Review of Hoo Chang article on free trade

The article talks about how several countries benefitted from free trade and not from selective protection, as some critics opined. As the author says, the critics have concluded based on some half-truths, and he has some evidence to debunk those notions. He starts the article with a brief outlook of what happened in the past, post-second world war. He says during that turbulent period, many countries, especially developing ones, have embraced the notion that import substitution is the best alternative to achieve growth in the economy. He cites some examples such as South Korea, Taiwan and Singapore that broke away from this consensus but still managed to achieve tremendous growth. Though some political scientists such as Alice Amsden and Robert Wade proposed that selective protection and industrial policies contributed to the success, the author says trade liberalisation in these countries, brought about that growth. He exposes with evidence the fallacies in the notions of critics such as Dani Rodrik, Chang etc., and debunks the myths surrounding the ISI approach.

The first myth was chiefly about the idea that it was from 1960 to 1973; the developing countries grew at an incredible pace. The author reveals that those countries did not grow fast during that period, but the growth happened decades later, as they embraced liberal and outward-oriented policies. The second claim was that industrial policy and selective protection was the reason behind East Asian tiger economies' growth. The author debunks this misconception by giving evidence about South Korea, which increased when it adopted an export-oriented strategy. The third claim was that the export-oriented approach was not the impetus to GDP growth as that approach followed, rather than led, that growth. He presents two counterarguments here. First, the critics have not included the contribution of exports to GDP growth, and second, the countries took several measures to shift policy toward reducing anti-export and pro-import-substitution bias, which led to development. The fourth myth was that exports' contribution was too insignificant to be considered a driver of growth. He says even if export sales were small concerning the GDP, the total sales of exportable products were not. He also says several export incentives gave a significant push, not only for exports but also for domestic sales of export products. The fifth claim was that government interventions helped Taiwan and South Korea to grow. The author counters that other countries with minimal government interventions grew faster. Countries like China and India achieved a growth trajectory because of liberalisation policies.

He concludes by saying liberal trade policies are necessary for growth. Protectionist ideas and approaches may descend countries back to oblivion. This concept applies to developed countries too. So governments must consider long term consequences before making any trade decisions.