Globalization, Comparative Advantage and the Changing Dynamics of Trade

The effects of globalization have been at the forefront of public debate in recent years, fueled by the considerable benefits of integrated markets and by the detrimental adjustment effects that often accompany them. Knowing how trade has been evolving over time and the role policy has played in this evolution are critical to understanding the globalization 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. The hypothesis, which states that two countries will both benefit from trade if they have different costs for producing the same goods, has also provided the intellectual underpinnings for most trade policy in the past fifty 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.