Towards an Alternative Perspective on Trade and Industrial Policies


  • S. M. Shafaeddin

    1. Senior economist in charge of the Macroeconomics and Development Policies Branch, Globalization and Development Strategy Division, of the United Nations Conference on Trade and Development (UNCTAD).
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  • Material for this article is drawn to a large extent from the recently published book by the author, Trade Policy at the Crossroads: Recent Experience of Developing Countries(Shafaeddin, 2005a). The author would like to thank an anonymous referee for comments on an earlier version. The views expressed here are those of the author and do not necessarily reflect the views of the United Nations.


Trade policy is at a crossroads, as is trade diplomacy, in the form of trade negotiations under the auspicious of the World Trade Organization (WTO). Widespread ‘traditional’ import substitution industrialization (ISI) strategies, which prevailed from the 1950s to the 1970s, failed. Across-the-board trade liberalization, recommended by the international financial institutions (IFIs) and neoliberal scholars in the 1980s and 1990s to promote outward-oriented industrialization and development, fared no better. What is next? Drawing on the experiences of developing countries in trade liberalization and economic reform in recent years, as well as the history of those countries which underwent early industrialization, this article aims to develop an alternative approach to trade and industrial policy by taking a bottom-up approach. The author presents a national policy framework (that is, a view of what is needed at the national level to catch up in the process of industrialization) and, on that basis, argues for changes in international trade rules.