Trade liberalization can boost growth rates from "summary" of Theory of Economic Growth by W. Arthur Lewis
Trade liberalization can boost growth rates through various channels. Firstly, by removing trade barriers such as tariffs and quotas, countries can increase their exports and imports. This can lead to greater specialization and efficiency in production, as countries can focus on producing goods and services in which they have a comparative advantage. As a result, resources can be allocated more efficiently, leading to higher productivity and economic growth. Additionally, trade liberalization can promote competition in domestic markets. When countries open up their markets to foreign competition, domestic firms are forced to become more competitive in order to survive. This can drive innovation and improvements in productivity, as firms seek to reduce costs and improve the quality of their goods and services. Ultimately, this can lead to higher levels of economic growth as firms become more efficient and dynamic. Furthermore, trade liberalization can encourage foreign direct investment (FDI) in a country. When countries open up their markets to foreign investors, it can attract capital, technology, and know-how from abroad. This can help to modernize industries, improve infrastructure, and enhance human capital development. As a result, countries can experience higher rates of economic growth as they benefit from the inflow of foreign investment.- Trade liberalization can play a key role in boosting growth rates in countries. By promoting trade, competition, and FDI, countries can achieve higher levels of productivity, efficiency, and innovation. This can lead to sustained economic growth and development over the long term.
