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TRADE BETWEEN DEVELOPED
AND DEVELOPING COUNTRIES':
THE DECADE AHEAD
Bela Balassa
CONTENTS
Introduction............................... 8
1. Trade policies and interdependence through trade in manufactured
goods...............................
Trade policies of developed countries Trade policies of developing countries Trade in manufactured goods between developed and developing
countries.............................. 13
11. Multilateral trade liberalisation and the interests of developed and
developing countries........................ 16
Trade liberalisation in developing countries and developed country
interests.............................. 16
Trade liberalisation in developed countries and developing country
interests.............................. 19
Trade negotiations between the developed countries and the newly -
industrialising developing countries................. 20
111. Modalities for North-South trade negotiations........... 2 1
The content of the negotiations.................. 22
The adjustment problem...................... 23
Concluding remarks........................... 24
Bibliography............................... 25
Steps towards a North-South round of trade negotiations.. ,.. 21
This paper was prepared as part of a consultancy for the OECD by Bela Balassa, Professor of Political Economy at the Johns Hopkins University and Consultant to the World Bank. The opinions expressed herein are those of the author and should not be interpreted to reflect the views of the World Bank, the OECD, or its Member Governments. The author is grateful for helpful comments on the initial draft of the paper by participants at a seminar held at the OECD and by Costas Michalopoulos of the World Bank.
INTRODUCTION
Trade between developed and developing countries, and the trade policies of
the t w o groups of countries, are matters of considerable interest. It has been
suggested, for example, that this trade should have a central role in any " new round "
of GATT negotiations. Yet, it is difficult t o find a comprehenseive statement of what
the interests of developed and developing countries in trade liberalisation actually
are. This paper aims to define the interests of the developed and developing countries in the liberalisation of their mutual trade. Possible approaches to
harnessing these interests for promoting North - South trade in the decade ahead will
also be analysed. The context for the discussion is the trade policies of developed and developing countries in the postwar period.
1. TRADE POLICIES AND INTERDEPENDENCE THROUGH TRADE
IN MANUFACTURED GOODS
Trade policies of developed countries
In the years following the Second World War, the developed countries reduced
their tariffs in the framework of successive rounds of trade negotiations on an
item - by - item basis. The negotiations involved a compromise between the principles
of reciprocity and of nondiscrimination. With the developing countries offering few
tariff concessions, the developed countries exchanged such concessions on products of interest to them. The developing countries nevertheless benefitted from the tariff reductions
that were made under the most - favoured - nation clause. By the early 1960s' tariffs
on manufactured goods imported from the developing countries had declined to a considerable extent, although remaining higher than the developed countries' overall tariff average on manufactured goods. (Balassa 1965, Table 2). A t the same time,
these tariffs showed a tendency towards escalation from lower t o higher levels of
fabrication, thereby discriminating against processing activities in the developing
countries.
Table 1. Changes^ in^ the volume^ of^ trade^ in^ manufactured goods between developed and eveloping countries, related to changes in GNPa
Industrial countries 1963 - 73 1973 - 78 1978 - 81 1973 - 81 Developing countries 1963 - 73 1973 - 78 1978 - 81 1973 - 81 Oil - importing developing countries 1973 - 78 1978 - 81 1973 - 81
Average annual rate of growth Imports GNP
6.5 4. 0.2 2. 8.4 2. 9.5 2.
8.2 6. 12.5 5. 8.3 2. 11.7 4.
7.2 4. 9.5 4. 8.1 4. Oil - exporting developing countries 1973 - 78 24.2 8. 1978 - 81 6.9 - 1. 1973 - 81 17.4 4. a ) This table contains revised GNP growth rates for the developing countries.
Apparent income elasticityb
6) The apparent income elasticity has been calculated with respect to GNP. rather than national income. Where^ terms^ of trade changes have been important, as for the oil-exporting countries in particular, these two measures can diverge substantially. Bela Balassa, "Trends in International Trade in Manufactured Goods and Structural Change in the Industrial Countries," invited paper prepared for the 7th World Congress of the International Economic Association on Structural Change, Economic Interdependence, and World Development, held in Madrid, Spain on September 5- 9, 1983.
Source:
cent in 1 9 8 1, with incremental shares (the ratio of increases in imports t o increases
in apparent consumption) rising from 2.4 per cent in 1973 - 78 t o 3.8 per cent in
1978 - 8 1 (Table 2).
Notwithstanding some tightening of the Multifiber Arrangement, the devel - oping countries also succeeded in raising their share in developed country markets for textiles and clothing. This result indicates the success of the developing countries in circumventing the restrictions imposed by the developed countries on textiles and clothing. This has occurred through upgrading as well as through the shift of exports t o products, and the shift of the place of production t o countries which are not subject t o restrictions. More generally, while the expansion of exports has been constrained by existing import restrictions as well as by the threat of the imposition of restrictions, the process of diversification in the developing countries has permitted them t o
increase their shares in developed country markets for manufactured goods in an unfavourable world environment. Thus, the success of the developing countries in exploiting the possibilities available in developed country markets has been determined t o a great extent by the policies applied by the developing countries themselves. The policies followed by the developing countries have also affected their ability to export primary commodities. But developed country policies have also had important effects. Foods produced in developing countries which compare with
domestic production in the developed countries encounter barriers in these countries
and often have t o compete with their subsidised exports. The Common Agricultural
Policy of the EEC as well as Japanese restrictions affect, in particular, sugar, cereals,
vegetable oils and oilseed, beef and veal, wine, and tobacco; while the United States limits the importation of sugar and, to a lesser extent, oilseeds.
It has been estimated that a 50 per cent reduction in the developed countries'
trade barriers on foods would lead to an 1 1 per cent increase in the exports of these
commodities from the developing countries. (Valdez and Zietz, 1980). This figure
understates, however, the impact of the developed countries' agricultural policies on developing country food exports by excluding the effects of export subsidies. Yet subsidies t o food exports have increased over time, in particular in the European
Economic Community, contributing to a decline in the world market shares of the
developing countries. Thus, the policies applied by the developed countries have retarded the growth
of food exports from the developing countries, which did not surpass the 1973 level
in 1981. In the same period the exports of raw materials declined slightly as the
recession in the developed countries affected developing country exporters of these products more than proportionately3. But the policies applied in many developing countries have also discriminated against their own export of primary products. While an increasing number of developing countries have come to provide incentives t o manufactured exports, such measures have rarely been used in favour of primary commodities.
Trade policies of developing countries
In the early postwar period, the dominant development strategy pursued by the developing countries involved import substitution in the manufacturing sector behind high protective barriers. This strategy favoured manufacturing activities producing for domestic markets and discriminated against manufactured as well as primary exports, and against primary production in general.
In the first half of the 1960s, Korea, Singapore, and Taiwan joined Hong Kong
in pursuing an outward - oriented development strategy. Under this strategy, similar
incentives are provided to exports and t o import substitution as well as to primary
and to manufacturing activities.
I 1
t o a lesser extent on foreign borrowing, put the borrowed funds t o better use, and
reached higher rates of export and GNP growth than countries pursuing an
inward - oriented development strategy (Balassa 1 984).
Various considerations explain these results. Given their high export and import shares, countries pursuing an outward - oriented development strategy had a greater latitude in reducing imports. By contrast, under inward orientation imports had already been limited t o an absoluteiy necessary minimum, with further reductions leading f~ a decline in output. The flexibility of the national economy is also greater under an outward- oriented, than under an inward - oriented, development strategy. In the former case, firms have been exposed t o competition in world markets and have acquired experience in changing their product composition in response to shifts in foreign demand. By contrast, under inward orientation, there is generally limited competi -
tion in the confines of domestic markets and firms have little inducement to
innovate, which is necessary under outward orientation in order to meet competition from abroad. Finally, the low degree of discrimination against primary activities and cost
reductions through the exploitation of economies of scale in export industries
contribute to efficient exporting and import substitution in outward - oriented economies. By contrast, under inward - orientation, import substitution becomes
increasingly costly, thereby lowering the efficiency of investment.
Preliminary results indicate that outward - oriented economies have also been
better able to surmount the second oil shock of 1 9 7 9 - 8 0 and the ensuing world
recession than inward - oriented economies. The former group of countries has again gained export market shares and has succeeded in limiting the decline in rates of economic growth. in turn, the latter group has further lost market shares, experienced low economic growth rates, and suffered the effects of higher interest
rates on their large external indebtedness. (Balassa 1984).
Trade in manufactured goods between developed and developing countries
Data on trade in manufactured goods between developed and developing
countries provide an indication of growing interdependence between these groups of countries over the past t w o decades. Parallel with the increases in the imports of
manufactured goods b y developed countries from the developing countries, the
developing countries expanded their imports of these products from the developed
countries (Table 1 ). Increases in developing country imports were financed through
higher export earnings, in particular through the growth of manufactured exports to the developed countries, as well as through foreign borrowing. In 1 9 8 1, however, a slowdown occurred as several large oil - importing developing countries experienced
Table 2. Trade in industrial commodity groups between developed and developing countries
1973 Developed Countries Iron and steel Chemicals Other semi manufactures Engineering products Textiles Clothing Other consumer goods 1973 1981 Explanation of Symbols: Nore: X = exports, M = imports, P = production, C = consumption, DC = developed countries, LDC = developing countries. The production estimates for the developing countries are subject to considerable error possibilities. Also, the estimates for 1973 have been obtained through interpolation of the reported figures for 1970 and 1978 while the 1981 estimates have been derived through extrapolation by the use of production indices. Bela Balassa, “Trends in International Trade in Manufactured Goods and Structural Change in the lndustrial Countries,” invited paper prepared for the 7th World Congress of the International Economic Association on Structural Change, Economic Interdependence, and World Development, held in Madrid, Spain on September 5-9, 1983; and UNIDI, Handbook of lndustrial Statistics, New York, United Nations, 1982.
- 3.5 0. Total manufacturing - 3.4 0. - 3.7 0. 1.1 1 .o - 2.8 1. - 0.9 6. - 1.2 1. - 2.9 0.
- P Iron and steel 3. A Developing Countries
- Chemicals 3.
- Other semi manufactures 7.
- Engineering products 6.
- Textiles 4.
- Clothing 36.
- Other consumer goods 12.
- Total manufacturing 7. - 24. - 21. - 8. - 34. - 8. - 7. - 10. - 21. - 5.0 0. - 4.6 0. - 2.5 1. - 7 .O 1. - 3.6 2. - 1.7 10. - 2.3 2. - 5.2 1. - 3. - 4. - 10. - 8. - 7. - 55. - 17. - 10. - 25. - 25. - 15. - 43. - 9. - 14. - 16. - 29. - 4.9 0. 6.5 1 .o - 3.0 1. - 8.7 1. - 5.0 3. - 2.6 14. - 3.3 3. - 6.4 2. - 5.1 27. - 4.9 27. - 8.0 14. - 13.7 51. - 7.3 11. - 58.3 17. - 20.1 19. - 12.5 33. - 7.3 0. - 5.9 0. - 6.5 3. - 11.2 1. - 5.6 6. - 3.2 19. - 3.6 3. - 8.5 2. - 1973 - - 3. A X D C / A P A M D ~ / A C - 4. - 15. - 10. - 11. - 78. - 22. - 13. - 25. - 29. - 26. - 47. - 11. - 32. - 22. - 36. - 17.5 4. - 5.2 1. 5.8 1 .o - 15.9 3. - 17.2 6. - 12.2 41. - 7.8 7. - 11.3 3. - 1978 - - 10.0 31. AX&A P A M D , / A C - 6.9 29. - 3.1 14. - 46.1 80. - 8.1 22. - 63.5 24. - 24.6 25. - 19.5 44.
II. ULTILATERAL TRADE LIBERALISATION
B THE INTER TS OF DEVELOPED AND DEVELOPING COUNTRIES
ralisation in eveloping countries and developed country
in gauging the interests of the developed countries in trade liberalisation by the developing countries, it is necessary t o assess how liberalisation would affect the
volume and the pattern of developed country exports. This question will be
considered in regard t o trade with the new~y-industrialisingcountries ( N U ) which account for the overwhelming share of the developed countries' manufactured imports from the developing countries, which provide the largest markets for their manufacturing industries, and which have been exhorted by the developed countries to liberalise their trade. The NlCs protect their manufacturing industries by the use of tariffs and itative import restrictions. Quantitative restrictions came into greater use after
in conjunction with the increased inward orientation of a number of the NlCs
and, again, after 1979 in attempting t o cope with their increased debt burden. Import restrictions are applied even in outward - oriented NICs, with the exception of Hong Kong and Singapore, although these have much more limited scope and are administered in a more liberal fashion that in inward - oriented NICs. Several years ago, an OECD report expressed the fear that a newly -
industrialising country " may find itself moving into surplus on current account when
in fact the availability of external capital and the possibilities for its profitable use would have permitted higher levels of domestic activity and consumption. " (OECD, 1979, p.57). This fear has not been realised and no newly - industrialising country has accumulated excessive foreign exchange reserves. These countries have few possibilities, therefore, t o draw on their foreign exchange reserves while, under present conditions, most NlCs may not increase their foreign debt.
It follows that reductions in trade barriers by the NlCs could not give rise t o
higher imports unless their exports are simultaneously increased. Excluding such a possibility for the time being, the relevant issue is how the composition of imports would be affected. This will be considered first for manufactured goods alone. The NlCs use import restrictions to save foreign exchange as well as to protect their domestic industry. They limit the imports of non - durable consumer goods that are produced locally, but demand for variety and for luxury goods creates demand for imports. The NlCs also protect their incipient industries producing intermediate goods (iron and steel, chemicals, and other semimanufactures) and relatively simple
engineering products (electrical and non-electrical machinery and transport equip-
ment). As a result of the application of protectionist measures, the share of consumer goods and intermediate products in the imports of the developing countries from the
developed countries declined in recent years whereas the share of machinery and machine tools used in their manufacture, which dominate the engineering goods
category, increased t o a considerable extent. Correspondingly, the liberalisation of
trade by the NlCs would lead t o increases in the imports of nondurable consumer goods, intermediate products, and simple engineering goods and to a decline in the imports of sophisticated machinery and machine tools necessary for their domestic production. This conclusion needs t o be qualified by reference t o cases where NlCs have made a push into technologically - advanced products. Examples are personal aircraft
and simple computers in Brazil. It is such instances that have evoked the ire of U.S.
exporters who have seen markets closing t o them. But the vociferous complaints should not mask the fact that these commodities are few in number, so that their existence does not introduce a major modification in the argument. One needs t o consider, however, possible changes in the importation of primary commodities. Since these commodities are rarely protected by the NICs, their imports would decline, and the importation of manufactured goods - largely
from the developed countries - correspondingly increase, following reductions in
protection. Reductions in primary product imports by the NlCs would adversely affect the deveioped countries as well as the less developed countries (LDCs), since some of these commodities are exported by developed countries and others by LDCs. But, in the latter case, too, there would be a decline in the export earnings of the developed countries,, owing t o reduced purchases of their products by the adversely - affected
LDCs. Thus, ultimately, any increases in the manufactured exports of the developed
countries to the NlCs would be offset by reductions elsewhere, so long as the export receipts of the NlCs remained unchanged. Next, consider the case where the NlCs expand their exports, so as to obtain foreign exchange for increasing their imports upon the liberalisation of trade. This is
indeed the expected consequence of trade liberalisation that reduces the bias of the
system of incentives against exports. For one thing, the cost of domestically-
produced inputs will decline; for another thing, the exchange rate will tend to depreciate in order to equilibrate the balance of payments following the liberalisation of imports. Part of the increase in the exports of a particular newly - industrialising country
would find markets in other NlCs as they liberalise their own trade. This will not
improve, however, the net foreign exchange position of the developing countries,
taken together. A t the same time, increased imports from the developed countries will have to be paid for by higher exports to them. Thus, while trade liberalisation will change the pattern of the NlCs imports from the developed countries, increases in these imports would necessitate a corre -
sponding rise in exports. The same result may be achieved if the developed countries
the markets for nondurable consumer goods are many times larger in the developed
countries than in the NICs. Thus, " second tier " exporters would derive considerable
benefit from trade liberalisation by the developed countries.
But the principal argument for reductions in trade barriers by the NlCs lies in
their own self - interest. This is because, as we have seen, the adoption of an
outward - oriented development strategy leads to improvements in the efficiency of resource allocation and rapid economic growth. Economic growth, in turn, will eventually make the NlCs full - fledged partners of the developed countries. A t the same time, providing secure access to developed country markets will increase incentives, and reduce domestic opposition, to liberalising trade in the NICs. The discussion has centered on the newly - industrialising countries, in regard t o which demands for trade liberalisation and " graduation " have been made. This is not
to say that the less developed countries would not benefit from liberalising their own
trade. In fact, as noted above, outward - oriented less developed countries showed a
much better performance than inward - oriented LDCs during the 1973 - 78 period of
external shocks. Still, infant industry arguments provide more of a rationale for protection in the LDCs than in the NICs.
Trade liberalisation in developed countries and developing country interests
A t the GATT Ministerial meeting in November 1982, proposals were made for
a North - South round of trade negotiations, under which developed countries would make tariff concessions to the developing countries on a preferential basis in exchange for the developing countries' liberalising their imports on a most- favoured - nation basis. The emphasis was on trade liberalisation by the NICs, which
would, however, enjoy only temporary preferences that would cease upon
" graduation ".
The proposal evoked little interest on the part of the NICs, and understandably
so. In the language of trade negotiations, these countries were asked to offer
concessions t o reduce their tariff and nontariff barriers in exchange for temporary
tariff preferences, losing their GSP status in the process, while the developed countries liberalised their o w n non - tariff barriers. In order to discern the elements of
an equitable bargain between the t w o groups of countries, the interests of the NICs
in the liberalisation of trade by the developed countries need t o be examined. Tariff reductions by the developed countries would bring benefits t o the LDCs,
which are major producers of foods and raw materials they could increasingly export
in a processed form once the escalation of tariffs is removed. The benefits would be
smaller for the NlCs that tend t o export the products of " footloose " industries (e.g. relatively simple engineering products), and products made of imported materials (e.g. textiles and clothing), so that they suffer little discrimination due t o the escalation of tariffs.
For the NI&, existing and potential non - tariff barriers in the developed countries represent the most important obstacles t o trade. Notwithstanding the
efforts made by the ICs to evade the MFA, the expansion of their textiles and
clothing exports is constrained by the provisions of the 198 1 Agreement, and they
are subject t o the limitations introduced su~sequentlyon the importation of these products in the United States. Also, the MlCs generally are adversely affected by
restrictions on steel imports imposed by the EEC, and Brazil by U.S. limitations on
steel imports from that country. At the same time, the danger of the imposition of restrictions, whether in the form of quantitative import restrictions, export limitations, and countervaifing or
antidumping duties of a rotective intent, creates a risk for the NICs and discourages
investment in their export i ~ ~ u s t r j e s. In fact, in the nited States, demands for the
imposition of restrictions h ve r e p o ~ t e d ~ ~been made in large part for their nuisance
value, i.e. to discour es from exporting. It may be add tintries would also derive benefits from the liberalisation of nefits stem from the upgrading of the labour force, the e low-skill^ products^ in^ trade with the
developing countries, the spreading of research and ~ e ~ e ~ o p ~ @ ~ texpenditures over
a larger output, and the a n t i - i n f l ~ t ~ ~ n a r yeffects of imports.
e negotiations b ~ n d u s ~ r i a l i s i n ~develo The above discussion concerning the interests of the developed countries and the NlCs in trade liberalisation leads to a possible policy package that would combine the perceived objectives of the two groups of countries. Such a package would include lowering tariffs, reducing export subsidies, dismantling quantitative import restrictions, establishing an effective safeguard code, reforming the GATT review mechanisms and, more generally, giving a greater role to the developing countries in the GATT. The last point underlies the importance of GATT, which provides the only appropriate venue for negotiating the liberalisation of trade. Negotiations would
need t o be carried out on a multilateral basis as bilateral approaches would be
counterproductive by leading t o charges of divide et irnpera. Nor would it be
appropriate t o provide special privileges, as has been suggested, t o countries with high indebtedness.
There is a further argument for multilateral negotiations that transcends
North - South relationships. This is the need to avoid the backsliding that is likely to
occur in the absence of a new round of multilateral negotiations. As first stated
sixteen years ago:
“It would ... appear that if no efforts are made to liberalise trade, the alternative is likely to be increased protectionism rather than the maintenance of the status
en the d e v e t ~ed countries and the newly count ties
income growth rates can be derived by adjusting for expected population growth
rates of 2.2 per cent. (World Bank, 1983, p.27).
However, during the 1960s and the 1970s, most of the NlCs were growing a t
rates much in excess of the average for the middle-income oil importing developing countries. For these countries, 1990 per capita incomes have been estimated by assuming that, after stagnation in 1982 - 83, they would regain their past growth
rates. In turn, it has been assumed that the NlCs which had below - average growth
rates in the 1960 - 8 1 period (Argentina, 1.9 per cent; Chile 0.7 per cent; Israel,
3.6 per cent; and Uruguay 1.6 per cent) would reach the central variant growth rate
projected for the middle-income oil importing countries. Under the stated assumptions, by 1990 the Latin American newly industrial -
ising countries, Korea, and Yugoslavia would approximately reach Italy's 1960 and
Japan's 1963 per capita incomes. In the same year, Hong Kong, Israel, and
Singapore would surpass Italy's 1980 and Japan's 1975 incomes per head. Two observations may be made in regard t o these estimates. First, the per capita income levels the NlCs are expected to reach towards the end of the decade would impose certain obligations on them in regard t o their trade policy vis-a-vis
developed as well as less developed countries. Second, and more important, these
countries could accelerate their economic growth if they reformed their trade
policies.
The content of the negotiations As far as the obligations to be taken in the course of the negotiations are concerned, it would be desirable, first of all, that the developed countries reduce their overall tariff level and lessen the extent of tariff discrimination against the processing of primary commodities by the developing countries. In turn, the NlCs should lower the level, and rationalise the structure, of their tariffs. There is further need to reduce export subsidies. In the developed countries,
subsidies are provided mainly t o agricultural exports while in the NlCs industrial
exporters are the main beneficiaries. In inward - oriented NICs, export subsidies are designed to reduce the bias against exports associated with industrial protection. With reform of the system of protection, this rationale would largely disappear. More important than tariff reductions is the liberalisation of quantitative import restrictions. It would be desirable that the developed countries gradually phase out the MFA as well as their restrictions on steel imports. Also, agricultural policies would need t o be reformed, involving reductions in the protection afforded to
agriculture. In turn, the NlCs would take the obligation t o phase out their own import
restrictions. As a result of these changes, the developed countries as well as the NlCs would place exclusive reliance on tariffs as measures of protection. The proposed reforms would need to be accompanied by the establishment of an effective system of safeguards. The principal requirement for such a system is the
assurance that safeguards are of a temporary character. This would necessitate setting time limits for the unilateral application of safeguards, with any further extension requiring the consent of a multilateral forum associated with the GATT. Extensions would be countenanced only in exceptional circumstances and made dependent on a plan for domestic adjustment. An important part of the proposed safeguard mechanism would be the role assigned t o the multilateral review process. More generally, the dispute settlement
mechanism in the GATT would need to be strengthened and rendered more
effective. The developed countries have special responsibility both to initiate cases before the GATT, when they consider that they have been injured by actions taken abroad, and to accept the conclusions of the review process, when their actions are found t o have caused injury elsewhere. In the review process, a greater role would need t o be given to the NlCs and t o
the developing countries in general. But this will depend to a considerable extent on
the developing countries themselves; in particular, subscribing to the codes established in the framework of the Tokyo Round negotiations is a precondition for participation in the dispute settlement mechanism in regard t o these codes. Giving a greater role to the developing countries in the GATT also presupposes their willingness to participate in GATT affairs. The NlCs could also caucus together, with a view to developing common positions in the GATT, in general, and for a
North - South round of negotiations in particular.
The adjustment problem It has been noted that the time involved for the preparation of the negotiations, the negotiations themselves, and the gradual liberalisation of trade barriers would provide considerable opportunity for adjustment. But, for adjustment t o be successful, it would be desirable for the countries involved to begin taking appropriate measures in advance of the negotiations. In the developed countries, the adjustment measures should be part of a long - term policy towards declining industries - in particular agriculture, clothing, shoes, and steel - aimed a t encouraging the movement of resources from these industries to modern sectors. Thus, adjustment assistance to workers should focus
on retraining and relocation while compensation for income losses would be made
under regular social security provisions. In turn, firms that reduce their productive capacity in the industries in question might receive credits for purposes of establishment in other industries. In some highly - protected NICs, the adjustment effort could be greater than in the developed countries. But the character of adjustment will not necessarily be the same. Thus, firms might receive assistance to improve their technology, to increase specialisation, and to adopt large - scale production methods while remaining in the same industry.
NOTES
1.
2.
3.
4.
5.
6.
Balassa and Balassa ( 1 984) Table 1 - Isaiah Frank suggests however that these figures are misleading as average tariffs on imports from the developing countries are raised by the large imports of textiles and clothing that are subject t o relatively high tariffs but are effectively limited by quantitative restrictions rather than by tariffs. Manufactured industr'es are defined according to the convention used in trade statistics, i.e. excluding food, beverages, tobacco, petroleum products, and nonferrous metals. The data refer to the volume of exports of the developing countries t o the developed countries. They derive from United Nations, Monthly Bulletin of Statistics. The data have been adjusted according to the definition of the maufaturing sector used here. They originate in UNIDO, Handbook of lndustrial Statistics. in an article entitled "America Needles Hong Kong " , The Economist (1 7th December 1983) reports that the United States issued fourteen suspensions against Hong Kong goods under the MFA in 1983. For a more detailed discussion, see Balassa (1980).
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