Trade policy for developing countries

Abstract

Although some issues remain unsettled, expert opinion and lessons of experience have begun to converge in recent years on trade policy measures that make sense for an individual developing country. Trade policy must be made on three levels, all of which are treated here -- strategic choices, economy-wide management including exchange rate policy, and detailed setting of incentives in relation to particular products and industries. Along with the underlying relationships at each level, attention is focused on practical lessons of experience concerning the policy instruments available, their proper design and use, and complications that arise in a world of harsh realities. Social repercussions of trade policy are also considered. Part I is concerned mainly with trade policy for purposes of industrial development, e.g., how to expand manufactured exports along with production for the home market. Part II examines relationships of trade policy with social and political systems and goals, for example, its effects on poverty, and how it interacts with repression or redistribution. Part III looks at how to achieve a successful transition from an unsatisfactory to a desirable trade policy regime.

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