Unilateral Economic Liberalization
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In assessing the membership of the WTO from the perspective of small developing countries, it was concluded earlier that this membership does not settle many policy matters that must be dealt with regarding beneficial integration into the world economy. The framework offered by the WTO is only a starting-point and needs to be complemented by further economic policy decisions. WTO members can still maintain relatively closed economies. It has been noted that many developing countries entered the WTO with high tariff bindings. They can also continue to impose trade restrictions, for example on balance-of-payments grounds, relying on special and differential treatment. All in all, developing countries that have become WTO members must still make a variety of policy choices in order to achieve openness. Some choices relate to the sequencing and the speed of economic liberalization measures. Countries must also choose whether to move towards openness in a unilateral way or in a regional integration grouping. Whether openness is pursued unilaterally or regionally, it will increase interdependence and lead to constraints on economic policy. The size of the economy will affect the advantages and costs of these choices.
KeywordsExchange Rate Foreign Direct Investment Trade Liberalization Adjustment Cost Tariff Rate
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