International trade and investment

Recent decades have seen rapid expansion of trade and foreign direct investment. While world-wide nominal GDP increased at a rate of 7.2 per cent a year between 1985 and 1997, imports grew at 9.2 per cent , and inflows of foreign direct investment increased at 17.6 per cent. The CEP's research investigates the causes and consequences of these changes.

Much of the growth of trade and investment has been within regional integration agreements in Europe and elsewhere. Trade growth has also been driven by multilateral and unilateral policy liberalisations and by changing technologies and transport costs.

The growth of trade has led to new patterns of international specialisation and new bases of comparative advantage, affecting both developed and developing countries. It has also changed the distribution of income between and within countries, and the returns to differing levels of skills.

Understanding these changes requires the development of new analytical tools as well as empirical research. The CEP has been at the forefront of the development of new economic geography techniques. Our research is now applying these techniques at the international and at the sub-national level, analysing regional and urban development.