Introductory Chapter

Abstract

Theoretical Perspectives on Trade and Global Market at the very beginning deals with the relationship between trade openness and economic growth which is ambiguous from both theoretical and empirical point of view. The theoretical propositions reveal that while trade openness leads to greater economic efficiency, market imperfections, differences in technology, and endowments may lead to adverse effect of trade liberalization on individual countries. The empirical evidence pointing to the benefits of trade liberalization and bringing theoretical issues on possible adverse effect of openness to the fore has been reexamined. It has been argued that “passive” trade liberalization may not necessarily lead to positive economic outcomes, particularly in less advanced transition economies. Considering the empirical work on the matter, a lot of controversies are related to measurement issues. We find that openness measured by trade intensity indicators may lead to misleading conclusions about the trade growth nexus. Hence, the discussion of policy implications regarding the positive influence of trade barriers on economic growth goes well beyond the context of transition.