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Trade Liberalization Under New Realities

Author

Listed:
  • S. Zahid Ali

    (Lahore University of Management Sciences)

  • Sajid Anwar

    (University of Adelaide)

Abstract

The last few decades have witnessed a significant influx of direct foreign investment in developing countries. The increased flow of foreign investment has contributed to the ability of developing countries to produce import competing manufactured goods by combining imported and domestically produced inputs. This situation has to some extent changed the comparative advantage of developing countries as suggested by the product cycle theory. Within the context of this development, this paper attempts to examine the effectiveness of devaluation and other import restricting polices. The paper argues that trade liberalization remains the most desirable policy. Specifically a cut in import and export duties is found to be beneficial both in the shortrun and the longrun.

Suggested Citation

  • S. Zahid Ali & Sajid Anwar, 2006. "Trade Liberalization Under New Realities," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 31(1), pages 1-16, June.
    • Handle: RePEc:jed:journl:v:31:y:2006:i:1:p:1-16
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    More about this item

    Keywords

    Devaluation; Trade Liberalization; LDCs;
    All these keywords.

    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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