Abstract
This article examines the existing literature on trade liberalisation and its effect on the economies of developing countries. It will also briefly examine the theory of comparative advantage which is seen as justification for global trade liberalisation under the auspices of the World Trade Organization. This process is also associated with greater openness, economic interdependence and deepening economic integration with the world economy. The study is important because once again the international institutions strongly advocate trade and financial liberalisation in developing countries. The proponents of trade liberalisation argue that multilateral trade negotiations would achieve these goals, and poor countries particularly would benefit from it. However, such policies may increase vulnerability and make developing countries further hostages of international finance capital. Adoption of open market policies in agriculture would also mean the abandoning of self-reliance and food sovereignty, which may have wider consequences in terms of food shortages, food prices and rural employment.
Highlights
The World Trade Organization (WTO) is widely seen as promoting prosperity through trade, especially favouring developing countries
The proponents of trade liberalisation argue that multilateral trade negotiations would achieve these goals, and poor countries would benefit from it; while critiques say that trade rules under the WTO and international financial institutions will acquire more power, which could restrict the ability of developing countries to pursue an independent economic policy
Trade-Related Aspects of Intellectual Property Rights (TRIPS) will increase the price of patentable knowledge to consumers and as a consequence, the flow of rents from the developing countries to developed countries will increase
Summary
The World Trade Organization (WTO) is widely seen as promoting prosperity through trade, especially favouring developing countries. On empirical grounds we have examples of successful economic development in East Asian economies such as Malaysia (Siddiqui 2012b), South Korea, Singapore and Taiwan, and more recently in China The success of their higher growth rates shows a clear role for governments in smoothing out the difficulties. A number of studies have pointed out that the governments in East Asian countries have invested in major outlays on infrastructure, education and skills development, import licensing, quotas, exchange rate controls and wage restraints (Rodrik 2004; Siddiqui 2012a) Enactment of all such policies by the states has resulted in the successful development of the manufacturing sector, with government-subsidised credits from state banks being extended to manufacturing in exchange for concrete results. P. Gallagher 2005, 8)
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