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CHAPTER 14 TRADE POLICIES FOR DEVELOPING COUNTRIES Objectives of the Chapter Chapter 14 examines the interactions between emerging economies and the rest of the world. It begins by offering perspectives on the link between growth and foreign trade, on the changing pattern of comparative advantage in the Third World, on the collective political voice gained by the developing countries after World War II, and on the movement toward market-oriented economies in the countries of the former Soviet Union. The “New International Economic Order” movement urged that incomes of developing countries be raised through cartels to restrict trade in primary products, schemes to stabilize primary product prices, and preferential tariff reductions to foster developing country exports of manufactured goods. Several alternatives to free trade have been proposed specifically for developing countries. New industries can be nurtured by restricting imports of manufactured goods. Price-raising cartels can be used to increase the prices of primary product exports. Finally, there are attempts to increase exports of manufactured goods to industrialized countries. Special obstacles are faced in the transition economies of Central and Eastern Europe. These countries are trying to move from isolation, central planning, and a goal of self-sufficiency to openness, capitalist markets, and a goal of increased national income. After studying Chapter 14 you should know how to 1. contrast the growth rates for high-, middle-, and low-income countries. 2. identify the forms taken by the increased political awareness and voice of developing countries in the international arena. 3. explain how declining prices for primary products can work against developing countries. 4.
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This note was uploaded on 02/18/2010 for the course ECON 343 taught by Professor Dblack during the Fall '09 term at University of Delaware.

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