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Trade and Industrial Policy Reform in Developing Countries: A Review of Recent Theory and Evidence

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  • Dani Rodrik

Abstract

This paper reviews recent theory and evidence on trade and industrial policy reform in developing countries. First, the theoretical and empirical basis of the rationales for policy reform are discussed. Next, two sources of heterodoxy are identified and evaluated: (a) the East Asian experience with interventionist industrial policies; (b) recent models of imperfect competition. The survey then turns on strategic issues in reform, and discusses the theory of piecemeal reform, tax or tariff uniformity, credibility, political economy, and interactions with stabilization policy. The penultimate section reviews the available evidence on the consequences of recent policy reform.

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  • Dani Rodrik, 1993. "Trade and Industrial Policy Reform in Developing Countries: A Review of Recent Theory and Evidence," NBER Working Papers 4417, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:4417
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    2. Haider A. Khan, 2003. "Digital Transitions: The POLIS Theory and The NIEs," CIRJE F-Series CIRJE-F-231, CIRJE, Faculty of Economics, University of Tokyo.
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    4. Judith Dean, 1995. "From protectionism to free trade fever? Recent reforms in developing countries," Open Economies Review, Springer, vol. 6(4), pages 369-385, October.
    5. Alberto Chong & Luisa Zanforlin, 2001. "Technological adaptation, trade, and growth," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 137(4), pages 565-592, December.
    6. Jeffrey A. Frankel, David Romer and Teresa Cyrus., 1995. "Trade and Growth in East Asian Countries: Cause and Effect?," Center for International and Development Economics Research (CIDER) Working Papers C95-050, University of California at Berkeley.
    7. Mohieddine Rahmouni & Murat Yildizoglu, 2011. "Motivations and determinants of technological innovations. A theoretical survey (In French)," Cahiers du GREThA (2007-2019) 2011-10, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    8. Alessandro Ruggieri, 2019. "Trade and labour market institutions: A tale of two liberalizations," Discussion Papers 2019-15, University of Nottingham, GEP.
    9. Thomas J. Holmes & James A. Schmitz, 1994. "Resistance to technology and trade between areas," Staff Report 184, Federal Reserve Bank of Minneapolis.
    10. María Soledad Feal Zubimendi, 2008. "Crecimiento económico y apertura comercial: análisis de la influencia de los canales," Estudios Economicos, Universidad Nacional del Sur, Departamento de Economia, vol. 25(50), pages 37-73, January-j.
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    12. Abo-Zaid Salem M, 2011. "The Trade-Growth Relationship in Israel Revisited: Evidence from Annual Data, 1960-2004," Review of Middle East Economics and Finance, De Gruyter, vol. 6(3), pages 63-93, February.
    13. Haider A. Khan, 2002. "Digital Development: Challenges and Prospects," CIRJE F-Series CIRJE-F-152, CIRJE, Faculty of Economics, University of Tokyo.
    14. Haider Ali Khan, 2004. "Towards A Field Theory of Innovating Multinational Firms in the Digital Economy: Creative Capital in a POLIS," CIRJE F-Series CIRJE-F-259, CIRJE, Faculty of Economics, University of Tokyo.
    15. Onur Koska, 2005. "Financial Liberalization Era in Turkey: Critique on Decree No.32," Macroeconomics 0506016, University Library of Munich, Germany.
    16. McCarthy, F. Desmond & Neary, J. Peter & Zanalda, Giovanni & DEC, 1994. "Measuring the effect of external shocks and the policy response to them : empirical methodology applied to the Philippines," Policy Research Working Paper Series 1271, The World Bank.
    17. César Calderón & Alberto Chong & Luisa Zanforlin, 2001. "On Non-Linearities Between Exports Of Manufactures And Economic Growth," Journal of Applied Economics, Universidad del CEMA, vol. 4, pages 279-311, November.
    18. Diaz-Bautista, Alejandro, 2002. "The role of telecommunications infrastructure and human capital: Mexico´s economic growth and convergence," ERSA conference papers ersa02p102, European Regional Science Association.
    19. Donald Hay, 2015. "Industrial Policy in Brazil: a Framework," Discussion Papers 0074, Instituto de Pesquisa Econômica Aplicada - IPEA.
    20. Jeffrey A. Frankel & David Romer, 1996. "Trade and Growth: An Empirical Investigation," NBER Working Papers 5476, National Bureau of Economic Research, Inc.

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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