What should poor countries be doing?
• In the 1950s and 1960s, the conventional wisdom was that poor countries should industrialize through import substitution, using tariff barriers or import quotas as a temporary measure to protect new manufacturing industries. (Historically, manufacturing in the US, Germany, and Japan developed behind such barriers.) The results have been disappointing. Manufacturers haven’t become efficient enough to be competitive without tariff barriers, for a number of reasons: lack of skilled labor, lack of management skills, social disorganization, small market size. • The current conventional wisdom is that the success of the Asian tigers is due to free trade and foreign investment. This implies that poor countries need to open up and liberalize their economies, reducing government control and regulation. Paul Krugman and Maurice Obstfeld (International Economics) point out that this story is too simple. Except for Hong Kong, the Asian tigers haven’t had free trade, and they’ve had plenty of gov
Related Questions
- Our company would like to begin exporting products to several countries. As we have no previous experience of doing this, can OCS Worldwide advise us?
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