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Import Liberalization and Industrial Performance: The Conceptual Underpinnings
Author(s) -
Lall Sanjaya,
Latsch Wolfram
Publication year - 1998
Publication title -
development and change
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.267
H-Index - 93
eISSN - 1467-7660
pISSN - 0012-155X
DOI - 10.1111/1467-7660.00085
Subject(s) - liberalization , economics , scope (computer science) , economic interventionism , market failure , interpretation (philosophy) , criticism , convergence (economics) , free trade , industrial policy , government (linguistics) , empirical evidence , positive economics , public economics , neoclassical economics , macroeconomics , international economics , international trade , political science , market economy , politics , epistemology , linguistics , philosophy , computer science , law , programming language
Import liberalization is a centrepiece of conventional approaches to policy reform and structural adjustment. Despite substantial criticism of the effects of liberalization, the underlying economic reasoning is widely accepted. This article examines the ways in which different schools of thought analyse the effect of ‘opening up’ the economy on industrial development, and contrasts neoclassical and evolutionary approaches. Different conceptualizations of ‘market failure’ emerge as the focal point for differences in discussing the role and scope of government intervention, with a convergence between the information‐economics and firm‐level evolutionary approaches (particularly the ‘technological capabilities’ approach). The empirical literature and its interpretation by different schools are reviewed, demonstrating how policy recommendations are strongly affected by the particular theory that informs the analysis of market failure and efficiency. It is concluded that empirically oriented micro‐level approaches are the most promising in guiding policy decisions.