ABSTRACT
This chapter evaluates how economists’ thinking of trade and foreign direct investment (FDI) has evolved as they have started abandoning the assumption that production processes are localized. It discusses how scholars increasingly view trade as an exchange in tasks (through global value chains), not goods, recognizing that firms not only conduct trade to reach foreign consumers but also to build efficient value chains. This structural change to the world economy also has an impact on trade and FDI policies and politics.
