Abstract
In light of the current economic developments after the 2008–2009 global financial crises and the political turmoil following the uprisings in the Middle East and North Africa (MENA), South–South dynamics and trade in services have become center of the attention for businessmen, policy makers, academicians and practitioners.
Increasingly, every indicator, from the least formal, such as the ever increasing number of Google search hits, to the most established, such as the titles of several panels dedicated to the topic in the International Development Conference 2011 at the Kennedy School of Government, points to the attention the South–South momentum is attracting.
Both South–South trade dynamics and the increasing trend in services trade have significant labor market implications, especially for developing countries. As the composition of trade diverges from traditional sectors and the familiar North–South axis, the demand for labor is affected considerably. The relatively higher value-added and skill requirements of services trade is counter-balanced by still relatively less value-added trade in the South–South domain.
The purpose of the chapter is to start a promising, but highly challenging research exploration in a phenomenon increasingly shaping the new map of trade, globalization and labor mobility. In addition to presenting new trends in international trade, the chapter also investigates the recent literature on labor market implications of these trade moves and makes very basic and intuitive predictions utilizing standard trade theory.
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Notes
- 1.
There are also many differences within South itself, with major countries like China, India and Brazil driving these trends. Aggregating all of these countries under the title of “South” may be a simplification, but the author believes it is also useful to give a snapshot of the greater picture and a continuum of the literature which often refers to developing and developed countries as two well-defined separate groups.
- 2.
Development in Trade 2010, The World Bank.
- 3.
OECD.
- 4.
Part of this growth comes from intermediate goods as a result of increased outsourcing and off-shoring activities initiated in the North.
- 5.
IMF DOTS. North refers to developed countries and North–North trade to the trade among developed countries.
- 6.
International Trade Forum, Shifting Markets, Issue 2, 2010.
- 7.
The expansion of the middle class in the South has contributed to this process.
- 8.
Francois and Hoekman (2010).
- 9.
See “Factor Price Equalization Theorem” for details.
- 10.
PTAs, which can enhance South-South trade, can slow down regional integration if they act as substitutes to regional trade agreements. A careful study is needed to fully assess the dynamic and static effects of a PTA.
- 11.
There are additional benefits of North-South trade, such as technology transfer.
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Erbil, C. (2014). New Trends in International Trade and Labor Market Interactions: South–South Trade, Trade in Services and Labor Market Implications. In: Dereli, T., Soykut-Sarica, Y., Şen-Taşbaşi, A. (eds) Labor and Employment Relations in a Globalized World. Contributions to Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-04349-4_1
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