Year: 2025
Type: article
Abstract: The decision by developing countries to open up their economies to foreign trade and investment in the 1980s and 1990s was a momentous event in world history. How and why did this trade policy revolution take place? Most accounts of trade politics stress domestic interest groups or trade agreements as driving policy changes, but these explanations fail in this period. This paper notes that many import restrictions were imposed for balance of payments purposes, as a way of avoiding a devaluation and protecting foreign exchange reserves from depletion under fixed exchange rates. A shortage of foreign exchange in the mid-1980s forced countries, under the guidance of economists, to shift to a more flexible exchange rate system that boosted export earnings and made import controls unnecessary for payments balance. Just as seen during the Great Depression, the exchange rate regime was a key factor in a country’s trade policy.
Source: The Journal of Economic History
Author: Douglas A. Irwin
Institution: Dartmouth College
Language: English
Topic: Global trade and economics
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,550
OpenAlex ID: W4409303282