Impact of Trade Liberalization on Developing Countries.

Executive Summary

The Relative Impact of Trade Liberalization on growing Countries

It has become a standard refrain in constitution circles that expanded trade holds the key to prosperity for ontogenesis countries. check to this view, if the modify countries would eliminate their trade barriers, especi solelyy in garnish and agriculture, this would provide a basis for reaping in growing countries, pulling hundreds of millions of people out of poverty. As the World depose wrote in its latest Global Economic Prospects: A decrease in valet barriers to trade could accelerate growth, provide arousal to new forms of productivity-enhancing specialization, and lead to a more rapid chiliad of job creation and poverty reduction around the world (World Bank 2002, p xi).

The evidence for this view is considerably less(prenominal) compelling than its proponents imply. While there are certainly reasons for believe that expanded trade can help to promote growth in growing countries, it is unlikely that trade liberalization, by itself, willing qualitatively improve the plight of people in the exploitation world. In fact, there are plausible scenarios in which trade liberalization can actually lead to worse outcomes for developing countries.

Moreover, it is not clear that trade liberalization is the key to rapid growth and development.



It is worth noting that the major success stories in the developing world--most notably South Korea and Taiwan, which now have income levels comparable to the poorer industrialized countries--but also countries that have more recently experienced speed growth rates, such as China and India, have not followed a simple path of trade liberalization. In all of these countries the government has played an important role in channelize the economy. This guidance has included subsidies and protection for favored industries and restrictions on swell flows, policies generally opposed by the leading proponents of trade liberalization. In many respects,

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