Trade Adjustment Costs in Developing Countries: Impacts, Determinants and Policy Responses

This book summarizes the state of knowledge in the economic literature on trade and development regarding the costs of adjustment to trade openness and how adjustment takes place in developing countries. The contributions by leading experts look at: - the magnitude of trade adjustment costs in the presence of frictions in factor markets; - the impacts of trade shocks and greater trade openness; - the factors that affect the way trade, especially exports, adjust; - trade adjustment assistance programs in the US and compensation schemes for farmers in the EU. The book will be relevant to academics, students, policy-makers and trade practitioners alike. Too often, policymakers avoid more open trade because they fear the adjustment costs, while proponents of such open trade overlook or dismiss them. This comprehensive set of papers takes these costs seriously and helps us appreciate where both sides go wrong. It provides an extremely useful survey of what we know and what we still need to know if the benefits from trade are to be more widespread within developing countries. - Robert Lawrence, Albert L.Williams Professor of International Trade, Harvard Kennedy School Trade expansion generates huge potential gains to developing countries, but it may also produce pains to specific socio-economic groups. This volume by world-renowned trade and labour experts offers the first comprehensive assessment of how trade adjustment takes place in developing countries, what its costs are and how policy can help mitigate them. As such it is an important and timely contribution to the debate on the costs and benefits of globalisation for developing countries. - Andre Sapir, Professor of Economics, Solvay Brussels School of Economics and Management, and former Economic Advisor to the President of the European Commission