Trade and development

Trade and Structural Adjustment: Embracing Globalisation


This book identifies the requirements for successful reallocation of labour and capital to more efficient uses in response to the emergence of new sources of competition, technological change and shifting consumer preferences. At the same time, it focuses on limiting adjustment costs for individuals, communities and society as a whole. 

Based on case studies of sectors such as agriculture, textiles, steel and information technology, Trade and Structural Adjustment: Embracing Globalisation includes analysis of the adjustment challenge and policy framework in both developed and developing countries, together with practical recommendations.

Complete Executive Summary

Summary of Contents

Part I. Structural Adjustment: Challenges and Policy Responses

Chapter 1. The Adjustment Challenge

This chapter sets the scene for the present study, identifying sectors, in both developed and developing countries, which are expected to face adjustment challenges in the future and examining for each of these sectors the underlying forces at work and the nature of the adjustment challenges. The eight sectors chosen for particular attention are agriculture, fisheries, textiles and clothing, steel, shipbuilding, motor vehicles, health services and international sourcing of information technology and business process services.

Chapter 2. The Domestic Policy Framework

This chapter examines structural adjustment in OECD member countries with possible policy responses. Structural change, as measured by the rate of change in sectoral employment patterns, is a strong and ongoing process, although it has not accelerated over the past few decades. Structural change in employment patterns takes place to an increasing extent between broad industries within the service sector, as shifts of employment from goods-producing sectors to services have tapered off.

Chapter 3. Trade and Structural Adjustment: Towards Good Practice

This chapter seeks to identify elements of good practice in domestic and trade policy, for both developed and developing countries. These elements are drawn from the case studies in Chapters 4-11 and the analysis in Chapter 2. In tackling the challenge of structural adjustment, all countries, developed and developing alike, albeit with differing degrees of emphasis, will benefit by adopting at the national level: macroeconomic policies that promote stability and growth; labour market policies that improve workforce skill levels and facilitate a smooth transfer of resources from declining to expanding activities; an efficient regulatory framework; a strong institutional and governance framework; and liberal trade and investment policies that support structural adjustment by contributing to growth, innovation and competitiveness.

Part II. Sectoral Case Studies

Chapter 4. Agriculture

This chapter examines cases of trade and structural adjustment in agriculture. Starting with a cross-country case study analysing potential changes in relative prices and factor returns that might accompany widespread reductions in agriculture and non-agriculture trade protection, it surveys examples of agricultural products in specific countries: trade in avocados in Mexico and the United States, the dairy industry in Australia, the agrofood sector in Chile, the cut flower industry in Kenya, and agricultural reform in New Zealand.

Chapter 5. Fisheries

This chapter examines cases of trade and structural adjustment in fisheries. It surveys fisheries in Denmark, with a focus on the fish harvesting and processing sectors, and the seafood industry in Thailand. It illustrates challenges relating to declining fish stocks on the supply side and increasing market integration on the demand side.

Chapter 6. Textiles and Clothing

This chapter examines cases of trade and structural adjustment in textiles and clothing. It surveys experience in Bangladesh, Colombia, Lesotho, Mauritius, the United States, Australia and the Slovak Republic. The case studies offer examples of producers in both industrialised and developing countries which have used the decade of phase-out of Multi-fibre Arrangement quotas by 2004 as an opportunity to prepare and adjust and have taken steps to reduce trade barriers in different ways.

Chapter 7. Steel

This chapter examines cases of trade and structural adjustment in steel. It surveys experience in the European Union and the United States. Structural adjustment has posed ongoing challenges to the steel industry which has struggled with at least one deep crisis in each of the recent decades. To support the industry, governments frequently applied restrictive trade measures during such crises. These, together with other government support (such as subsidies), served to sustain global overcapacity, which, in turn, distorted steel trade.

Chapter 8. Shipbuilding

This chapter examines cases of trade and structural adjustment in shipbuilding. It surveys experience in the European Union, Japan and Australia. Structural adjustment policies in Europe (both member states and the European Commission) were based on two pillars: reduction of capacity in recognition of structural deficiencies in shipbuilding (i.e. persistent overcapacity); and facilitating industry efforts to nurture new sources of competitiveness, via aid for modernisation and upgrading.

Chapter 9. Motor Vehicles

This chapter examines cases of trade and structural adjustment in the motor vehicle sector. It studies the experience of four countries i.e. one developing country (South Africa), one country in transition (Poland) and two industrialised countries (Australia and Japan). In spite of the many differences, these countries share three common characteristics: i) the automotive industry is important in all; ii) each has recently faced a major adjustment challenge in the sector; and iii) the approaches taken in meeting these challenges bear certain similarities.

Chapter 10. Health Services

This chapter examines cases of trade and structural adjustment in health services. It surveys two cases: Mexico/United States and Japan-Philippines/Thailand. Trade in health services can help to ease structural adjustment pressures but may also exacerbate them. There are both opportunities (increased efficiency, variety and availability of services) and risks (increased shortages of health-related services in the domestic system). The case studies underline the potential for mutually beneficial trade in health care over the long run, particularly between developed and developing economies.

Chapter 11. International Sourcing of IT and Business Process Services

This chapter examines international sourcing of information technology and business process services and the case for adjustment in major markets. It provides country case studies of the United States, the European Union and India as well as corporate case studies of IBM and Infosys Technologies.


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