Industrialization, infant industry protection, and economic openness : the role of industrialization in political-economy decision making

Modern liberal economic theory has asserted that economic benefits accrue to states that pursue policies of economic openness. This paper challenges the simplicity of this assertion by arguing that economic theory may have overlooked an important element in its assessment of the impact of openness on economic growth. Because of infant industry concerns, it is argued that developing states first industrialize and then subsequently pursue policies of economic openness. In the end, economic openness may be an epiphenomenon of industrialization, not a fundamental cause of economic growth.