The Generalized System of Preferences of the United States: Does it Promote Industrialization and Economic Growth of the Least Developed Countries?
Posted: 12 Jun 2008 Last revised: 24 Jul 2008
The Generalized System of Preferences (GSP) - a system of differential and favorable trade arrangements toward less developed countries - has been around since the early 1970s. A primary objective of GSP schemes, sponsored by developed industrialized countries, especially by the United States and the European Union, has been to promote industrialization and economic growth in developing countries through trade rather than aid. The outcome of such programs have, however, been mixed. This paper identifies some of the underlying political and economic dynamics which led to abysmal failure of the US GSP schemes, especially in respect to the Least Developed Countries (LDCs). The paper suggests that GSP schemes would be more effective if they are brought under the binding WTO rules, the supply constraints of the LDCs are addressed more resourcefully, and developed countries grant more dependable market access to LDC exports.
Keywords: Generalized System of Preferences, Least Developed Countries, Trade Preferences, World Trade Organization, Economic Integration
JEL Classification: F02, F10, F13, F14, F15
Suggested Citation: Suggested Citation