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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.

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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.

English

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