Page "Trade and development" Paragraph 31

* Trade liberalization.

According to the World Bank, “ most analyses suggest that unilateral reduction in barriers can produce the greatest and the quickest gains .” Some countries, such as Chile, China and Costa Rica, have undertaken domestic policy reforms.

Caution must however be employed: as the case of Haiti shows, liberalization when institutions and the economy are not strong enough to face risks and opportunities can be harmful ( Rodrik 2001 ).

And while reforms may be beneficial in the long run, for example by reducing possibilities for customs corruption, in the short run they create both winners and losers.

Low-income consumers, unskilled workers in sheltered industries, and previously-shielded producers may suffer in the transition period as the economy adapts to changed incentive structures.

Temporary safety nets can help cushion the blow and ensure trade-led growth is pro-poor.

Specific assistance to meet costs of adaptation – for example of switching to a different crop – may be appropriate.