2. 1 Lecture 8 Don DeVoretz Trade as a Handmaiden of Growth ? An Overview

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4. 3 1. How does trade affect rate and structure of LDC Growth? –Structure: x’s/GDP =%, % of mfg x’s. % of ag x’s 2. What are conditions for Trade to act as an impetus to growth ? –What were the historical conditions is Canada ? QUESTIONS:

5. 4 More Questions 3. What are conditions for Trade to act as an impediment to growth ? –Income and price elasticities of demand 4. What is the best set of commercial policies to follow to achieve growth through trade ? –Outward looking indices convertibility, effective tariff rates

6. 5 Final Questions 5. How do you measure the trend in export and import prices ? 6. Should LDC's join DC's in trade unions ? –What has happened to Mexico and Chile in Nafta ?

7. 6 Trade: Facts and Figures Facts: –Is there a story here ? –Is Trade a Handmaiden of Growth or Not ? Growth in International Trade after 1970 (billions $1980) –Year19701980198619901995 World Exports:3122,0022,1133,1873,555 % Developed72%66%69%75%77% % LDC’s17%28%20%17%15%

8. 7 B.Several Trends emerge Ten fold increase in 25 years Underdeveloped rise and fall of share owing to mineral and oil prices. Cartels don’t work in long-run, OPEC, tin, coffee, cocoa, etc. Within the developed-underdeveloped grouping is great variance; –.NICS’s South Korea, Hong-Kong, Singapore and Taiwan versus.India and ROW

9. 8 NICS Patterns –Mfg. X’s as % of total X’s %Total ExportsGDP –196519751990196519751990 –Taiwan468393263451 –Korea52779492432 –HK929796564950 –Singapore29407381178132 –Brazil52353686 –Mexico1430443819

10. 9 C. What Do we Learn from NICS ? Mfg is key. Why? –. Income and price elasticity of demand »[D(P*Q)/(P*Q)]/ [D( Y/Y)/(Y/Y)]> 0 –Business cycles can affect you –Exchange rate depreciation is often key to stability and growth

11. 10 End of Show