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This technical paper reviews and establishes associations between two parallel strands of theoretical and empirical literature: (a) one examining the relationship between economic opening, or trade liberalisation, and the return to skills; and (b) one examining the relationship between human capital and growth. Based on the literature, the paper examines how trade and investment liberalisation may affect the demand for, and returns to, skill in developing countries. The first section of the report briefly reviews some issues of definition and measurement in the study of skills and skill-based wage differentials. The following section reviews the key role of capital-skill and technology-skill complementarity for the OECD countries where it is plentiful and for developing countries where it is meagre. The report then reviews evidence in support of the assertion that increased trade openness in developing countries may result in a shift in skill demand through newly accessible foreign capital and technology. As self-employment is also important in many developing countries, the effect of economic openness on the returns to education in entrepreneurship is also addressed. The report concludes with a brief summary of some policy implications. Show less