Globalisation and the ladder of development


Published 19.07.23

Does international trade always push countries up the ladder of development?


Read "Globalization and the Ladder of Development: Pushed to the Top or Held at the Bottom?" by David Atkin, Arnaud Costinot and Masao Fukui here.

A popular metaphor about development is that countries sit at different rungs of a ladder, each associated with a different set of economic activities. As countries develop, they become more capable, move up the ladder, and start to produce and export more complex goods. In this episode of VoxDevTalks, David Atkin discusses his work with Arnaud Costinot and Masao Fukui which studies the relationship between international trade and development using this "ladder" framework. They find that while countries can specialise in "good" sectors that are conducive to growth, these sectors face more foreign competition. This implies that rather than pushing countries up the development ladder, opening up to international trade tends to hold many of them back, as it pushes them towards "bad" sectors with fewer positive spillovers which have less competition. David outlines what policymakers can take from these findings, and what they might mean for different regions.