Introduction

Trade shapes and directs the world. In the modern economy, we witness how trade liberalization has hugely contributed to world economic growth over the last 70 years. In one of the main economic ideas contained in the Ricardian model, dating back to 1817, is the observation that “a country’s comparative advantage is essentially labour productivity that determines the pattern of world trade” (Ricardo 1817). Paul Krugman (1994) reiterates that “productivity is not everything, but in the long run, it is almost everything”. Modern trade literature stresses how trade liberalization affects growth and productivity by improving firm productivity, either through competition or access to better quality or lower-priced inputs. Trade also affects real wages and the wages of skilled labour relative to those of unskilled labour and this will affect employment creation and movement of labour.