Globalisation, Comparative Advantage and the Changing Dynamics of Trade

image of 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.



Breaking through on trade

How a changing world dynamic affects policy

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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