EXPORT-LED DEVELOPMENT - PRIMARY VS INDUSTRIAL EXPORTS

Trade with North can make South poorer if South is a primary exporter. Manufactured imports from North can cause a decline in the real wage and consequently lower the labour supply. The production possibility f rontier and hence the GNP of South can shrink while that of North can expand. If South gains comparative advantage in manufactured goods and reverses the trade pattern it can turn the tables on North. The analy sis, based on a theoretical model, suggests a way to reconcile the div ergent views on the desirability of North-South trade.