Foreign Trade, Wages, and Unemployment

World trade has increased about twice as rapidly as world output during the past two decades. Most countries have both become more open with respect to imports and have seen a sharp growth in imports (and hence exports as well). Phased trade liberalization agreed on during the Kennedy and Tokyo multilateral trade negotiations (completed in 1975 and 1987, respectively) contributed to this result, as did the enlargement of the European Community from six to twelve members and the inauguration of the U.S.-Canada free trade area in 1989. But it was driven also by structural developments in the world economy, notably the great reduction in practical barriers to communication among national markets. Developing countries during this period have become major exporters of manufactured goods, which now account for over half of their nonoil exports.