Table of Contents

Handbook on Trade and Development

Handbook on Trade and Development

Edited by Oliver Morrissey, Ricardo Lopez and Kishor Sharma

This Handbook comprehensively explores the complex relationships between trade and economic performance in developing countries. Insightful chapters cover issues such as trade, growth and poverty reduction; trade costs, facilitation and preferences; sub-Saharan Africa’s reliance on trade in primary commodities, informal cross-border trade, agglomeration and firm exporting; imported technology, exchange rates and the impact of firm exporting; the increasing importance of China in world trade and links between FDI and trade. This Handbook provides an essential overview of trade issues facing developing countries.

Chapter 1: Introduction

Oliver Morrissey, Ricardo A. López and Kishor Sharma

Subjects: development studies, development economics, economics and finance, development economics, international economics


Globalization has become a dominant feature of the world economy since at least the 1980s. Global capital and trade flows have grown far faster than global income, as measured by Gross Domestic Product (GDP), so that individual countries are now more integrated in the global economy that at any time since the end of the second World War. International migrant flows have also increased significantly, as have the associated flows of remittances back to the sending countries. Trade has been central to globalization, as fragmentation of production has supported increasing importance of multinational firms and associated flows of foreign direct investment (FDI), while widespread trade liberalization has reduced barriers to trade. Significant trade liberalization has been implemented at the country (unilateral), bilateral (free trade agreements), regional (through numerous integration agreements) and global level, the latter under the auspices of the World Trade Organization (WTO). This process has motivated research on the impact of globalization in general, and trade in particular, on growth, incomes and poverty. The focus of this volume is on trade and trade policy reform from the perspective of developing countries. The standard economic argument is that increased global trade flows would benefit developing countries through increased demand for their exports using relatively unskilled labour with which they are well endowed. Trade liberalization encourages increased trade with each country specializing in goods in which it has a comparative advantage.