International trade

Aboubakr El Menjra ECON 3403 TERM PAPER 11/05/12 Essay 2: Growth and International trade Throughout the past century, World War I and II and different crises have allowed many different theories to arise as solutions for economic growth in the least developed nations. After the failure of the socialist oriented theories of dependency and structuralism, the richer countries decided to impose neoliberalism on the lesser-developed countries. This was done through multilateral organizations such as the World Bank for instance, and its structural adjustment policies. Poorer countries were only lent money if they accepted to implement a set of changes in their economic policies. These changes were all in favor of an outward looking strategy such as lowering of trade barriers, allowing foreign direct investment, deregulation, and privatization of important sectors. After over thirty years of neoliberalism, and questionable results, people are starting to draw conclusions on the efficiency of this theory. The review of Martin Wolf's book by Arvind Panagariya and the scholar article "How to help poor people" are both eloquent pieces on the validity of outward looking strategies as economic growth catalyzers. In his review of the Mircale of Globalization by Martin Wolf, Arvind Panagariya adopts a very much neoliberalism friendly stance. Furthermore, he even calls out the author of the book on his accusation against rich countries for adopting "double standards" in their trade barrier policies. Panagariya, by stating the following, positions himself early in the essay in favor of trade liberalization: "the book's most important contents are in part IV, in which Wolf examines and dismisses the critiques of free trade, of the role of multinational corporations in the global economy, and of capital mobility" (Panagariya, 2006). In dealing with the first part of his quote, and retaliating against free trade critiques, Panagariya refers to the examples of India and China, which experienced tremendous advances in the living conditions of their population through opening to international markets. The tendency of neoliberals to ensure that the positive paths of countries that have previously adopted free trade are a guarantee for success to all the other ones is eloquently brought up by Broad and Cavanagh in The hijacking of the development debate. In this article, they quote the neoliberal mentor Thomas L. Friedma...