Impact of Trade Liberalization on Developing Countries

Executive Summary
The Relative Impact of Trade Liberalization on Developing Countries
It has become a standard refrain in policy circles that expanded trade holds the key to prosperity for developing countries. According to this view, if the industrialized countries would eliminate their trade barriers, especially in apparel and agriculture, this would provide a basis for growth in developing countries, pulling hundreds of millions of people out of poverty. As the World Bank wrote in its latest Global Economic Prospects: "A reduction in world barriers to trade could accelerate growth, provide stimulus to new forms of productivity-enhancing specialization, and lead to a more rapid pace of job creation and poverty reduction around the world" (World Bank 2002, p xi).
The evidence for this view is considerably less compelling than its proponents imply. While there are certainly reasons for believing that expanded trade can help to promote growth in developing countries, it is unlikely that trade liberalization, by itself, will qualitatively improve the plight of people in the developing world. …