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Free trade and development

I. Points covered: How did today’s developed countries become rich? What lessons from the past should today’s developing countries learn? II. Critical skills: critique. Free trade and development.

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Free trade and development

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  1. I. Points covered: • How did today’s developed countries become rich? • What lessons from the past should today’s developing countries learn? II. Critical skills: critique Free trade and development

  2. What can today’s developing countries learn from the development process of today’s developed countries from the 17th to the 20th century? Learning from the past

  3. How do the developmental policies of today’s developed nations compared to the measures recommended to today’s less developed nations? Learning from the past

  4. Development in the past (1600-1970) had little to do with the laissez faire policies which the WTO and IMF recommend to developing countries today. Development in the past

  5. ‘Infant industry promotion’: It is very difficult for a country to develop if it practises free trade. Why? Because its domestic industry won’t survive the competition of more developed nations. Protectionism and tariffs

  6. Examples: Britain and the US ‘Kicking away the ladder’ Japan: an alternative ladder to development Protectionism and tariffs

  7. Chang (p. 27): Important to compare not tariff levels but tariff levels in comparison to the amount of ‘catching up’ a nation has to do relative to the richest nations. Protection then and now

  8. Elements of the model: Heavy state intervention in: investment, credit provision, state banks, training/education, infrastructure Protectionism (undervalued exchange rate, tariffs) The ‘east asian model’

  9. 2 mutually exclusive critiques of WTO: WTO rules and free trade are good; however, rules are not fairly applied. The solution is to apply the rules fairly. Concluding comments

  10. Free trade not unambiguously good; it is bad during the ‘catching up’ period; prior to catching up, developing countries should be exempt from WTO rules.

  11. Economists and politicians are often totally ignorant of historical fact. • Do NDCs have an interest in the development of LDCs? A conspiracy theory?

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