Panagariya puts forth a trenchant case against import tariffs and other forms of trade protectionism in developing countries. He carefully reviews both the economic theory of import substitution (government-led efforts to replace imported goods with domestically produced ones) and the empirical evidence from the past six decades showing which trade policies have fostered economic growth in developing countries. A vigorous supporter of free trade, he criticizes those who advocate import substitution as a path to development. He concedes that rapid economic growth often raises income inequality even as it almost always slashes poverty, but he cautions that some policies aimed at reducing inequality, including import substitution, may thwart growth and thus leave most people worse off.
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