Trade Liberalization and Economic Development

Abstract

B oth developed and developing countries have sub- stantially reduced trade barriers in recent decades, triggering a rapid integration of world goods markets.Yet, while economists and policymakers have often touted trade liberalization as an attractive policy, it is not well understood whether the impact of trade liberalization depends on a country's level of economic development.This essay investigates the extent to which trade liberalization affects developed and developing countries differently.In particular, we examine whether exports respond differently to changes in trade barriers in rich and poor countries.