Trade Policies and Economic Development

Abstract

The availability of foreign exchange constitutes a major constraint on the pace of economic development in many developing countries. This constraint has its roots in (a) unfavourable conditions of external demand for a number of major export products of the developing countries; (b) structural rigidities and imbalances characteristic of the economies of the these countries ; and (c) in a number of cases, a failure to pursue appropriate economic policies. Usually all the three factors listed above operate simultaneously, though the relative importance of any single factor varies not only from country to country but also from one time period to another in the same country.

Professor Jagdish Bhagwati’s, The Theory and Practice of Commercial Policy: Departures from Unified Exchange Rates, Special Papers in International Economics, No. 8 (Princeton, 1968) contains a much more comprehensive and rigorous analysis of many of the issues discussed in this paper. See also S. C. Tsiang, ‘Tax, Credit and Trade Policies to promote the Production and Export of Manufactures of Developing Countries’, Journal of Development Studies, I, 2 and 3 (1965).