Trade and industrialization in developing economies

This paper examines the impact of international trade on the allocation of production across sectors in developing countries. Estimates from a panel of 92 developing countries in the period 1960-2000 suggests that an increase in openness to trade leads to an increase in the industrial value added share of production, at the expense of the agricultural share. Therefore, trade leads the developing countries to industrialization, in contrast to what the infant industry argument would imply. (c) 2004 Elsevier B.V. All rights reserved.