Has trade integration caused greater divergence?

It is often claimed that integration into the global economy through increased flows of goods, services, capital, technology and labour—admittedly the least mobile production factor in the group—enhances opportunities for growth and development, thus providing a powerful push towards closing the income gap between developed and developing economies. Convergence narratives that make the connection with integration usually refer to the experience of post-war Japan, to the Western European periphery since the late 1950s and to the more recent experience of the East Asian newly industrialized economies. In all these cases, a strong investment-trade nexus certainly helped to power rates of economic growth above those of the leading industrialized economies.

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