Trade policies in developing countries

Trade policies in developing countries have been a focal point of analysis for international economists in the past several decades. Policies adopted in many developing countries have often been widely at variance with those emanating from models of rational resource allocation and provided researchers with ample scope for analysis of their effects. Simultaneously analysts have examined the theoretical and empirical content of the rationales given for rejection of the rational resource allocation models. In addition, some developing countries reversed their trade policies in important ways. These reversals and the resulting changes in economic structure also provided stimulus for analysis of the link between trade policies and development. The concerns and experience of developing countries form the basis of discussion of trade and development. This paper first outlines the history and evolution. It then focuses upon analysis of policies adopted under alternative trade strategies. Thirdly, it discusses measures of protection and the effects, and then introduces factor market imperfections into the analysis. Finally, it deals with export pessimism and instability of the international market.