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Trade Liberalization And The Manufacturing Sector: The Case Of The Small Developing Country


  • Denny Lewis-Bynoe
  • Jennifer Griffith
  • Winston Moore


Historically, the lack of competition in developing countries has resulted in highly concentrated domestic industries that suffer from diseconomies of scale but prosper behind high walls of protection. Liberalization is expected to reverse this trend but at what cost? This article utilizes an import demand framework to examine the potential impact of trade liberalization on the manufacturing sector in the Caribbean using the case of Barbados. The results indicate that the manufacturing industry could encounter tremendous price competition, which could compromise the future survival of these industries. The study recommends that industries reorganize production processes to increase efficiency, which will allow them to compete effectively in the new global trading environment. These results may also be applicable to the wider Caribbean. Copyright 2002 Western Economic Association International.

Suggested Citation

  • Denny Lewis-Bynoe & Jennifer Griffith & Winston Moore, 2002. "Trade Liberalization And The Manufacturing Sector: The Case Of The Small Developing Country," Contemporary Economic Policy, Western Economic Association International, vol. 20(3), pages 272-287, July.
  • Handle: RePEc:bla:coecpo:v:20:y:2002:i:3:p:272-287

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    References listed on IDEAS

    1. James R. Tybout, 2000. "Manufacturing Firms in Developing Countries: How Well Do They Do, and Why?," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 11-44, March.
    2. Jagdish N. Bhagwati, 1978. "Appendix to "Anatomy and Consequences of Exchange Control Regimes"," NBER Chapters,in: Anatomy and Consequences of Exchange Control Regimes, pages 219-221 National Bureau of Economic Research, Inc.
    3. Hertel, Thomas W & Masters, William A & Elbehri, Aziz, 1998. "The Uruguay Round and Africa: A Global, General Equilibrium Analysis," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 7(2), pages 208-236, July.
    4. Tybout, James & de Melo, Jamie & Corbo, Vittorio, 1991. "The effects of trade reforms on scale and technical efficiency : New evidence from Chile," Journal of International Economics, Elsevier, vol. 31(3-4), pages 231-250, November.
    5. Collier, Paul & Gunning, Jan Willem, 1992. "Aid and Exchange Rate Adjustment in African Trade Liberalisations," Economic Journal, Royal Economic Society, vol. 102(413), pages 925-939, July.
    6. Vousden, Neil & Campbell, Neil, 1994. "The organizational cost of protection," Journal of International Economics, Elsevier, vol. 37(3-4), pages 219-238, November.
    7. Hall, S G, 1986. "An Application of the Granger & Engle Two-Step Estimation Procedure to United Kingdom Aggregate Wage Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(3), pages 229-239, August.
    8. Jagdish N. Bhagwati, 1978. "Anatomy and Consequences of Exchange Control Regimes," NBER Books, National Bureau of Economic Research, Inc, number bhag78-1, January.
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    Cited by:

    1. Jen Baggs & James A Brander, 2006. "Trade liberalization, profitability, and financial leverage," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(2), pages 196-211, March.
    2. Syed Abdul Sattar SHAH & Anwar Ali Shah G. SYED & Faiz M. SHAIKH, 2013. "Effects Of Wto On The Textile Industry On Developing Countries," Romanian Statistical Review, Romanian Statistical Review, vol. 61(6), pages 60-77, July.
    3. Syed Zahid Ali & Sajid Anwar, 2005. "Trade Liberalization under New Realities," Trade Working Papers 22243, East Asian Bureau of Economic Research.
    4. Kevin Honglin Zhang, 2010. "How Does Globalization Affect Industrial Competitiveness?," Contemporary Economic Policy, Western Economic Association International, vol. 28(4), pages 502-510, October.
    5. Ali, Syed Zahid & Anwar, Sajid & Valadkhani, Abbas, 2012. "Macroeconomic consequences of increased productivity in less developed economies," Economic Modelling, Elsevier, vol. 29(3), pages 621-631.
    6. Baggs, Jennifer & Brander, James A., 2005. "Liberalisation des echanges, rentabilite et levier financier," Direction des etudes analytiques : documents de recherche 2005256f, Statistics Canada, Direction des etudes analytiques.

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