The combination of rapid improvements in the technology of transport and communications and widespread deregulation of international markets (especially financial markets) led to a phenomenon that came to be known as globalisation. This was a process by which countries became increasingly interconnected, especially in terms of international trade. This may have become a double-edged sword when the global recession hit, as it meant that the crisis probably spread more rapidly than it otherwise would have done.
International trade has long been an important part of economic life. There are some obvious reasons for this. Think about the goods that you consume every week, and how many of these are imported from overseas. I expect that some of them are goods that could not possibly be produced on a commercial scale within the UK. For example, our climate is not suitable for growing bananas or coffee. However, you might also observe that we import some goods that could be produced in the UK — for example, the UK both imports and exports motor vehicles, which is a bit more difficult to explain. The Getting started column on pp. 13–15 of this issue of ECONOMIC REVIEW explores some of the economic arguments underpinning specialisation and trade.
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