Introduction and Overview

Abstract

It has been argued that recent developments in international integration are historically large and have unprecedented characteristics (OECD, 2007). While the value of international trade in goods and cross-border investment has continued to grow somewhat faster than global GDP, three key developments distinguish this episode of globalisation from those observed in the past. First, the entry of China and India into the world economy has had a huge impact on the potential global supply of labour. Second, rapid developments in information and communications technology have allowed firms to trade more intermediate inputs and hence ‘fragment’ their production process. This fragmentation of production has also allowed the trade in a vast range of services which were previously regarded as non-tradable. Third, migration into almost all OECD economies has increased, with migrants making up a significantly larger proportion of the working-age population.