Gains and losses from sectoral relocation: A review of theory and empirics

This paper addresses the distributional consequences of international sectoral relocation. We begin by looking at the gains and losses for individual countries by reviewing the implications, and real-world relevance, of the various trade and growth models that address the issue. In each case, the role of FDI in the process is explored. The second part of the paper reviews the empirical evidence on what becomes of workers whose jobs are displaced by sectoral relocation. The ongoing policy debate on how to minimise the costs of displacement and the length of the adjustment period is also reviewed.