Structural Change: Accommodating Imports from Developing Countries

Although the proposition is sometimes called into question, there is substantial evidence that there is a close connection between economic development on the one hand, and export growth on the other. In looking to expanded developing country intra-trade

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it seems difficult to share the optimism of some that trade between developing countries provides an alternative to growth in North/South trade

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. Furthermore, recent history has further validated the proposition that the accumulation of foreign debt is no long-term substitute for exports; and even if conceived as a short-term relief, accumulated foreign debt can, in fact, seriously impede the process of economic development due to changing external conditions not under the control of the borrowing country. Hence whatever solution to the present debt problem of developing countries may eventually be found, export growth will have to continue if development is to proceed. The envisaged reduction of foreign debt from present high levels calls for even larger export increases in the years to come.

*The author was until 1985 Professorial Fellow, Centre of Policy Studies, Monash University, Australia and Senior Fellow in Economic Policy with the Reserve Bank of Australia. While he is currently Senior Counsellor at GATT, the chapter was written while he was employed by UNCTAD. A special debt is owed to Sam Laird of the World Bank for his contributions to the modelling section. Rene Vossenaar of UNCTAD generated the data on NTBs. Helpful comments on an earlier draft by Robert Baldwin of the University of Wisconsin and Richard Eglin of the GATT secretariat are gratefully appreciated. The views expressed in this chapter are those of the author and not the institutions with which he is currently, or has been associated.