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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.

English

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Comparative advantage

The theory behind measurement

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.

English

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