Defining the Future of Trade

Introduction & Context Trade by its very nature enables specialisation, exploits economies of scale, and generates competition in markets. This results in efficient allocation of resources and enhancement of productivity, which are at the heart of economic progress. Some highlights from recent studies on trade liberalisation and its impact on economic growth and development are as follows: • A 10 percent increase in trade openness reduced unemployment by 1.0 percent for a mix of developed and developing countries (Felbermayr et al, 2009). Trade liberalisation may lead to immediate increase in unemployment but employment-generation effect is felt with a time lag – unemployment declines by 3.50 percent three years after liberalisation. • In a comparative study on trade and employment generation in four countries, viz. Bangladesh, Kenya, South Africa and Vietnam, Sen (2008) found “Kenya and South Africa have been handicapped by a lack of active export promotion and the capital intensity of their exports. Asian countries have converted their export gains better into employment benefits as the composition of 1/2012