Avoiding economic hardship is a primary objective of social policy. As perceptions of “a decent standard of living” vary across countries and over time, no commonly agreed measure of “absolute” poverty across OECD countries exists. A starting point for measuring poverty is therefore to look at “relative” poverty, whose measure is based on the income that is most typical in each country in each year.

International trade is a principal channel of economic integration. International trade tends to be more important for countries that are small in terms of geographic size or population and surrounded by neighbouring countries with open trade regimes than for countries that are large, relatively self-sufficient, or geographically isolated and penalised by high transport costs. Other factors that help explain differences in the importance of international trade across countries are history, culture, trade policy, the structure of the economy (especially the weight of non-tradable services in GDP), re-exports and the presence of multinational firms (which leads to much intra-firm trade).

Since its creation, the OECD has sought to promote international trade, considering it an effective way of enhancing economic growth and raising living standards. Member countries benefit from increased trade as do OECD’s trade partners in the rest of the world.

International trade in services is growing in importance both among OECD countries and with the rest of the world. Traditional services – transport, insurance on merchandise trade, and travel – account for about half of international trade in services, but trade in newer types of services, particularly those that can be conducted via the Internet, is growing rapidly.

The pattern of OECD merchandise trade – where imports come from and where exports go to – has undergone significant shifts over the last decade. These shifts have occurred in response to changes in the distribution of global income and to globalization – in particular, the outsourcing of manufacturing from OECD countries to the rest of the world.

The 2011 edition of the African Economic Outlook investigates the increasing intensity and changing patterns of Africa’s trade. It analyses policy options for African policy-makers to make the best out of Africa’s rapid integration into the global economy.

Foreign direct investment (FDI) is a key element in international economic integration. FDI creates direct, stable and long-lasting links between economies. It encourages the transfer of technology and know-how between countries, and allows the host economy to promote its products more widely in international markets. FDI is also an additional source of funding for investment and, under the right policy environment, it can be an important vehicle for enterprise development.

The current account balance is the difference between current receipts from abroad and current payments to abroad. When the current account is positive, the country can use the surplus to repay foreign debts, to acquire foreign assets or to lend to the rest of the world. When the current account balance is negative, the deficit will be financed by borrowing from abroad or by liquidating foreign assets acquired in earlier periods.