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

  • Dani Rodrik

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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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4417.

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Date of creation: Aug 1993
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Publication status: published as Rodrik, Rani, 1995. "Trade and industrial policy reform," Handbook of Development Economics, in: Hollis Chenery†& T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 45, pages 2925-2982 Elsevier.
Handle: RePEc:nbr:nberwo:4417
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