A review of recent literature on international trade in developing countries

VoxDevLit: International Trade

Over the last four decades, many developing countries initiated reforms that have lowered barriers to trade. Yet despite these reforms, developing countries still remain far less open than developed ones–both because of tariffs that remain high but also weak contract and regulatory enforcement, inadequate transport infrastructure, search frictions, and a plethora of other distortions that are more severe in the developing world.

EGC Affiliate Amit Khandelwal and coauthor David Atkin shared the key takeaways from a new literature review of a broad set of empirical work that explores the impact of international trade in developing countries characterized by weak institutions, market failures and firm distortions. For each of these categories, the authors asked how the effects of trade policy may differ in the presence of such frictions, how trade may moderate or exacerbate the friction itself, and how policies should respond in the light of the answers to the first two questions.

Originally published on VoxDev on October 27, 2022