ch10 Trade Policy in Developing Countries 国际商务硕士 国际经济学 教学课件.pptVIP

Chapter 10 Trade Policy in Developing Countries Preview Import substituting industrialization Trade liberalization since 1985 Export oriented industrialization Introduction Which countries are “developing countries”? The term “developing countries” does not have a precise definition, but it is a name given to many low and middle income countries. Table 10-1: Gross Domestic Product Per Capita, 2005 (dollars) Import Substituting Industrialization Import substituting industrialization was a trade policy adopted by many low and middle income countries before the 1980s. The policy aimed to encourage domestic industries by limiting competing imports. It was often accompanied with the belief that poor countries would be exploited by rich countries through international financial markets and trade. Table 10-2: Effective Protection of Manufacturing in Some Developing Countries (percent) Import Substituting Industrialization (cont.) The principal justification of this policy was/is the infant industry argument: Countries may have a potential comparative advantage in some industries, but these industries can not initially compete with well-established industries in other countries. To allow these industries to establish themselves, governments should temporarily support them until they have grown strong enough to compete internationally. Problems With the Infant Industry Argument It may be wasteful to support industries now that will have a comparative advantage in the future. With protection, infant industries may never “grow up” or become competitive. There is no justification for government intervention unless there is a market failure that prevents the private sector from investing in the infant industry. Infant Industries and Market Failures Two arguments for how market failures prevent infant industries from becoming competitive: Imperfect financial asset markets Because of poorly working financial laws and markets (and more generally, a lack of property rights), f