by Emily Adams

Created on: June 21, 2008   Last Updated: September 02, 2010

The statement, "Development must take place outside the international trade system, it cannot occur within it!" adheres to strategies that generally seclude the state within itself, such as autarky, import substitution, and socialism, and rejects the globalization that development inside the international trade system would engender. It greatly corresponds to the argument against using international institutions to shepherd less developed countries into the industrialized world and therefore the premiere trading economy.

These supporters also believe this to be true because if development occurred inside the international trade system, the developing states would need assistance from international monetary systems, and many LDCs perceive the loans to create a reliance on DCs which would threaten to limit their autonomy and create a great dependency on the DC, which, according to Dependency Theory, can only be opted out of through the Global Marxist Revolution.

Engaging in these loans also simultaneously invests into the Western idea of capitalism because the conditions given often require open economic policies with trade liberalization, and this is often aberrant to the political ideology of the LDC. Globalization is a common offset to this free trade, and the advocates of the aforementioned quote would also agree with the beliefs that globalization increases unemployment in rich countries and exploitation in poor countries, reduces global cultural diversity and the legitimate democratic influence of people, undermines the welfare state through reduced tax policies to court global investment, and undermines their autonomy.

Autarky, import substitution, and socialism are all strategies that occur outside the international trade system and in practice are ineffective. The tactic of autarky, the approach in which a country cuts itself off from the international system completely, is undesirable. As a result of market restrictions, the basket of goods in the individual country is small and the price of products increases. Besides the surge of price (and the burden it places on citizens), autarky will never be satisfying because the limitations of goods that the country can independently produce will leave citizens wanting products that can only be acquired through trading with other countries, which would acquire inserting itself into the international system once again.

Socialism, another tactic that initiates development outside the international market, argues

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