25 Trade Policy in Developing Countries, Part 1

25 Trade Policy in Developing Countries, Part 1 - Trade...

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1 1 Trade Policy, Developing Countries • Agenda: –In troduc t ion – Import-Substituting Industrialization • The Infant Industry Argument – Problems of Import-Substituting Industrialization 2 Trade Policy, Developing Countries • Introduction: – Trade is important for developing countries. • Exports average about 35% in developing countries. • Exports average about 20% in developed countries. – Developing countries are the source of about one- third of all world exports. 3 Trade Policy, Developing Countries • Introduction: – Some basic questions: • What role can trade and trade policy play in economic development? • How can trade and trade policy be used to boost income and economic growth in poor countries? 4 Trade Policy, Developing Countries Introduction: Many developing countries have a comparative advantage based on:
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2 5 Trade Policy, Developing Countries Introduction: Exploiting these comparative advantages leads to exports of: 1. Foods, 2. Fuels, 3. Other primary products, and 4. Less-skilled-labor-intensive manufactures. 6 Trade Policy, Developing Countries Introduction: Basic trade-policy choices: 1. A trade policy that accepts and exploits the country’s comparative advantages in land and natural resources and the export of primary products. 2. A trade policy that attempts to enhance the gains from exporting primary products by raising the world price of these products. Export tax and/or Forming an international cartel. 7 Trade Policy, Developing Countries Introduction: Basic trade-policy choices: 3. A policy that taxes and restricts imports to protect and subsidize new industries serving the domestic market . 4. A trade policy that encourages the development of
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This note was uploaded on 02/25/2012 for the course ECON 181 taught by Professor Kasa during the Spring '07 term at University of California, Berkeley.

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25 Trade Policy in Developing Countries, Part 1 - Trade...

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