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.
industrilal_policy (Download the full text in PDF format)