International trade as a source of economic growth: trade barriers and institutions

Trade barriers, erected by advanced countries to the agricultural exports from poor countries, are a greater barrier to economic growth and development than is commonly recognised. It is shown that agricultural policies in advanced countries are a major barrier to agricultural exports from poor countries, and particularly so for countries in sub-Saharan Africa (SSA). The major effect on growth is that these barriers inhibit institutional reform. An empirical analysis of economic growth shows that sub-Saharan economies can repeat potential gains from increased trade that are larger when such integration induces institutional reform. Policy makers in advanced countries should thus recognise that reform in advanced countries is about special interests; in poor countries it is about development.