Influence of Trade Liberalization Policy on the Developing Economies

The following paper provides new useful insights into the problem of relation between economic growth rates and particulars of liberalization policies that developing countries assume. It has become common knowledge that trade openness tends to lead to positive economic results for states. However, the mechanisms of such results beg further discussion, especially when it comes to developing nations. Specifically, we try to elucidate the issue of proper liberalization policies that both maximize the profits for developing countries, and ensure a minimum-risk accommodation to the necessary trade policy changes. In order to substantiate hypotheses of the research a powerful tool of statistical analysis is applied. It is shown that the results tend to be robust on different models so the findings do describe the real tendencies of the matter. The main point that we seek to prove is that in order for a liberalization policy to work in a developing country it is essential that proper institutional preparations be made, otherwise the effects of these policies are going to amount to little, if not go negative. The main theoretical explanation of the phenomenon lies in the idea that long term institutional changes precede any effects of policy changes.