General Agreement of Tariffs and Trade

"The rationale for strategic trade policy in industrialised countries is based upon two kinds of market failure. One of these is the inability of firms in high-technology industries to capture or appropriate the externality benefits of contributions to knowledge that spill-over to other firms. The other is the presence of monopoly profits in highly concentrated oligopolistic firms. Import-substituting industrialisation based upon the infant industry argument, which was popular in developing countries during the first 30 postwar years, has largely been superseded by export-orientated industrialisation during later years due to the example set by a group of high performance Asian economies. "