If a country is at its productive potential, and has the means to stay there, and if it has followed advice on its non-trade policies and received assistance to remove distortions and improve the transmission of effects, or to put in place the institutions which will achieve this, and if it either has a comparative advantage in what it considers the 'right' products or does not take a view on the appropriate pattern of development, then the traditional recommendations of trade policy come into play and trade will have only its traditional, limited development effects.
It is perhaps puzzling that there has been such strong emphasis on trade in the analysis of development, whether as an obstacle or as an advantage. In particular, for each successive 'constraint' on development which has been identified (market demand, investment, technology, efficiency, finance) trade has been identified as the best or only means of supplying it to developing countries. Theory confirms that it is one way of supplying each of these (with the possible exception of
X efficiency where economics has little to say), but not, for any of them, that it is the only way. If, however, there is a preference not to use government intervention (whether because of political choice or because of concern about the competence of the government sector in developing countries), then the only available exogenous agent may seem to be the external sector, so it may seem necessary either to assume that trade can provide whatever is needed to develop or to conclude that we do not know how to stimulate development. As one of the oldest and best developed branches of economics, international economics has been well placed to find possible development roles for trade. In contrast, analysis of the formulation of government policy is principally outside economics, so that it is not as well understood (and the bias may be against relying on it). But in practice, the exogenous agent in some successful countries in the past has been either the government or the emergence of a new type of private sector, so the external sector is not the only possible agent. But this implies that prescribing a guaranteed path for development to a country like Malawi where the external sector seems likely to have at best a weak role becomes very uncertain.
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