Critique:

The critiques of the trade liberalisation policy have argued that despite the shifts from import substitution to economic liberalisation, the Latin American countries faced an economic crisis. Trade has been one of the major instruments of the globalisation process. Considering that exports play an important role in a country's growth process a vast body of literature  emerged on an analysis of the relationship between trade openness, export orientation and growth. It is argued that exports as a part of the national income identity contribute to the economic growth or GDP growth process. However, it is argued that exports are only one component of the national income identity therefore their role in propelling growth cannot be over emphasised.

Several alternative  explanations for export-to-growth linkage  have emerged. It is  also  argued  that  the  level and  stage of economic development might determine a country's ability to foster  export growth. Further the argument that trade liberalisation leads to exports and exports in turn contribute  to growth and  development was  also  challenged by putting  forward an alternative explanation for e xport-growth linkage  lying in  terms of world economic environment.  It  was  been found that, while there is a strong positive correlation between  exports growth and GDP growth for countries facing positive  world demand conditions, this correlation was very weak, or non existent,  for  countries facing  below  nomal world demand. Thus it was concluded that  outward-orientation  cannot  be considered as a universal recommendation under all conditions and for all types of countries. Some economists also point out that  the present-day developed countries had not practiced fiee  trade during  their  industrialisation  in the  nineteenth century, when they were at a comparable stage of development.

The foregoing details demonstrate that  the causality issues between export growth and economic growth have remained inconclusive and debatable and thus  trade liberalisation which is one of the major instruments of globalisation cannot be over-depended upon  for achieving growth objectives and  in turn, through growth, the developmental objectives  of poverty eradication, etc. There are various other arguments that have been advanced to contest the fiee trade  doctrine. According  to the national defence  argument import barriers could be necessary  to ensure the capacity  to produce and store  crucial goods  in crisis. This argument need not be applicable to military-related goods but for some countries  it  could  be in the areas  such  as  oil and natural gas, food, pharmaceuticals etc.  It  may  be  also argued that since protectionist  trade policies affect  the distribution  of  income, a trade restriction might be defended on the grounds that it favours some disadvantaged group.

Many  countries  enact  protectionist  trade  policies with the objective of eliminating or checking a balance of trade deficit or increasing a balance of trade surplus. The desire  to increase a  balance of  trade surplus  follows  from  the mercantilist  view that larger trade surpluses are beneficial from a national perspective. Countries also want to keep  the trade deficit as a proportion of national  income  within limits for avoiding  unnecessary strain on  their import-obligations  and  possibilities  of  default.  The  protection  of jobs argument is  closely related  to  the balance of trade argument. A domestic industry  faced  with  increased  imports from  foreign competition is under pressure  to reduce production and lower  costs. Productive resources must move from this industry  to other domestic industries. Workers must change jobs and, in some cases, relocate which puts pressure on them to accept jobs  at  lower wages.

The infant industry argument  is advanced in terms of promoting a domestic industry. In  a situation when  an  industry is being established in  a specific country the country might not he able to realise its comparative advantage in this  industry because of  the existing cost and other  advantages of foreign firms. Initially, while the infant firm is subject  to incur losses until the firm develops its  market  and  lowers  its  production  costs to  the level of  its  foreign competitors, it needs some protection. In order to assist this entrant, tariff protection can be used to shield the firm from foreign competition. Recent theoretical developments  have identified cases in which strategic trade policy is superior to free trade. Economies of scale and market structures that contain monopoly elements are common in the industries involved in international trade. Market imperfections immediately suggest the potential benefits of governmental intervention.  In the strategic trade policy argument, government policy can alter  the  terms of competition  to favour domestic over foreign firms and shift the excess returns in monopolistic markets fiom foreign  to domestic firms.