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unit-1-alternative-paradigms-of-development

Unit-1 Alternative Paradigms of Development

In this unit, we will distinguish between growth and development and discuss the various institutional approaches to development.

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Why did classical economists consider trade as the ‘engine of growth’?

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Learning Pundits Content Team

Written on Jun 26, 2019 1:03:16 PM

Early thinking on development tended to equate ‘industrialisation’ as development and then focus on the role of trade in industrialisation. Trade, often, was referred to as engine of growth. This was largely on the basis of classical Ricardian inspiration that free trade served as the engine of industrial revolution in England. This is also essentially what is called as ‘free trade’ argument. There are two leading ideas here. Firstly, international trade overcomes the narrowness of the home market and provides an outlet for the surplus product above domestic requirements. Secondly, by widening the market, international trade improves the division of labour raising the general level of productivity within the country.