International Trade and Economic Development

Abstract

In principle, several different relations can be envisaged between the performance of the foreign trade sector and an economy in the process of development. To the extent that the classical economists offered a judgement, it was held that foreign trade could make an impressive contribution to a country’s growth and development. Trade was not only considered a device for achieving production efficiency, but was a powerful ‘engine of growth’ which incorporated a variety of dynamic effects that could raise living standards. On the other hand, several alternative growth models accent potentially negative aspects of trade and recommend that export promotion be given less weight than production geared to local needs. Finally, some models relegate the export sector to a more or less neutral role, in which export revenues are just sufficient to cover capital equipment costs.¹