Free Trade and Prosperity:

• First book-length defense of free trade with the developing countries at its center;
• Shows how openness has been critical to growth and poverty reduction;
• A systematic critique of import substitution industrialization and infant industry protection;
• Exposes the myths of growth through industrial policy and protection by free trade critics;
• Documents compelling empirical evidence linking the volume of trade causally to high per capita income;
• A detailed examination of the experience of Singapore, Taiwan, South Korea, China and India demonstrating that trade openness has been a central element in their rapid growth and success in poverty alleviation

Arguments for protection and against free trade have seen a revival in developed countries such as the United States and Great Britain as well as developing countries such as India. Given the clear benefits trade openness has brought everywhere, this is a surprising development. The benefits of free trade are especially great for emerging market economies.

Free Trade and Prosperity offers the first full-scale defense of pro-free-trade policies with developing countries at its center. Arvind Panagariya, a professor at Columbia University and former top economic advisor to the government of India, supplies a historically informed analysis of many longstanding but flawed arguments for protection. He starts with an insightful overview of the positive case for free trade, and then closely examines the various contentions of protectionists. One protectionist argument is that "infant" industries need time to grow and become competitive, and thus should be sheltered. Other arguments are that emerging markets are especially prone to coordination failures, they are in need of diversification of their production structures, and they suffer from market imperfections. The panoply of protectionist arguments, including those for import substitution industrialization, fails when subject to close logical and empirical scrutiny.

Free trade and outward-oriented policies are preconditions to both sustained rapid growth and poverty alleviation in developing countries. Panagariya provides compelling evidence demonstrating the failures of protectionism and the promise of free trade using detailed case studies of successful countries such as Singapore, Taiwan, South Korea, China and India. Low or declining barriers to free trade and high or rising shares of trade in total income have been key elements in the sustained rapid growth and poverty alleviation in these countries and many others.

Free trade is like oxygen: the benefits are ubiquitous and not noticed until they are no longer there. Free Trade and Prosperity is an essential reminder of the costs of protectionism.