Developing Countries During World War II ( Wwii )

1211 Words5 Pages
Trade policy in developing countries obtained major influence from the changing views in economic development, namely, inward looking and outward looking (Moon, 1998). For about 3 decades after World War II (WWII), the trade policy of developing countries relies on inward-looking development. This type of development is implemented through autarky trade policies to protect country’s local manufacture industry. There are so many critics delivered during the inward looking development implementation. Then, around eighties, most of developing countries started to change its trade policies in to more outward-looking policy. Those two policies conflicts each other’s. One emphasizes the importance of the principle of comparative advantage, campaigning free market and export oriented policies, while the other highlights to foster domestic market through Import Substitution Industrialisation (ISI). ISI was a trade policy adopted by many developing countries before the 1980s. Two background of ISI implementation: first, the argument that there is a secular deterioration in the international relative prices of the principal exports of developing countries (primary commodities) and second, is infant industry argument that aimed to encourage domestic industries by protecting them from competing imports (Duncan and Quang, 2012). It was assume that domestic industry initially could not compete with the competitors from developed countries. Thus, import limitation was conducted through
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