NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Trade and Industrial Policy Reform in Developing Countries: A Review of Recent Theory and Evidence

Dani Rodrik

NBER Working Paper No. 4417*
Issued in August 1993
NBER Program(s):   ITI

This paper reviews recent theory and evidence on trade and industrial policy reform in developing countries. First, the theoretical and empirical basis of the rationales for policy reform are discussed. Next, two sources of heterodoxy are identified and evaluated: (a) the East Asian experience with interventionist industrial policies; (b) recent models of imperfect competition. The survey then turns on strategic issues in reform, and discusses the theory of piecemeal reform, tax or tariff uniformity, credibility, political economy, and interactions with stabilization policy. The penultimate section reviews the available evidence on the consequences of recent policy reform.

*Published: J. Berhman and T.N. Snkivosan (eds.), Handbook of Development Economics, vol III, Amsterdam, North-Holland, 1996.

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