Trade liberalisation in developing countries

Nina Pavcnik (Dartmouth College and CEPR) presented on “International Trade, Firms and Jobs: Perspectives from Emerging Economies” as part of the monthly seminar series on “Policy Implications of Recent Globalization Research”. In her presentation, Nina Pavcnik explored the recent expansion of global trade and trade liberalisation in developing countries. She concluded that increasing international trade is not the main reason for increased wage inequality in developing countries. Nevertheless, trade policy has implications for employment and poverty. Nina Pavcnik highlighted four important observations from research. First, it matters for workers in which firm they work, with better performing firms paying higher wages and being better able to withstand negative effects from trade shocks. Second, the link between trade and informality is important, with large shares of informality in developing countries and important shifts occurring between the informal and formal sector (and vice versa) following trade liberalisation. Third, trade has geographically concentrated effects, meaning that effects are often highly unequal within countries. Lastly, Nina Pavcnik pointed out that trade liberalisation has long-term effects, suggesting that it is relevant to understand how labour and capital adjust to liberalisation over time.

The recordings of past seminars from the series can be found here.

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