Trade Openess Theory

Introduction
In the 1970’s and 1980’s trade openness and economics reform towards market mechanism flourished in many developing countries. This trend is much different as compared to those in the early 1950’s and 1960’s when many less developed countries favored protection policy, inward orientation, and import substitution. As a result of this change, there are substantial developments in world economy after applying outward orientation. According to Thilrwall (2011 p. 514), the implementation of trade openness has managed world output trade relative to world output gain a considerable growth in the period of 1960-2006. The volume of world trade has risen 25 times or nearly 8 percent per annum (at annual compound rate). In the meantime world’s GDP has multiplied seven times during that period. However, some evidences on the development indicators in developing countries, such as poverty, inequality, unemployment, environment and health, show that they are more affected by trade liberalization. This paper aims to argue that even though trade openness shows successful indicators, some problems still exist when developing countries are more prone to get harm rather than gain. Trade openness per se is not the only solution for stimulating development at developing countries.
Evolution of Trade Theory
It is worthwhile to review some theoretical backgrounds supporting that trade openness can led to growth, as Marshal said in 1890 (as cited in Thirlwall p. 504) ‘the cause which determines the economic progress of nations belong to the study of international trade”. Robbins (2003) summarize some ( This part also mentions criticisms against those theories.

Firstly, David Ricardo (1817) is the pioneer who forms the static gains from tr...

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... In: Jha P and Chaloupka FJ (eds) Tobacco Control in Developing Countries. Oxford: Oxford University Press, pp. 343-364.

Paulino AS, Thirlwal A.P, 2004, The impact of Trade Liberalisation on Exports, Imports and the Balance of Payments of Developing Countries, Amelia Santos-Paulino and A. P. Thirlwall The Economic Journal Vol. 114, No. 493.

Robbins, DJ, 2003, the impact of trade liberalization upon inequality in developing countries: a review of theory and evidence, ILO Working Papers.

Squalli, J. and Wilson, K. (2011). A new measure of trade openness. The World Economy, 34(10): 1745-1770.

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