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Trade Liberalization under New Realities


  • Syed Zahid Ali


  • Sajid Anwar


The last decade has witnessed 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. 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 are found to be beneficial both in the short-run and the long-run.

Suggested Citation

  • Syed Zahid Ali & Sajid Anwar, 2005. "Trade Liberalization under New Realities," Trade Working Papers 22243, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:tradew:22243

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    References listed on IDEAS

    1. 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.
    2. Jorge Saba Arbache & Andy Dickerson & Francis Green, 2004. "Trade Liberalisation and Wages in Developing Countries," Economic Journal, Royal Economic Society, vol. 114(493), pages 73-96, February.
    3. A. U. Santos-Paulino, 2002. "Trade Liberalisation and Export Performance in Selected Developing Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 39(1), pages 140-164.
    4. Carmen M. Reinhart & Kenneth S. Rogoff, 2004. "The Modern History of Exchange Rate Arrangements: A Reinterpretation," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 1-48.
    5. Greenaway, David & Morgan, Wyn & Wright, Peter, 2002. "Trade liberalisation and growth in developing countries," Journal of Development Economics, Elsevier, vol. 67(1), pages 229-244, February.
    6. repec:hrv:faseco:34721963 is not listed on IDEAS
    7. Thorvaldur Gylfason & Michael Schmid, 1983. "Does Devaluation Cause Stagflation?," Canadian Journal of Economics, Canadian Economics Association, vol. 16(4), pages 641-654, November.
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    More about this item


    Trade Liberalization; Deve loping Countries; Devaluation;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • F00 - International Economics - - General - - - General


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