Does Trade Openness Favour or Hinder Industrialization and Development? Mehdi Shafaeddin

The author argues that the theory behind “trade liberalization hypothesis”, the doctrine of comparative cost advantage, cannot be used as a guide to caching up and achieving dynamic comparative advantage which is a policy-based effort. International trading rules based on this doctrine are therefore not conducive to industrialization and development. There is a need for a different framework of industrial and trade policies, which however requires a radical change in international trade rules. Therefore, developing countries should not be worried to be “blamed” for defending their policy autonomy in order to enhance their development.

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