Economic Themes (2018) 56 (2) 1, 139-160
Marko Đogo, Vesna Prorok
Abstract: The economic openness and reindustrialization. Can these two occurrencesexist at the same time? The empirical experience of the East European countries tells us that they cannot. Trade liberalization in the transition countries implemented during the 1990s led to the process of deindustrialization which continued also during the 2000s. The goal of this paper is to present the possible directions for reform of the international trade system which would enable reindustrialization of the small countries in East Europe with simultaneous preservation of the achieved level of trade liberalization. Admittedly, we are separated from the win-win situation by the conviction that this is only possible if the compensation principle is applied on the global trade, according to which the winners in the global trade (developed countries with trade surplus), should compensate to the losers (small insufficiently developed countries) a part of their losses with mandatory support to programs of reindustrialization based on exports, for which the funds are chronically lacking. An alternative is reindustrialization based on import substitution i.e. strengthening of the protectionism, where all benefits of the free trade could vanish so in the end everybody would be in loss.
Keywords: trade barriers; gains from trade; small countries
PREFERABLE DIRECTIONS IN REFORM OF THE INTERNATIONAL TRADING SYSTEM FROM THE STANDPOINT OF DEVELOPMENT NEEDS OF THE SMALL COUNTRIES IN EASTERN EUROPE
Marko Đogo, Vesna Prorok
Abstract: The economic openness and reindustrialization. Can these two occurrencesexist at the same time? The empirical experience of the East European countries tells us that they cannot. Trade liberalization in the transition countries implemented during the 1990s led to the process of deindustrialization which continued also during the 2000s. The goal of this paper is to present the possible directions for reform of the international trade system which would enable reindustrialization of the small countries in East Europe with simultaneous preservation of the achieved level of trade liberalization. Admittedly, we are separated from the win-win situation by the conviction that this is only possible if the compensation principle is applied on the global trade, according to which the winners in the global trade (developed countries with trade surplus), should compensate to the losers (small insufficiently developed countries) a part of their losses with mandatory support to programs of reindustrialization based on exports, for which the funds are chronically lacking. An alternative is reindustrialization based on import substitution i.e. strengthening of the protectionism, where all benefits of the free trade could vanish so in the end everybody would be in loss.
Keywords: trade barriers; gains from trade; small countries
