Trade liberalization, growth and distribution in developing countries: Leading experiences

This paper makes an intensive review of the literature on trade liberalization and its impacts on growth and distribution in developing countries. A growing surge of literature on internal and external trade reforms for the last two decades comprises both transition and developing economies. Most of the theoretical studies are, in fact, the extensions of Stolper-Samuelson theorem. Empirical studies, however, differ based on their methodological approaches; but they can be broadly grouped into cross-country regression analysis, country-specific partial analysis, and general equilibrium analysis. This paper concludes that trade reforms are growth enhancing but they require complementary policies to make the growth pro-poor. So long as the macroeconomic parameters improve or do not deteriorate, at least, the potential impacts are sustainable.