New regional initiatives abound, both outside Asia and within. Free Trade Areas in the West - notably NAFTA, its possible enlargement into an FTA of the Americas, and the European Union - have implications for Asia. Asian manufacturers will experience trade diversion, especially in textiles and...

According to classical Ricardian trade theory, overall productivity differences between countries are manifested as differences in real labor incomes (absolute advantage), while the sectoral pattern of productivity differences determines trade patterns (comparative advantage). This paper...