Preferential schemes: a reappraisal

Abstract

The present paper elaborates further on a previous work by the author in which attention was directed to the lack of progress in the flow of resources to developing countries in the 1960s and the urgent need for a significant increase. Attention is concentrated on one of the key demands by the developing countries: namely, the granting of preferential tariffs on manufactures and semi-manufactures by the developed countries to the developing countries. It is shown that the lack of major progress in this area may be traced to the intellectual foundation of the preferential schemes and the way in which the preference issue has been debated by proponents and opponents alike. The author argues that the basic conflict between the two proposed approaches can be greatly lessened by advancing the aid argument rather than the infant industry argument. Moreover, if this issue is to move from the debating stage to the negotiating stage, the arguments have to be reappraised and the schemes have to be redesigned.

JEL: F13, F35, O19