Trade Liberalisation and The Poverty of Nations

Description

Orthodox trade and growth theory, and the world's multilateral development institutions, extol the virtues of trade liberalisation and free trade for more rapid economic development of poor countries. However, the contemporary reality and history seem to tell a different story. The world economy has experienced an unprecedented period of trade liberalisation in the last thirty years, and yet international and global inequality is widening; domestic poverty (outside of China) is increasing; poor countries' exports have grown more slowly than their imports leading to balance of payments crises, and the so-called globalising economies of the world (excluding China and India) have fared no better, and in some cases worse, than those countries that have not liberalised so extensively. This book argues that orthodox theory is based on many unreal assumptions, and that there are sound economic arguments for selective protection of industrial activities in the early stages of economic development. The historical evidence of the now-developed countries also illustrates this fact. With supporting empirical evidence, this book provides a powerful theoretical critique of orthodox trade theory. It will be of great interest to students taking courses in international trade and development economics, as well as to professional economists and policymakers in international development institutions. Trade Liberalisation And The Poverty Of Nations Cover Other Books by A.P. Thirlwall Title Page Copyright Contents Acknowledgements Preface 1. The theory and measurement of trade liberalisation Introduction The ‘Classical’ Foundations of Trade Liberalisation On The Principles of Political Economy and Taxation Free Trade Enthusiasm in the Modern Era The Case for Protection Figure 1.1 Production and consumption distortions from a tariff 1. The infant industry argument for protection 2. The externalities argument for protection 3. The domestic distortion argument for protection Figure 1.2 Protection when social cost of labour is less than the private cost 4. The optimal tariff argument for protection Bhagwati’s Lament Protection in Historical Perspective Table 1.1 Average tariff rates on manufactured products for selected developed countries in their early stages of development (weighted average, in percentages of value) The Measurement and Process of Trade Liberalisation Conclusions Notes 2. Trade liberalisation, trade performance and economic growth Introduction Trade Liberalisation and Export Growth Trade Liberalisation and Import Growth Trade Liberalisation and the Balance of Payments Trade Liberalisation and Economic Performance Trade Liberalisation and the Trade-Off Between Growth and the Balance of Payments Figure 2.1 The trade-off between growth and the balance of payments Conclusions Notes 3. Trade liberalisation and international inequality Facts and Orthodoxy Non-Orthodox Models of Divergence Strategy of Economic Development Measures of Inequality and Historical Trends Figure 3.1 Lorenz curve diagram Table 3.1 A comparison of Gini ratios International Inequality (Unweighted and Weighted) Global (or World) Inequality Table 3.2 Alternative measures of inequality The Impact of Trade Liberalisation on Inequality Conclusions Notes 4. Trade liberalisation, poverty and domestic inequality Introduction Poverty Table 4.1 Absolute poverty and poverty rates, 1981–2001 Wages and Income Inequality Income Inequality and Trade Liberalisation Table 4.2 Income inequality in selected developing countries measured by the Gini ratio Conclusions Notes 5. Trade strategy for development Notes Bibliography Index