This was important, because it meant that, in principle, a country could have lower productivity across the board, in the production of every good, and still end up as a net exporter of some of them. But the basic points survive: there’s no reason to suppose that commerce across an international border is any less mutually beneficial than that within a single country; nor is there any reason to view imports as intrinsically bad. Of course, you might feel differently if you happen to be in one of the sectors at a comparative disadvantage. In the mid-1970s, just as the post-war boom in global trade was getting started, the UK’s clothing and textile industry employed over 800,000 people. That’s one in every 30 jobs. As markets opened up international prices fell steeply and, over the following thirty years or so, the domestic industry all but collapsed. Output fell 65%, employment by 90%. It now accounts for one in every 370 jobs. Not all of this reflects the effects of greater trade. Part of the post-war decline in textile employment – employment in manufacturing in general, in fact – reflected relatively rapid productivity growth, not cheaper imports. If it takes progressively fewer people to make the same amount of stuff you might expect employment to fall. Over time the share of jobs in manufacturing has fallen in every developed country, including in those regarded as industrial powerhouses, such as Germany and Japan.
And if the theme of this talk is that the benefits of trade involve imports as much as they do exports, the same point applies. Put simply, a significant curtailment of trade with Europe would force the UK to shift away from producing the things it’s been relatively good at, and therefore tends to export to the EU, and towards the things it currently imports and is relatively less good at. Chart 13: UK’s revealed comparative advantage  Chart 13, which plots “revealed comparative  with the EU  advantage” in each sector – roughly speaking a rescaled version of the balance of trade with the EU – gives some idea of what these sectors are: we tend to export services, financial services in particular, and import goods, notably food and capital equipment. All else equal, the first shift (i.e. away from services exports) would tend to lower UK income, the second to raise certain costs (that is, of food and machinery). And, albeit on a smaller scale, relative to their (much 16  larger) GDP, the same would be true for the EU . Trade really is mutually beneficial and less of it costs Source: UNCTAD and ONS; Note: Gross value added was used  us all. That these truths are a couple of centuries  as output. Revealed comparative advantage is expressed as the  old, and not always widely accepted, doesn’t make  ratio of a sector’s share in UK’s exports to the EU to its share in trade with EU.