On the Measurement of Trade-Induced Adjustment

A. K.M. Azhar, Universiti Putra, Malaysia
Robert J.R. Elliott, University of Birmingham

Abstract

Globalisation and closer regional integration has led to significant increases in trade between nations that in turn impacts on existing long standing trade partnerships. A consequence of changing trade patterns is an increase in the pressure for resources to reallocate between industries and sectors. This paper provides an integrated approach to the analysis of trade induced adjustment that complements the existing literature. Adjustment pressures are documented in accordance with the theoretical underpinnings of the smooth adjustment hypothesis and satisfy a number of desirable criteria, monotonicity, consistency and country specificity. The applicability of our approach is examined using UK manufacturing data.