Summary and Conclusions
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By integrating into the world economy, developing countries can take advantage of the current globalization trend. Participation in the world economy calls for openness; in other words, barriers to international trade, investment and payments should be reduced. There is overwhelming evidence that lack of openness or autarky prevents the achievement of optimal results. However, there are different strategies towards openness. And there are risks as well as opportunities. Small developing economies face extra problems because of their lack of economic diversification and vulnerability. Opening up the economy will lead to adjustment costs that can be very high and socially disruptive. How should openness best be achieved in the case of small developing countries? Should they move towards openness in a unilateral way or in a regionally coordinated way? How should regional partners be selected? What is the contribution of non-reciprocal preferences granted by the North? Are they still worth the trouble? Should there be more attention for reciprocal North-South arrangements? This chapter suggests some answers to these questions.
KeywordsWorld Trade Organization Regional Integration Uruguay Round Free Trade Area Trade Diversion
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