International Trade and Economic Development

Abstract

Developing countries have had an ambivalent attitude toward international trade as a means of stimulating economic growth and development. On the one hand, their policymakers have been skeptical of a trade-oriented strategy because it appears to be associated historically with colonialist domination, unstable export prices, dualistic patterns of economic growth, and an emphasis on nonindustrial production. On the other hand, developing countries wishing to become less dependent on the developed countries still have a need for foreign exchange to finance the importation of industrial raw materials, intermediate goods, and capital goods not available locally. When prices for their exports are favorable and world market demand is strong, trade seems clearly beneficial to growth and development. Accordingly, developing countries are motivated to seek ways of keeping export prices high and expanding the market for their products.