Rethinking Trade and Commercial Policy Theories

Rethinking Trade and Commercial Policy Theories

Development Perspectives

P. Sai-wing Ho

This controversial book offers a unique approach to rethinking the trade and development literature and will therefore strongly appeal to researchers, academics, and students of trade and development as well as those involved in the history of economic thought.

Chapter 1: Introduction

P. Sai-wing Ho

Subjects: development studies, development economics, economics and finance, development economics, international economics

Extract

1.1 THIS BOOK'S CONCEPTION To most readers it is probably too obvious to point out that a substantial portion of the rationale behind the push toward globalisation - in its trade or trade-related aspects - is based, directly or indirectly, upon the mainstream or orthodox trade and commercial policy theories that have long exercised dominance within the economics profession.! Nevertheless, as trite as that observation may sound, it usefully reminds one that any serious voice of caution against those aspects of the globalisation process must necessarily take on those theories. For the sake of discussion they can be grouped into two intimately connected sets that essentially constitute two sides of the same coin. One set has to do with the illustration that free trade is, under assumptions that are widely regarded by the economics mainstream as standard and innocuous, the 'best' or 'most efficient' trade policy.2 In the rest of this book these are referred to as the static classical trade theories. 3 The flip side, the other set, relates to the claim that deviations from free trade would, under the same list of assumptions made in the first set of theories, not be efficient as a trade policy. Even if there are 'market failures', deviations from free trade would in most cases fare no better than 'second-best'. In the rest of this book this set is referred to as the theory of commercial policy, or more technically known as the theory of domestic divergences or distortions. 4 In both...