Effects of Alternative Policy Regimes on Foreign-Payments Imbalances

Using a country-specific multisectoral general-equilibrium trade model the paper examines the consequences of outward- and inward-oriented development strategies. The analysis supports the view that the unwillingness of some of the developing countries’ governments to pursue outward-oriented policies can be explained in terms of low trade-elasticity values supposedly perceived by the policy makers, and/or by the political power exercised by capitalists, whet seem to lose most under outward-oriented policies.