Trade and Growth

The relationships between trade and growth have long been a subject of considerable controversy among economists. In the early post-World War II period, many economic leaders concluded that protective trade policies stimulated growth, and import substitution policies were widely adopted by developing countries. By the 1980s, however, country-specific and general cross-country analyses had demonstrated the failure of the import substitution approach, and consequently export-oriented policies were widely adopted. While subsequent cross-country studies have generally indicated the growth effectiveness of outward-looking policies, recent criticisms of these studies (by Rodriguez and Rodrik, 1999, in particular) have called this conclusion into question ...