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• • • • • FREE TRADE. Some of the world’s poorest countries have tried to achieve more rapid economic growth’ by pursuing inward-oriented policies.
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These policies attempt to increase productivity and living standards within the country by avoiding traction with the rest of the world. Domestic firms, claiming they-need protection of foreign competition to thrive and grow, often support this infant-industry argument. Together with a general distrust of foreigners, it has at times led policymakers ‘in less developed countries to impose tariffs another trade restrictions. Most today believe that p~or countries are better off pursuing outward-oriented policies that into grate these countries into the world.economy, ‘When we -studied earlier in this book, we showed how trade can improve the economic well-being of a country’s citizens, Trade is, in some ways, a type of technology.
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When’ a country exports wheat and important steel, the country benefits as if it Untenanted a technology for turning wheat into’ steel. A country that eliminates trade restrictions will, therefore, experience the same kind of economic growth that would occur after a major technological advance The adverse impact of inward orientation becomes clear.when one considers the size of many less developed economies. The total GDP of Argentina, for, instance, is about that of Philadelphia.
