Dani Rodrik argues:
Developing nations also need to enshrine the notion of "policy space" in the World Trade Organization. The goal would be to ensure that developing countries can employ the kind of trade and industrial policies needed to restructure and diversify their economies and set the stage for economic growth. All countries that have successfully globalized have used such policies, many of which (e.g., subsidies, domestic-content rules, reverse engineering of patented products) are currently not allowed under WTO rules.
Here are some questions that occur to me:
1. Why does he consider domestic content rules so important? Why not just use tariffs to favor domestic industries?
2. Are subsidies really that important for development? Many developing countries, especially the poorest ones, don't have that much money to give.
And one final note: I don't think it's correct to say that subsidies "are currently not allowed under WTO rules." There are constraints, but there is also a good deal of scope for using them, especially for developing countries.
