ABSTRACT
This chapter considers alternative international trade policies and the role of foreign aid as a result of alternative models of transition. Alternative models of transition are the result of different methods of economic analysis, different political structures and different speeds of implementing the transition policies. As a result five alternative models of transition are considered: the shock therapy model of transition, the neoclassical gradualist model of transition, the post keynesian model of transition, and the non-pluralistic market socialist model of transition – the chinese model of transition. The shock therapy supporters favored the immediate establishment of free trade and a fully convertible exchange rate. The neoclassical gradualist economists were in favor of gradual process of achieving full convertibility through a payments union. The Post Keynesians were in favor of maintaining tariffs through a permanent clearing union. The non-pluralistic socialists in China, maintained tariffs and non-tariff barriers, implemented a discretionary exchange rate policy and the establishment of special economic zones.
