ABSTRACT
Globalization generally and trade liberalization specifi cally create winners and losers in domestic economies and among countries. Domestically, workers and producers in the sectors protected from foreign competition may see revenues decrease or employment disappear when tariffs or regulatory barriers are removed. The negative impacts of liberalization are not limited to one-time adjustments to trade reforms. The dynamics of an open economy differ greatly from an economy that is relatively insulated from foreign competition. By defi nition, the frequency and scope of economic restructuring in an open economy is higher. For example, an International Labour Organization (ILO) study of manufacturing employment in 77 countries found that a higher level of international trade in a national economy is associated with greater movement of workers between sectors (Torres, 2001). Such intersectoral movement is not without consequences. Low-skilled workers in particular fi nd it diffi cult to fi nd new employment, as moving into a different sector usually requires a different set of skills (Torres, 2001) which can bring with it costs associated with retraining and relocation. While the weight of existing evidence generally supports the view that trade liberalization and openness increase economic insecurity (Rodrik, 1997, 1998; Garrett, 1998; Burgoon, 2001; Boix, 2002; Hayes, Ehrlich, & Peinhardt, 2002; Gunter & van der Hoeven, 2004), there is little consensus on this point (see Bourguignon & Goh, 2003, for a review of studies challenging this linkage).1
