Executive summary -- trade reform : lessons from eight countries

The question is not whether restrictive trade regimes should be reformed, but what measures should be taken, how rapidly, and in what sequence, in order to achieve trade reform without excessive transition costs. Analyzing the experiences of eight countries that have attempted trade reform during the past four decades -- Brazil, Argentina, Chile, Greece, Spain, Yugoslavia, Korea, and Singapore -- this book finds a number of lessons for successful liberalization. A recurrent theme is the importance of monetary and fiscal policy: radical reform of the foreign-exchange regime, undergirded by policies of economic stabilization, has initiated every significant and lasting trade liberalization. Other lessons emerge from the country studies. Although adjustment costs -- in particular, possible unemployment -- are to be expected in the transition from restricted to freer trade, there is little evidence to suggest that the liberalization episodes studied have led to net unemployment, even in the manufacturing sector. Moreover, major initial relaxation of quantitative restrictions on imports -- a key step in sustaining reform attempts -- appears typically to have been achieved with few transitory costs and with a major increase in economic growth. (Author abstract)