Trade and FDI are major engines of growth

"Opening markets matter: The benefits of trade and investment liberalisation"
OECD report requested by Council of Ministers, April 1998

An OECD study "Strengthening the multilateral system" notes that trade and foreign direct investment are major engines of growth in developed and developing countries alike.

The study says that trade and investment-induced market integration has led to deeper forms of economic interdependence among nations, as a growing number of developing and former centrally-planned economies have become more closely linked to the global economy.

"The case for open markets rests on solid foundations. One of these is the fact that when individuals and companies engage in specialization and exchange, a country will exploit its comparative advantage. It will devote its natural, human, industrial and financial resources to their highest and best uses. This will provide gains to firms and consumers alike."

The study goes on to say that the case for opening markets to investment is as compelling as it is for trade. "More open economies enjoy higher rates of private investment, which is a major determinant of economic growth."

Some statistics:

• The volume of world merchandise trade is 16 times greater today than it was in 1950, reflecting the dismantling of import and export barriers.
  OECD "Opening markets matter: The benefits of trade and investment liberalisation"
• A study of OECD countries found that each $1.00 of outward foreign direct investment was associated with $2.00 of additional exports and a trade surplus of $1.70.
  OECD "Opening markets matter: The benefits of trade and investment liberalisation"