Trade Policies and Industrialisation.

In this paper, the three-commodity model of Gruen and Corden is used to examine the effects of import restriction policies designed to promote industrial development. It is shown that under circumstances which might reasonably be expected to exist in developing economies such policies will likely appear successful in the short run, but may fail in the long run, if the import-competing sector's expansion is largely achieved by the diversion of resources form an infant manufacturing sector producing exportables. An export subsidy is the more appropriate policy under these circumstances. [ABSTRACT FROM AUTHOR]