Trade liberalisation and the poverty of nations: A review article

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    The role of trade policy reforms in economic development and poverty reduction in developing countries has long been a subject of controversy. In the 1950s and 1960s there was a broad consensus that the basic strategy for development should be based on import substitution - the promotion of industries oriented toward the domestic market by using import restrictions to encourage the replacement of imported manufactures. The period from about the late 1960s witnessed a decisive shift in development thinking and policy away from import substitution and in favour of outward-orientated (or export-promotion) strategy. This policy advocacy soon became an integral part of aid conditionality of the World Bank and the International Monetary Fund (IMF) and the major bilateral donors. Reflecting this new ideological orientation (popularly known as 'the Washington Consensus'), coupled with the influence of aid conditionality, trade liberalisation became the linchpin of policy reforms in many countries around the world. The past two decades have, however, seen the emergence of a strong revisionist school of thought in response to the lack-luster outcome of Washington-consensus reforms. The revisionists do accept that the old-style import substitution strategy bordering on autarchy has outlived its usefulness and growth prospects for developing countries can be greatly enhanced through integration into the global economy. But they argue that trade can help achieve self-sustained growth with poverty alleviation only through cautious liberalisation combined with the right kind of government action to make 'openness work'.
    Original languageEnglish
    Pages (from-to)533-543
    JournalJournal of Development Studies
    Issue number3
    Publication statusPublished - 2011


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