Abstract

During the 1960s and the 1970s, industrial countries increasingly adopted trade liberalization. The General Agreement on Tariffs and Trade (GATT) provided them with a framework for a more coordinated multilateral liberalization of trade; successive GATT rounds of negotiations reduced tariffs and QRs among them. From the first round of multilateral talks to the close of the Tokyo Round in 1979, the average tariff on manufacturing in the major industrial countries was reduced from 40 percent to between 6 and 8 percent. In contrast, many developing countries, in their efforts to modernize, pursued inward-looking strategies, adopting “infant industry” support of nascent industries, and “import substitution” for the development of domestic industry. As part of this inward-looking strategy, tariffs, quota, and exchange and payments restrictions in many developing countries were increased.