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Trade liberalization, industrialization and development; experience of recent decades

  • Shafaeddin, Mehdi

Reviewing the experience of developing countries in recent years as well as successful industrialization in developed countries in previous centuries, the author explains that trade liberalization is necessary for industrialization if: it is regarded as a part and parcel of a dynamic and flexible trade and industrial policies; undertaken in the right time, gradually and selectively. More importantly, trade policy is to be an ingredient of a comprehensive set of industrial and development policies and measures to enhance the capabilities of firms for establishing industries, making them efficient and upgrading them. By contrast, if it is undertaken, pre-maturely, rapidly and uniformly, i.e. across-the-board, as advocated by Neo-liberals and proponents of “Washington Consensus”, it will lead to de-industrialization and unemployment; it will lock the country in specialization in production and exports of primary commodities and at best natural resource-based products, and/or labour intensive stage of assembly operation. He further, discusses changes needed in WTO rules and practices of International Financial Institutions to make them “development friendly”.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 26355.

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Date of creation: Apr 2010
Date of revision:
Handle: RePEc:pra:mprapa:26355
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  1. Mehdi SHAFAEDDIN, 1998. "How Did Developed Countries Industrialize? The History Of Trade And Industrial Policy: The Cases Of Great Britain And The Usa," UNCTAD Discussion Papers 139, United Nations Conference on Trade and Development.
  2. Sanjaya LALL, 2004. "Reinventing Industrial Strategy: The Role Of Government Policy In Building Industrial Competitiveness," G-24 Discussion Papers 28, United Nations Conference on Trade and Development.
  3. Rodrik, Dani, 2004. "Industrial Policy for the Twenty-First Century," CEPR Discussion Papers 4767, C.E.P.R. Discussion Papers.
  4. Maurizio Zanardi & Alberto Paloni, 2007. "The IMF, World Bank and policy reform," ULB Institutional Repository 2013/9823, ULB -- Universite Libre de Bruxelles.
  5. Bagchi,Amiya Kumar, 1982. "The Political Economy of Underdevelopment," Cambridge Books, Cambridge University Press, number 9780521284042.
  6. Krueger, Anne O, 1980. "Trade Policy as an Input to Development," American Economic Review, American Economic Association, vol. 70(2), pages 288-92, May.
  7. S.M. Shafaeddin, 2004. "Who Is The Master? Who Is The Servant? Market Or Government? An Alternative Approach: Towards A Coordination System," UNCTAD Discussion Papers 175, United Nations Conference on Trade and Development.
  8. Justin Lin & Ha-Joon Chang, 2009. "Should Industrial Policy in Developing Countries Conform to Comparative Advantage or Defy it? A Debate Between Justin Lin and Ha-Joon Chang," Development Policy Review, Overseas Development Institute, vol. 27(5), pages 483-502, 09.
  9. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
  10. Shafaeddin, Mehdi, 2006. "Does trade openness helps or hinders industrialization?," MPRA Paper 4371, University Library of Munich, Germany.
  11. Wacziarg, Romain & Welch, Karen Horn, 2003. "Trade Liberalization and Growth: New Evidence," Research Papers 1826, Stanford University, Graduate School of Business.
  12. Francisco Rodriguez & Dani Rodrik, 1999. "Trade Policy and Economic Growth: A Skeptic's Guide to Cross-National Evidence," NBER Working Papers 7081, National Bureau of Economic Research, Inc.
  13. Shafaeddin, Mehdi, 2006. "Is The Industrial Policy Relevant In The 21st Century?," MPRA Paper 6643, University Library of Munich, Germany.
  14. Mehdi Shafaeddin & Juan Pizarro, 2010. "The evolution of value added in assembly operations: the case of China and Mexico," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 8(4), pages 373-397.
  15. Li, Shaomin & Xia, Jun, 2008. "The Roles and Performance of State Firms and Non-State Firms in China's Economic Transition," World Development, Elsevier, vol. 36(1), pages 39-54, January.
  16. Paul Bennell, 1998. "Fighting for survival: manufacturing industry and adjustment in sub-Saharan Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 10(5), pages 621-637.
  17. Baldwin, Robert E, 1969. "The Case against Infant-Industry Tariff Protection," Journal of Political Economy, University of Chicago Press, vol. 77(3), pages 295-305, May/June.
  18. Yilmaz Akyuz, 2005. "The WTO Negotiations on Industrial Tariffs: What is at Stake for Developing Countries?," Working Papers 2005/8, Turkish Economic Association.
  19. S.M. Shafaeddin, 2005. "Trade Liberalization And Economic Reform In Developing Countries: Structural Change Or De-Industrialization?," UNCTAD Discussion Papers 179, United Nations Conference on Trade and Development.
  20. Yılmaz AKYÜZ, 2005. "The wto negotiations on industrial tariffs: What is at stake for developing countries?," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 20(232), pages 5-35.
  21. Kevin P. Gallagher & Mehdi Shafaeddin, 2009. "Policies for Industrial Learning in China and Mexico," Trade Working Papers 22782, East Asian Bureau of Economic Research.
  22. Jie Yang, 2008. "An Analysis of So-Called Export-led Growth," IMF Working Papers 08/220, International Monetary Fund.
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