeking to maintain or develop competitiveness in a certain area, it is best develop an effective broad policy approach.
    • The role of intermediate inputs and equipment imports in dynamic gains from trade
      This chapter examines the impact of the import of intermediate inputs and capital goods on firm-level productivity. It also systematically explores the specific impacts of nontrade, or complementary, policies on firms’ ability to realise dynamic gains. Access to skilled labour is a particularly important policy variable with respect to the import of intermediate goods, followed by access to finance, while macroeconomic stability slightly outranks access to finance for capital goods importers. The importance of access to finance has particular policy significance given the wide-spread financial reforms being discussed or underway.
    • Determinants of diffusion and downstreaming of technology-intensive products in international trade
      The patterns of trade for a broad category of technology-intensive products, including advanced technology products (ATP), are analysed for a group of 15 economies in Asia, Europe, and the United States. This chapter finds that the degree of downstreaming is highly sector- and product-specific. For example, there has been more downstreaming of electronics than chemicals, of consumer electronics than electronic components, and of certain basic chemicals than specialized products, such as photographic film and cosmetics. The chapter also discusses the roles of technology, national and sectoral innovation systems, government policies, and other factors in shaping the degree of diffusion and downstreaming.
    • Intellectual property reform and productivity enhancement
      For a broad sample of OECD countries, this chapter considers empirically the relationship between change in the protection of intellectual property rights (IPR) between 1990 and 2000 and the evolution of technological achievement, as well as the relationship of such achievement to change in labour productivity. The core assessment proceeds via regression analysis using a two stage approach and national level data. The results point to a positive and statistically significant relationship between indicators for protection of patent and trademark rights and technological achievement. The relationship between such technological achievement and labour productivity was positive and significant in certain specifications.
    • The impact of export restrictions on raw materials on trade and global supply
      Export restrictions on raw materials accentuate the challenge of supplying raw materials in a world market context of sharply rising commodity prices. The economic effects of export restrictions are overwhelmingly negative. By diverting exports to domestic markets, export restrictions raise prices for foreign consumers and importers while increasing global uncertainty and negatively affecting investment in extraction and production. Timely and accurate information about government policy is a necessary condition for predictability of supply and risk management in production. This paper presents preliminary findings from an ongoing OECD initiative attempts to contribute to improved transparency by constructing an inventory of export restrictions on critical raw materials.
    • Comparative advantage and structural change
      This chapter outlines a pragmatic framework for the structural policies needed to complement trade liberalization within the context of comparative advantage. Its recommendations are eclectic — ranging from efforts to identify key areas of market failure to policy experiments and the analysis of successful past experiences in developing institutions and infrastructure. The goal is to strengthen an economy’s ability to maximise benefits attendant from specialising in comparative advantage industries, while providing support to facilitate structural adjustment and ensure that the benefits from structural change are widely shared. The tools recommended are in turn based on strategies that can be (and often have been) implemented by governments subject to the usual political, informational and capacity constraints.
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