彼得森經(jīng)濟研究所-世界銀行、國際貨幣基金組織和關(guān)貿(mào)總協(xié)定-世貿(mào)組織：哪個機構(gòu)最支持發(fā)展中國家的貿(mào)易改革

WORKINGWORKINGPAPERWhichInstitutionMostSupportedTradeReforminDevelopingEconomies?DouglasA.IrwinDecember2022ABSTRACTThe1980sand1990ssawapolicyrevolutionindevelopingcountriesinwhichmanyhighlyprotected(ifnotclosed)economieswereopenedtoworldtrade.Thesereformswerelargelyundertakenunilaterally,butinternationaleconomicinstitutionssuchastheWorldBank,theInternationalMonetaryFund,andtheGeneralAgreementonTariffsandTrade/WorldTradeOrganizationsupportedtheseefforts.Thispaperexaminesthewaysinwhichtheseinstitutionspromoted,orfailedtopromote,tradepolicyreformduringthispivotalperiod.DouglasA.Irwin,nonresidentseniorfellowatthePetersonInstituteforInternationalEconomicssinceFebruary2018,istheJohnFrenchProfessorofEconomicsatDartmouthCollege.JELCodes:F13Keywords:IMF,WorldBank,GATT,WTO,tradereform,structuraladjustment,conditionalaid,tariffreduction,tradeliberalizationNoteNote:ThispaperwaspreparedforaconferenceinhonorofAlanWintersattheEuropeanUniversityInstituteinFlorence,Italy,September5–6,2022.TheauthorthanksparticipantsatthePetersonInstitutestafflunchandBernardHoekman,AnneKrueger,PatrickLow,PetrosMavroidis,CostasMichalopoulos,andAdrianWoodforhelpfulcommentsanddiscussions.1750MassachusettsAvenue,NW|Washington,DC20036-1903USA|+1.202.328.9000|2WP22-19|DECEMBER202221.INTRODUCTIONThedecadefrom1985to1995wasaperiodofdramatictradepolicyreform,particularlybydevelopingcountries.Manyofthemshedimportsubstitutionpoliciesthathadbeeninplacesincethe1950sandembracedexchangerateandtradereformsthatopenedtheireconomiestotheworld(Dean,Desai,andReidel1994;Irwin2022).Indoingso,previouslyclosedeconomiessuchasChinaandIndiabecameopentoworldtradeandinvestment,andotheremergingmarketsinLatinAmerica,Asia,andAfricareducedtheirtradebarriersandincreasedtheirparticipationinglobaltrade.Thesepolicychangesreshapedtheworldeconomy,enabledtheemergenceofglobalsupplychains,andproducedthehighlevelofinterdependencethatweseetoday.Mostcountriesopenedtheireconomiesbyperformingthetradepolicythree-step:(1)devaluingtheircurrenciesandestablishingcompetitiveexchangerates,(2)abolishingforeignexchangecontrolsandconvertingquantitativeimportrestrictionsintotariffs,and(3)graduallyreducingthedispersionandlevelofthosetariffs.Inmostcases,thesereformswereundertakenunilaterally,ofteninthemidstofaneconomiccrisis.Thelessonsofexperience,suchasthesuccessthatTaiwanandKoreaenjoyedafteropeningtheireconomiesinthe1960s,alongwithchangingideasabouteconomicpolicy,contributedtothedecisiontoreformtheirtradepolicies(Krueger1997).TheWorldBank,theInternationalMonetaryFund(IMF),andtheGeneralAgreementonTariffsandTrade(GATT)—thentheWorldTradeOrganization(WTO)after1995—supportedandencouragedthereformefforts.Theseinstitutionsplayaninfluentialroleinshapinginternationaleconomicpolicyandtheirchartersgavethemacommonpurposeinpromotingworldtrade.1Althoughtheseorganizationsmaynothavebeenthedrivingforcebehindthereformefforts,whatimpactdidtheyhaveinpromotingthetradereformsofthe1980sand1990s?2Evaluatingthecontributionoftheseinstitutionstotradereformindevelopingcountriesischallengingbecausetheyapproachedthegoalofexpandingtradeinverydifferentways.TheGATTestablishedtraderulesandfacilitatedmultilateralnegotiationstoreducetariffandnontariffbarrierstotrade.TheWorldBankmadeloanstocountriesconditionalontheirmakingchangestotheirtradepolicies.TheIMFsought“exchangeratestability”tohelp“intheeliminationofforeignexchangerestrictionswhichhamperthegrowthofworldtrade.”Theinstitutionsalsodifferedintheirabilitytoinfluenceacountry'spolicies.TheGATT/WTOwastheweakestofthethreeinhavingvirtuallynoleverageoversovereigngovernments.TheWorldBankandIMFhadfinancialresourcesthattheycouldusetowincompliancewiththepoliciesthattheydeemeddesirable.1TheGATTwastopromotetrade“byenteringintoreciprocalandmutuallyadvantageousarrangementsdirectedtothesubstantialreductionoftariffsandotherbarrierstotradeandtotheeliminationofdiscriminatorytreatmentininternationalcommerce”(Preamble).TheWorldBankwas“topromotethelong-rangebalancedgrowthofinternationaltradeandthemaintenanceofequilibriuminbalancesofpaymentsbyencouraginginternationalinvestmentforthedevelopmentoftheproductiveresourcesofmembers”(ArticlesofAgreementI:3).TheIMFwas“topromoteinternationalmonetarycooperation…tofacilitatetheexpansionandbalancedgrowthofinternationaltrade”(ArticlesofAgreementI:1-2).2AsRodrik(1994,79)observedatthetime,“externalactorshaveplayedatbestamodestroleininitiatingrecent[trade]reforms.”Inaseriesofcasestudies,Devarajan,Dollar,andHolmgren(2001,34)findthatall“agreethateconomicpolicyisprimarilydrivenbydomesticpolitics,notbyoutsideagents.”3WP22-19|DECEMBER20223Empiricalassessmentsoftheimpactofthesemultilateralinstitutionsongovernmentpoliciesandeconomicoutcomesareplaguedwithdifficulties.Studiesbasedonobservationaldatasufferfromsampleselectionproblems:thecountriesthatchoosetojointheGATT/WTO,acceptaWorldBankloan,orenterintoanIMFprogramarenotrandomlyselected.Theseinstitutionsdealtwithdifferentcountriesatdifferenttimesandindifferentways.Thedegreeofcompliancewithloanconditionalityishardtoobserve.Anditisnotpossibletoknowthecounterfactualofwhetheracountry’spolicieswouldhavechangedevenintheabsenceofthoseactions.Thatsaid,itispossibletoreachsometentativeifimpressionisticjudgments,perhapsevensurprisingones,aboutthecontributionoftheseinstitutionstothetradereformprocess.OnemightsuspectthattheGATT/WTO,whichofthethreeinstitutionsfocusesmostdirectlyontrade,hadthebiggestimpactondeveloping-countrypolicies,butoncloserexaminationitsimpactwaslimited.TheWorldBankprovidedbillionsofdollarsintradepolicyloans,butthismaynothavehadadecisiveinfluenceonacountry’sdecisiontoundertaketradereforms.Ofthethree,theIMF’sroleinpromotingtradereformmaybethemostunderrated.TheIMFfocusedmoreonstabilizationandmacroeconomicstabilityandyetitprovidedcriticalingredientstotradereformsbyencouragingcountriestodevalueovervaluedcurrenciesandstarttheprocessofeliminatingexchangeratecontrolsandimportrestrictions.2.THEGENERALAGREEMENTONTARIFFSANDTRADE/WORLDTRADEORGANIZATION(GATT/WTO)Overthepostwarperiod,theGATThelpedfacilitatethereductionoftradebarriersintheUnitedStates,WesternEurope,andJapan(BownandIrwin2017).Giventhisexperience,theGATTwouldseemtohavebeenideallyplacedtohelpdevelopingcountriesreformtheirtraderegimes.Asalreadynoted,however,theGATTwasaweakinstitution.Itismainlyaforumforcountriestodiscusstraderulesandnegotiatetariffreductions.Itdidnothaveanyindependentpowertoaffectpolicyinparticipatingcountries.Itcouldnotofferanyfinancialincentivestopromotepolicychanges.Itdidnotadvisecountriesastowhattheirpoliciesshouldbeorevenpromoteresearchfindingsthatmightencouragepolicyreforms.Itdidnotconductanymonitoringorsurveillanceofcountrypolicies,atleastuntiltheTradePolicyReviewMechanismwasestablishedin1989.Ithaddifficultyaddressingviolationsoftraderulesuntiltheestablishmentofthedisputesettlementsystemin1995.Despitetheseweaknesses,theGATTcouldhavepromotedreformthroughitsrulesontradepolicy,multilateralnegotiationstoreduceimportrestrictions,andaccessionagreements.Withsomenotableexceptions,noneofthesemechanismsplayedanimportantroleinthetradereformwaveof1985–95.TheGATTruleswereineffectivebecausedevelopingcountrieswereexemptfromkeydisciplines.3Forexample,ArticlesXIIandXVIII(b)permittedcountriestoimposequantitativerestrictions(QRs)onimportstosafeguardthebalanceofpaymentsandpromoteeconomicdevelopment.Theseenormousloopholesalloweddevelopingcountriestojustifyalmostanyrestrictiononimports.Asa3FingerandWinters(1998)concludedthatGATTrulesoftenamountto“notgoodpolicyadvice”forcountriesseekingtoundertakepolicyreforms.4WP22-19|DECEMBER20224result,developingcountriesmaintainedextensivenontariffbarriers—includingforeignexchangecontrols,importlicensing,andotherQRs—ostensiblyonbalanceofpaymentsgrounds.Suchmeasuresweresupposedtobetemporaryortransitional,buttheGATTprovidedverylittleoversightandallowedthemtopersistfordecadeswithoutchallenge.4Developingcountrieswerealsoexemptfromreciprocityintradenegotiations.5NotonlydidtheyfailtoparticipateinthetariffreductionsnegotiatedduringtheKennedyRoundofthe1960sandtheTokyoRoundofthe1970s,developingcountriesinsistedonspecialanddifferentialtreatment,thatis,nonreciprocalandpreferentialtreatmentbydevelopedcountries.6Eveniftheyhadparticipatedinthenegotiations,tariffswerenottheprincipalbarriertotradeindevelopingcountries,giventheQRstheyimposed.Whendevelopingcountriesbegantodismantletheirimportcontrolregimesandreducetheirtariffsinthelate1980sandearly1990s,theydidsounilaterallywithouttheGATTbeingmuchinvolvedintheprocess.Two-thirdsofthereductionintheweightedaveragetariffofdevelopingcountries,whichfellfrom29.9percentin1983to11.3percentin2003,camefromunilateralaction(figure1).Justonequartercamefrommultilateralnegotiations,mostofwhichwasduetoChina,andonetenthfromregionaltradeagreements,accordingtoastrikingcalculationbyWillMartinandFrancisNg(2004).DevelopingcountriesdidmaketariffconcessionsintheUruguayRound,agreeingtoreducetheirboundtariffsandincreasetheshareoftheirboundtarifflines.However,theboundtariffsweremuchhigherthantheappliedtariffs,whichwereleftlargelyuntouchedinthenegotiations.Figure2showsthattheslightcutsinboundtariffsstillleftthoseratesconsiderablyhigherthantheappliedtariffs.Asaconsequence,thereductioninboundtariffsbydevelopingcountriesnegotiatedintheUruguayRoundhadlittleimpactontheirtradeflows.7CountriesjoiningtheGATTinthe1970sand1980sdidsowithoutmanydemandsplacedonthem.Mexico(1986),Morocco(1987),andCostaRica(1990)accededwhiletheyweremaking,oraftertheyhadmade,unilateralchangestotheirtradepolicies(PastorandWise1994).Bycontrast,countriesseekingtobecomeamemberoftheWTOfrom1995on,mainlytransitioneconomies,wererequiredtomakesignificantconcessionsaspartoftheaccessionprocess,4TheIMF(1992)reportedthatsome80percentofquantitativerestrictionsnotifiedtotheGATTbydevelopingcountrieswerejustifiedforbalanceofpaymentsreasonsunderArticleXVIII(b).AsEglin(1987,23)notes:“theconceptofthetemporaryapplicationofrestrictionshasbeenlost.Asaresult,manydevelopingcountrieshaveappliedrestrictionsandinvokedArticleXVIII(b)overlongperiods.”O(jiān)neofthegoalsoftheUruguayRoundwastointroducesomedisciplinesontheuseofthesearticles(Anjaria1987).5AsArticleXXXVI(8)states:“Thedevelopedcontractingpartiesdonotexpectreciprocityforcommitmentsmadebythemintradenegotiationstoreduceorremovetariffsandotherbarrierstothetradeofless-developedcontractingparties.”6ThisspawnedthecreationoftheUnitedNationsCommitteeonTradeandDevelopmentin1964.Thisspecialanddifferentialtreatmentwasformalizedin1979,whentheGATTadoptedthe“enablingclause”thatpermittedtradepreferencesfordevelopingcountriesthatwouldotherwiseviolateArticleIoftheGATT.7In2001–13,whentariffsfellfrom7.2percentto4.6percent,mostofthereductioninappliedtariffsofdevelopingcountrieswasmadeunilaterally(Bureau,Guimbard,andJean2019).Ofthis2.6percentagepointdecline,unilateralliberalizationaccountsfor1.3percentagepoints,WTOcommitmentsfor1.0percentagepoint,andregionalagreementsfor0.3percentagepoint.Forexample,India’starifffellfrom30.0percentto9.7percentoverthisperiod,almostallofwhichwasdoneunilaterally.5WP22-19|DECEMBER20225althoughthiswaslargelyafterthereformwaveofthelate1980sandearly1990s.TheWTOaccessionprocesswasvigorousanddemandinginthecasesofBulgaria(1996),China(2001),Cambodia(2004),SaudiArabia(2005),Vietnam(2007),andRussia(2012).China,forexample,madeextensivechangestoitstraderegimeaspartofalong,drawn-outprocessofgainingadmissiontotheWTO(Lardy2002).Theserequirementswerenecessarysothatcountriescouldnotfreerideontheprevioustariffreductionsmadebyothers.Figure1Developingeconomiesundertookmosttariffreductionsunilaterallybetween1983and2003pp=percentagepointNote:DevelopingeconomiesdefinedusingWorldBankclassification.Source:WorldBank(2005,42),basedonMartinandNg(2004).Figure2DevelopingeconomiessettariffsbelowtheirobligationsundertheUruguayRoundNote:DevelopingeconomiesdefinedusingWorldBankclassification.Source:Finger,Ingco,andReincke(1996).6WP22-19|DECEMBER20226Thisaccessionprocesscreatedatwo-tieredsystemofinsidersandoutsiders.Nothingwasaskedoftheinsiders,thedevelopingcountriesthatwerealreadypartoftheGATT,whereasmuchwasaskedoftheoutsidersseekingtojointheWTO.Theyhadtoundertakefar-reachingtradereformstogainadmissiontotheclub.ArvindSubramanianandShang-JinWei(2007)andPushanDutt(2020)provideempiricalsupportforthisinsider-outsiderview.TheyfindthatdevelopingcountriesalreadyintheGATTdidnotseetheirimportsincreasesignificantlyasaresultoftheUruguayRoundbecausetheydidnotreducetheirappliedtariffsinthenegotiations.CountriesthatjoinedtheWTOsawasignificantincreaseintheirimportsbecausetheyhadtoundertakesubstantialtradereforms.Insum,theGATTwasnotthedrivingforcebehindthetradereformsof1985–95.Butitwasnotentirelyirrelevanttotheliberalizationprocesseither.Countriesoutsidethesystem,suchasChina,hadastrongincentivetojointheorganizationasthebenefitsofreceivingmostfavorednationstatusintheglobalinstitutionweregrowing.GiventheimportanceofChinatotheworldeconomy,thisexamplealonesuggeststhattheGATT/WTOplayedanimportantroleinthereformprocessofdevelopingcountriesandtransitioneconomies.3.THEWORLDBANKTheWorldBankwasnotalwaysachampionoftradereform.Initsfirstfewdecadesitfocusedonprojectloansandinfrastructurelending,witheconomiststakingabackseattoengineers.TheBankwasinclinedtosupportopenmarkets,butitalsosoughttopromoteindustrialization,whichsometimesentailedfinancingprojectswhosegoalwasimportsubstitution.8EconomistsbegantoplayalargerroleintheBankinthe1970sunderPresidentRobertMcNamara.Theworldeconomywasrockedbytwooilshocksandothermacroeconomicturbulenceduringthatdecade.TherewasalsoagrowingsensethatBank-sponsoredprojectswouldnotgeneratehighratesofreturnorhelpincreasegrowthandreducepovertywhenrecipientcountrieshadpooreconomicpolicies.9In1979McNamara(1979,20)proposednewloanstoassistdevelopingcountriesinmaking“structuraladjustmentsforexportpromotioninlinewiththeirlong-termcomparativeadvantage.”In1980theBankbeganofferingstructuralandsectoraladjustmentloansconditionalonpolicychanges,includingtradepolicy.Sectoraladjustmentloansfortradepolicyamountedto$7.4billionoverthe1980s(mostly1986–89),about5percentoftotalBanklending(WorldBank1992,18).10TheBankalsoprovidedtechnicalassistanceandadvicetocountriesseekingtoreformtheirtradepolicy.8AsKapur,Lewis,andWebb(1997,451)putit:“TheearlyBankfavoredinternationaltrade;reoccupiedwithindustrializingwhichtendedtomeanimportsubstitution;andbecauseoftheinfant-industryproblem,import-substitutionindustrialization(ISI)entailedprotection.ThustheBank’stradeandindustrializationrecipeinthe1950sand1960swastoseekbothimport-substitutionandexport-promotionindustrializationviaaliberalizedpricerationingofinputs,protectedbytariffsandpartlyorderedbynationaleconomicplanning.”9IshamandKaufmann(1999)foundthatovervaluedcurrencies,traderestrictions,anddistortionsinthepricesoftradablegoodsallsignificantlyreducedtherateofreturnofinvestmentprojectsindevelopingcountries.10Betweenfiscal1987and2004,theBankapprovedabout$38billionforloansintrade-relatedareas,representing8.1percentoftotalBanklending(WorldBank2006,x).7WP22-19|DECEMBER20227Theresultsofthetradepolicyloansweremixed,accordingtoassessmentsinsideandoutsidetheBank.Examining40countriesthatreceivedtradepolicyloansin1980–87,VinodThomas(1991,57)concludedthat“directexaminationoftheconditionsintradeadjustmentloansandtheirimplementationrecordssuggeststhatimportprotectiononaveragehasfallenonlymodestlyinmostofthesecountries.”Countriesmayhaveadjustedtheirexchangeratesandremovedexportrestrictions,butthereductionofimportprotection“hasbeenmodestatbest.”11Thereportfoundthatweakmacroeconomicperformanceandinadequategovernmentcommitmenttoreformwereresponsibleforthefailuretofullyimplementorsustainthechanges.Evenstrongreformadvocates(e.g.,KruegerandRajapartirana1999,Nogués1998,andEdwards1997)concludedthatBanklendingdidnotproducemuchchangeinthetradepoliciesofloanrecipients.12Whywasthetrackrecordsomixed?TheBankidentifiedthelackofcountry“ownership”ofthereforms—i.e.,thereluctanceofpolicymakerstoundertakereforms—asthekeyproblem.Ifacountry’spoliticalleadersdidnotwanttoreform,offeringthemfinancingwasnotgoingtopersuadethemtodoso.Studiesfoundthatdomesticpoliticalconsiderationsusuallydeterminedwhetheracountrywaswillingtoreform,notthepresenceorabsenceofBank-providedloans.13Insomecases,however,loansgaveapoliticalboosttoreformersingovernmentsthatweredividedoverwhethertoreformornot,tippingthebalanceinfavorofmakinganattemptatreform.14TheBankwasparticularlydisappointedinitseffortstopromotepolicyreforminAfrica.Thebasicproblemwasthatmanycountrieswerehappytotaketheloansbutnotchangetheirpolicies.Inadamningreport,ShantayananDevarajan,DavidDollar,andTorgnyHolmgren(2001,34–35)wrote:“Inthepre-reformphaseinwhichthegovernmentisnotcommittedtoreform,conditionalloanshavegenerallybeenafarceinwhichthegovernmentagreestomeasuresitdoesnotbelieveinasawaytogetfunding,failstocarrythemout,andthenreceivesthefundingfromdonorsanyway.”Thisledtoarepeatedcycleoflendingandnoncompliance,inpartbecauseofinstitutionalincentivesintheBanktocontinueprovidingloans.Breakingthiscyclebywithholdingfundssometimesprovedmoreeffectiveatpromotingreformbecauseitforcedcountriestofaceatighterbudgetconstraint.AsMichaelBruno,formerchiefeconomistatthe11Thesequalitativeassessmentsfocusonwhethertheloanconditionsweremetornot.Inoneofthefewempiricalanalysesoftheloans,Jinjarak,Salinas,andTsikata(2013)comparecountriesthatreceivedatradeadjustmentloanin1987–2004withanonrecipientgroup.Theyfindthatloansareassociatedwithslightlyhighereconomicgrowthandgrowthintrade.12KruegerandRajapartirana(1999,739)concludedthat“thestrongestreformersdidnotundertakereformswithBankloans,rathertheyundertookreformontheirownandsoughtassistancelater.”Nogués(1999,86–87)aversthattheBankpoliciesfailedinsomecountries“mainlybecausetheydidnotsupport…astrongtradeliberalizationprogrambackedbyaclearpoliticalcommitment.”13DollarandSvensson(2000)found“noevidencethatanyofthevariablesundertheWorldBankscontrolaffecttheprobabilityofsuccessofanadjustmentloan.”Rather,domesticpoliticaleconomyfactors—suchasethnicfractionalization—stronglyinfluencethesuccessorfailureofreformprograms.14AsMorrissey(2004,163)pointedout:“Almostallstudiesrevealthatconditionalityhasencouragedreformeffortsthatmaynototherwisehavebeenattempted,evenifreformachievementsarelessthandonorshadexpected.”HeckelmanandKnack(2008,526)notethat“severalWorldBankandIMFstudieshaveconcludedthatpolicyreformisdrivenbydomesticpoliticaleconomyconsiderations,andthatconditionalityislikelytobeeffectiveonlyintheearlystagesofreform,whenitcanbolsterthepositionofreformadvocatesingovernment.”8WP22-19|DECEMBER20228WorldBank,said:“Wedidmorefor[reformin]Kenyabycuttingoffaidforoneyear,thanbygivingthemaidforthepreviousthreedecades”(DevarajanandKehmani2018,216).Thefailureofconditionalitytoguaranteepolicyreformwasapparentbythelate1980s.Bythemid-1990s,theWorldBankshifteditsfinancialsupportfortradepolicyfromsubsidizingpolicyreformtosupportingtradefacilitationandinfrastructure.TheBankalsoprovidedtechnicalassistancetohelpwiththeprocessoftradereform,particularlyindealingwithsequencingandimplementationissues(ThomasandNash1991).TheTradeExpansionProgram,fundedbytheUnitedNationsDevelopmentProgrammeandadministeredbytheWorldBank,beganin1987toprovideindependenttechnicalexpertiseindesigningandimplementingreformprogramswithoutconditionality.Thegoalwastohaveindependentassessmentteams(ratherthanWorldBankstaff)provideadviceandtherebyincreaselocalownershipofreform.Buteventhisprovisionoftechnicalassistancewasnotaclearsuccess.ElliotBerg(1998,318)offeredthesoberingconclusionthat“l(fā)ocalofficials,economicinterestgroups,andpoliticalclassessawthesepolicyreformprogramsasanoutsideimposition,aperceptionreinforcedofcoursebythedominanceofconditionalityinthedialogue,andbythelimitedextentofgenuinebureaucraticandpoliticalparticipationintheprocess.Therefore,adoptionofreformswasslowandlocalcommitmenttoArguablymoreimportanttoreformthanconditionallendingwastheBank’sroleindisseminatingresearchoneconomicpoliciesthatcontributetogrowthanddevelopment.16TheBankhelpedshifttheintellectualconsensusamongpolicymakerstowardanunderstandingofthebenefitsofaliberalizedtradeandpaymentregime(Irwin2020).TheprodigiouswritingsandtravelsofBelaBalassa,along-servingconsultantattheBankinthe1970sand1980s,helpedchangeprevailingviews—insideandoutsidetheBank—awayfromimportsubstitutiontowardopennessandexportorientation.Heforcefullyandconsistentlyarguedthatexportswereasourceofgrowth,thatamarket-appropriateexchangeratewascriticaltoexportexpansion,andthatimportrestrictionswereoftenarbitraryandcostly.AnneKrueger’sintellectualleadershipaschiefeconomistattheBank(1982–86)putaspotlightontraderesearch,especiallythedistortionscausedbyexcessivetraderestrictions.Thiseffort,includingthefamous1987WorldDevelopmentReportontrade,addedtothegrowingbodyofevidencethatamoreliberaltradepolicycouldimprove15Noteveryanalysistooksuchadismalview.Jones,Morrissey,andNelson(2011)findthatwhenAfricancountriesdidadopttradereformsinthe1990s,theydidsoalongthelinessuggestedbytheBank.16SeeGavinandRodrik(1995)andClemensandKramer(2016,59),whonotethat“theBankplaysanimportantroleinhowideasmoveintopolicybycollectingdata,generatingideas,bringingideastoawiderpolicyaudience,andturningideasintospecificpolicies.”9WP22-19|DECEMBER20229economicperformance.Thechangeinintellectualmindsetabouttradeanddevelopmentishardtomeasureorevenexplaintoanyonewhodidnotlivethroughthe1970sand1980s.17AmoreconcretewaytheBankcontributedtotradereformwasbyservingasatraininggroundforofficialswhowouldreturntotheirhomecountries,takehigh-rankingpositionsingovernment,andbecomeimportantplayersonreformteamsthatbroughtaboutpolicychanges.18TheriseofWestern-trainedeconomists,manywithWorldBankexperience,tohigh-rankinggovernmentpositionshasbeentiedtothespreadoftradeliberalizationaroundtheworld(WeymouthandMacpherson2012).Insum,theWorldBank’seffortstopromotetradereformthroughconditionallendinghavebeengenerallyviewedasmixed:countriesthatwantedtoreformdidnotneedtheloanstodosoandcountriesthathadnointentionofreformingwerehappytotaketheloans,althoughsomecountriesmayhavebeenpersuadedtoundertakereformsthatotherwisemightnothavebeendone.TheBankmayhavehadabiggerimpactontradepolicythroughthedisseminationofresearchfindingsaboutthebenefitsofamoreliberaltradepolicyanditstechnicalexpertiseabouthowtoimplementsuchreforms.4.THEINTERNATIONALMONETARYFUNDAtfirstglance,theIMFappearstobetheinstitutionwiththeleastrelevancetoacountry’stradepolicy.Itsprimaryfocusismacroeconomicstability,forexample,bycontrollinginflationandreducingfiscaldeficits.Butinitsattentiontoexchangeratesandforeignexchangecontrols,theFundplayedaveryimportantroleinenablingcountriestotakethefirststepofthe“tradepolicythree-step.”Tradecontrolsandimportrestrictionsoftenstemfrombalanceofpaymentsdifficulties,whichinturnarisefromanovervaluedcurrency(ShatzandTarr2002).Anovervaluedexchangeratereflectsafailuretoadjustthenominalexchangeratewhenacountryexperiencesmorerapidinflationthanitstradingpartnersoranadverseterms-of-tradeshock.Anovervaluedcurrencydepressesexportsandleadstoexcessiveimports,puttingpressureonf