Changing the Trade and Development Consensus: Evidence Building from Little, Bhagwati, Krueger, and Balassa in the 1960s

Abstract

Abstract Economists became skeptical about the benefits of free trade for developing countries during the Great Depression, but in the 1960s some had come to recognize the problems with import substitution policies and the benefits of encouraging exports. This article examines how four economists who led this transition—Ian Little, Jagdish Bhagwati, Anne Krueger, and Bela Balassa—came to their views and helped build a new professional consensus on trade policy and economic development. In each case, practical experience, and empirical observation, particularly from India, helped shape their opinions, persuading two of the four to revise their previous beliefs.