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Has Trade Liberalisation in Poor Countries Delivered the
Promises Expected?
*
Penélope Pacheco-López and A.P. Thirlwall
Abstract
The paper reviews the evidence of the impact of trade liberalisation on the economic
performance of poor developing countries with respect to poverty reduction, the
distribution of income within countries, the distribution of income between countries,
trade and the balance of payments, and economic growth, and finds that liberalisation
has not delivered the benefits expected. Economic theory, and the historical and
contemporary evidence, all provide arguments for protection of industrial activities in
developing countries.
Key words: Trade liberalisation, trade policy, income distribution, poverty
JEL Classification: F 10; F 13; F 43; F 46
*
The authors are, respectively, Economic Consultant and Professor of Applied Economics, University
of Kent, UK.
Has Trade Liberalisation in Poor Countries Delivered the Promises Expected?
Trade liberalisation has not lived up to its promises. But the
basic logic of trade ― its potential to make most, if not all,
better off― remains. Trade is not a zero-sum game in which
those who win do so at the cost of others; it is, or at least can
be, a positive-sum game, in which everybody is a winner. If
that potential is to be realised, first we must reject two of the
long-standing premises of trade liberalisation: that trade
liberalisation automatically leads to more trade and growth,
and that growth will automatically “trickle down” to benefit
all. Neither is
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