Trade and Global Links

Abstract

It is useful to begin by outlining the features of a desirable and efficient trade regime. Rather than embarking on the difficult task of constructing the attributes of a desirable trade regime in the abstract, one might take the actual trade and development regime pursued by the most successful cases of development in recent history. By nearly universal consensus the East Asian development model, the one adopted by the pioneers like Japan, the Republic of Korea, Taiwan and others, is the natural candidate for an example of such a regime.1 A slightly stylized version of the system of promoting East Asia’s export-led industrialization might be described as follows. It avoided widely varying arbitrary protection that robs the economy of indicators that guide efficient allocation of resources; but it was not a free trade regime. There were widespread public intervention to provide direct incentives to worthwhile infant industries. But such incentives did not discriminate against sales in the export market vis-a-vis the domestic market. The defining characteristic of the East Asian trade regime is not free trade or near-free trade, but non-discrimination against exports.