《国际经济学英文课件：ch10 Trade Policy in Developing Countries》由会员分享，可在线阅读，更多相关《国际经济学英文课件：ch10 Trade Policy in Developing Countries（27页珍藏版）》请在金锄头文库上搜索。
1、Slides prepared by Thomas BishopCopyright 2009 Pearson Addison-Wesley. All rights reserved.Chapter 10Trade Policy in Developing CountriesPreviewImport substituting industrializationTrade liberalization since 1985Export oriented industrialization2IntroductionWhich countries are “developing countries”
2、?The term “developing countries” does not have a precise definition, but it is a name given to many low and middle income countries.3Copyright 2009 Pearson Addison-Wesley. All rights reserved.Table 10-1: Gross Domestic Product Per Capita, 2005 (dollars)4Copyright 2009 Pearson Addison-Wesley. All rig
3、hts reserved.Import Substituting IndustrializationImport 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 po
4、or countries would be exploited by rich countries through international financial markets and trade.5Copyright 2009 Pearson Addison-Wesley. All rights reserved.Table 10-2: Effective Protection of Manufacturing in Some Developing Countries (percent) 6Copyright 2009 Pearson Addison-Wesley. All rights
5、reserved.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 coun
6、tries.To allow these industries to establish themselves, governments should temporarily support them until they have grown strong enough to compete internationally.7Copyright 2009 Pearson Addison-Wesley. All rights reserved.Problems With the Infant Industry Argument1.It may be wasteful to support in
7、dustries now that will have a comparative advantage in the future.2.With protection, infant industries may never “grow up” or become competitive.3.There is no justification for government intervention unless there is a market failure that prevents the private sector from investing in the infant indu
8、stry.8Copyright 2009 Pearson Addison-Wesley. All rights reserved.Infant Industries and Market FailuresTwo arguments for how market failures prevent infant industries from becoming competitive:1.Imperfect financial asset marketsBecause of poorly working financial laws and markets (and more generally,
9、 a lack of property rights), firms can not or do not save and borrow to invest sufficiently in their production processes.If creating better functioning markets and enforcing laws is not feasible, then high tariffs would be a second-best policy to increase profits in new industries, leading to more
10、rapid growth.9Copyright 2009 Pearson Addison-Wesley. All rights reserved.Infant Industries and Market Failures (cont.)2.The problem of appropriability Firms may not be able to privately appropriate the benefits of their investment in new industries because those benefits are public goods.The knowled
11、ge created when starting an industry may be not appropriable (may be a public good) because of a lack of property rights.If establishing a system of property rights is not feasible, then high tariffs would be a second-best policy to encourage growth in new industries.10Copyright 2009 Pearson Addison
12、-Wesley. All rights reserved.Import Substituting IndustrializationAs a strategy to encourage manufacturing industries, import substituting industrialization in Latin American countries worked in the 1950s and 1960s.11Copyright 2009 Pearson Addison-Wesley. All rights reserved.Import Substituting Indu
13、strialization (cont.)But economic development, not encouraging manufacturing per se, was the ultimate goal of the policy.Did import substituting industrialization promote economic development?No, countries adopting these policies grew more slowly than rich countries and other countries not adopting
14、them.12Copyright 2009 Pearson Addison-Wesley. All rights reserved.Import Substituting Industrialization (cont.)It appeared that the infant industry argument was not as valid as some had initially believed.New industries did not become competitive despite or because of trade restrictions.Import subst
15、itution industrialization involved costs and promoted wasteful use of resources:It involved complex, time-consuming regulations.It set high tariff rates for consumers, including firms that needed to buy imported inputs for their products.It promoted inefficiently small industries.13Copyright 2009 Pe
16、arson Addison-Wesley. All rights reserved.Trade LiberalizationThere is some evidence that low and middle income countries which had relatively free trade had higher average economic growth than those that followed import substituting industrialization.But this claim is a matter of debate.Regardless,
17、 by the mid-1980s many governments had lost faith in import substituting industrialization and began to liberalize trade.14Copyright 2009 Pearson Addison-Wesley. All rights reserved.Table 10-3: Effective Rates of Protection for Manufacturing in India and Brazil15Copyright 2009 Pearson Addison-Wesley
18、. All rights reserved.Fig. 10-1: The Growth of Developing-Country TradeSource: World Bank16Copyright 2009 Pearson Addison-Wesley. All rights reserved.Trade Liberalization (cont.)As with import substituting industrialization, economic development was the ultimate goal of trade liberalization.Has trad
19、e liberalization promoted development?The evidence is mixed.Growth rates in Brazil and other Latin American countries have been slower since trade liberalization than they were during import substituting industrialization, 17Copyright 2009 Pearson Addison-Wesley. All rights reserved.Trade Liberaliza
20、tion (cont.)But unstable macroeconomic policies and financial crises contributed to slower growth since the 1980s.Other countries like India have grown rapidly since liberalizing trade in the 1980s, but it is unclear to what degree liberalized trade contributed to growth. Some economists also argue
21、that trade liberalization has contributed to income inequality, as the Hechscher-Ohlin model predicts. 18Copyright 2009 Pearson Addison-Wesley. All rights reserved.Export Oriented IndustrializationInstead of import substituting industrialization, several countries in East Asia adopted trade policies
22、 that promoted exports in targeted industries.Japan, Hong Kong, Taiwan, South Korea, Singapore, Malaysia, Thailand, Indonesia, and China are countries that have experienced rapid growth in various export sectors and rapid economic growth in general.These economies or a subset of them are sometimes c
23、alled “high performance Asian economies.”19Copyright 2009 Pearson Addison-Wesley. All rights reserved.Export Oriented Industrialization (cont.)These high performance Asian economies have generated a high volume of exports and imports relative to total production.By this standard, these economies are
24、 “open economies.”But it is debatable to what degree these economies established “free trade.”Although evidence suggests that these economies did have less restricted trade than other low and middle income countries, some trade restrictions were sometimes still in effect.20Copyright 2009 Pearson Add
25、ison-Wesley. All rights reserved.Table 10-4: Average Rates of Protection, 1985 (percent)21Copyright 2009 Pearson Addison-Wesley. All rights reserved.Export Oriented Industrialization (cont.)It is also unclear if the high volume of exports and imports caused rapid economic growth or was merely correl
26、ated with rapid economic growth.Some economists argue that the cause of rapid economic growth was high saving and investment rates, leading to both rapid economic growth in general and rapid economic growth in export sectors. In addition, almost all of the high performance Asian economies have exper
27、ienced rapid growth in education, leading to high literacy and numeracy rates important for a productive labor force.22Copyright 2009 Pearson Addison-Wesley. All rights reserved.Industrial Policies in East AsiaSome East Asian economies have implemented industrial policies: policies intended to promo
28、te certain industries.Examples of industrial policies include not only tariffs, import restrictions, and export subsidies for import-competing industries and export industries, but also policies like subsidized loans for industries and subsidized research and development.But not all high performance
29、 Asian economies implemented these policies, and the ones that did had a wide variety of policies.23Copyright 2009 Pearson Addison-Wesley. All rights reserved.Industrial Policies in East Asia (cont.)There is little evidence that countries with industrial policies had more rapid growth in the targete
30、d industries than those that did not.There is some evidence that industrial policies failed: chemicals, steel, automobiles were promoted by the South Korean government in the 1970s, but the polices were later abandoned because they were too expensive and did not produce desired growth.24Copyright 20
31、09 Pearson Addison-Wesley. All rights reserved.Summary1.Import substituting industrialization aimed to promote economic growth by restricting imports that competed with domestic products in low and middle income countries. 2.The infant industry argument says that new industries (ex., in poor countri
32、es) need temporary trade protection because of market failures:imperfect asset markets that restrict saving, borrowing and investment in production processesproblems of appropriating gains from private investment in production processes25Copyright 2009 Pearson Addison-Wesley. All rights reserved.Sum
33、mary (cont.)3.Import substituting industrialization was tried in the 1950s and 1960s but by the mid-1980s it was abandoned for trade liberalization.4.The precise effect of liberalized trade on national welfare is still being debated.Trade helped growth in some sectors, but saying that trade caused h
34、igher overall economic growth has attracted some skepticism. Some argue that trade has caused increased income inequality.26Copyright 2009 Pearson Addison-Wesley. All rights reserved.Summary (cont.)5.Several East Asian economies adopted export oriented industrialization instead of import substitutin
35、g industrialization.High export and import volumes and relatively low trade restrictions were characteristics of this policy.But it is unclear to what degree this policy contributed to overall economic growth.6.Some East Asian economies used more general industrial policies as well.But it is unclear to what degree this policy contributed to or hindered overall economic growth.27Copyright 2009 Pearson Addison-Wesley. All rights reserved.
