Trade (Global Inequality)

15 Pages 3675 Words

me countries. Expansion of trade is associated with the intensification of international competition. Enterprises in low-income countries often find it hard to withstand international competition and hence freer trade can have a negative effect on growth. A more subtle negative effect of trade is emphasised in the literature on endogenous growth. Trade could drive low-income countries to specialise in goods whose production brings no benefit in terms of learning-
by-doing effects or development of technological capability. Long-term growth prospects could thus be harmed rather than enhanced by trade in certain circumstances. (32) In the case of industrialised countries, these possibilities can be ruled out.
It is clear that there is no strong a priori presumption about trade improving or worsening inter-country and international inequality. In view of this, rather modest objectives are set for the analysis of this section. The search is for contingent empirical relationships. Does the available evidence suggest that trade had a positive impac...