Domestic Supply Constraints versus Market Access: International Trade and Economic Development in Tanzania

Abstract

The role of international trade in the growth of the world economy in general and in the development and structural transformation of less developed economies in particular cannot be overemphasised. The rapid growth of the world economy during 1950–73 has been partly attributed to the rapid growth of world trade made possible by a relatively more liberal global trading system.¹ LDCs which have succeeded in attaining sustained high rates of economic growth and structural transformation, such as South Korea, Taiwan and Brazil, have invariably recorded high rates of growth of exports and imports. A global trading system that guarantees individual countries easy access to other countries’ markets for their exports and imports is a necessary though not a sufficient condition for less developed economies to grow and transform their primary-production-based economies. Domestic economic policies must enable economic agents to take advantage of opportunities offered by international trade. Domestic policies may inhibit economic growth even when the global trading system provides easy access to markets.