December 07, 2001

If You Don't Believe That Trade Causes Economic Development, You Have to Argue That There Is Some Powerful and Unidentified Development-Inducing Force Correlated with Trade

Gains from Trade if you divide poor countries into those that are more and less globalized, more globalized poor countries have grown faster than rich countries. Since 1980 manufactures have risen from 25% of poor-country exports in 1980 to more than 80% in 1998. Manufacturing export growth has been concentrated in two dozen countries, chief among them China, India and Mexico, that are home to 3 billion people. These economies have doubled their ratio of trade to national income. And the 1990s their GDP per head grew by an annual average of 5%. For the 2 billion people who live in the non-globalizing rest of the developing world, the story is very different. Trade has fallen relative to GDP. Income per capita has grown slowly, or has shrunk. And poverty has risen. Posted by DeLong at December 7, 2001 10:00 PM | TrackBack

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