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Chapter 41 The New Economy and International Trade We analyze three channels how the new economy affects international trade in this chapter. First, a new economy driven fall in information, communication and distance costs reduces market segmentation. This changes the structure and raises the level of international trade. Second, service trade is particularly affected by changes which are brought about by the new economy. New technologies lead to increased tradability of various services which boost service trade levels. Third, we look at the new channel of trade for some digitizable products which is offered by the new economy: the Internet. These changes also pose challenges to the existing WTO framework governing international trade.
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