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Published online by Cambridge University Press:  24 February 2010

Richard Baldwin
Affiliation:
Graduate Institute of International Studies, Geneva
Daniel Cohen
Affiliation:
Université de Paris I
Andre Sapir
Affiliation:
Université Libre de Bruxelles
Anthony Venables
Affiliation:
London School of Economics and Political Science
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Summary

There is something paradoxical in the attitude of international trade economists in the ‘trade and jobs’ debate. Most international economists would argue that trade did not matter much in determining the economic (mis)fortunes of unskilled workers in industrial countries, thereby denying the empirical and policy relevance of the very same theory that is covered at length in most of the standard textbooks on trade. When, however, trade economists turn to the developing countries case, they typically conclude that openness is a major determinant of the wellbeing of unskilled workers, with protectionism being a source of substantial inequality. Adrian Wood's previous research on industrial countries has contributed significantly to redress this imbalance, by arguing on the basis of a modified net factor-content approach that trade with developing countries can have sizable distributional effects in industrial countries. This should solve the paradox and re-establish the symmetry in the effects of trade between industrial and developing countries. This is not the end of the story, however. In this new piece of research, Adrian Wood collects extensive empirical evidence to show that quite often trade liberalisation has a negative impact on unskilled workers even in developing countries. We have come full circle, with the paradox simply reversed.

That trade liberalisation may have the opposite effects to those predicted by the standard H–O–S theory does not certainly come as a surprise to theorists. It is not difficult to build models, fully rooted in factor-endowment theory, where trade can lead to an income fall for the supposedly abundant factor.

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Publisher: Cambridge University Press
Print publication year: 1999

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  • Discussion
  • Edited by Richard Baldwin, Graduate Institute of International Studies, Geneva, Daniel Cohen, Université de Paris I, Andre Sapir, Université Libre de Bruxelles, Anthony Venables, London School of Economics and Political Science
  • Book: Market Integration, Regionalism and the Global Economy
  • Online publication: 24 February 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511599118.013
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  • Discussion
  • Edited by Richard Baldwin, Graduate Institute of International Studies, Geneva, Daniel Cohen, Université de Paris I, Andre Sapir, Université Libre de Bruxelles, Anthony Venables, London School of Economics and Political Science
  • Book: Market Integration, Regionalism and the Global Economy
  • Online publication: 24 February 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511599118.013
Available formats
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Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • Discussion
  • Edited by Richard Baldwin, Graduate Institute of International Studies, Geneva, Daniel Cohen, Université de Paris I, Andre Sapir, Université Libre de Bruxelles, Anthony Venables, London School of Economics and Political Science
  • Book: Market Integration, Regionalism and the Global Economy
  • Online publication: 24 February 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511599118.013
Available formats
×