Whose Interests Should Be the Paramount Concern of Government Trade Policy - the Interests of Producers (Businesses and Their Employees) or Those of Consumers?

JOURNAL OF ECONOMIC ISSUES Vol. XLIV No. 4 December 2010 DOI 10.2753/JEI0021-3624440402

Government-Led Export Promotion in Light of Distributional Fairness in the Global Trading System
Jai S. Mah

Abstract: Since developing countries were relatively free from the trade regulations relating to export promotion policies until 1994, the northeast Asian dynamic economies could pursue export promotion policies aggressively during the period of rapid economic growth. Under the current World Trade Organization (WTO) system, there are restrictions or even prohibitions on the developing countries’ use of export promotion policies. One may doubt the fairness of the current WTO system, which regulates the use of export promotion policies regardless of different economic development levels. The current paper suggests various ways of allowing developing countries to develop their production capacities and exports of manufactured products. It also provides suggestions on modifying the current WTO regulations in favor of the export promotion policies of developing countries. Such special treatment of developing countries could be justified from the viewpoint of distributional fairness applied to international trade relations. Keywords: distributional fairness, export promotion, international trade JEL Classification Codes: F13, F53, O25

Several developing economies including the East Asian tigers and China have achieved very rapid economic growth over the past decades. The outward oriented economic development strategy of those countries may have contributed to rapid economic growth due to an enlarged market, improvement of productivity, and vent for surplus, among other factors. Meanwhile, Sarkar (2008), using a sample of 51 developing countries (DCs), shows that there is no significant relationship between trade openness per se and economic growth. Reviewing the works of the early development economists such as Prebisch, Myrdal, and Singer, Ho (2008, 512-513) notices

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