Evaluating the Impact of Trade on Development

Brian Sturgess & Oni Oviri

Published: March 2018

The main conclusions of the theory of comparative advantage is powerful and inescapable – restrictions on trade harm economic welfare. The principle of comparative advantage shows that trade enables one-off welfare gains, but the impact of international trade on prosperity and on economic growth and development are empirical questions. The balance of evidence suggests that opening economies to trade is associated with higher growth, improved welfare, lower corruption and better working conditions. Restrictions on trade damage the development prospects of poorer countries which require assistance with infrastructure to enable them to realise the benefits from integration into the world economy.