ABSTRACT
It has been argued that an increasing number of international arrangements have limited the “policy space” in industrial policies for developing countries. Such WTO rules as the TRIPS, TRIMS, and SCM have made poor countries face more difficulties in devising and implementing industrial policies to develop their economies. However, scrutiny of international arrangements could make some developing countries enjoy a de facto industrial policy, thereby widening the policy space. This chapter demonstrates that the Multi-Fiber Arrangement (MFA) and the Generalized System of Preferences (GSP) functioned as de facto industrial policies to foster the export-oriented garment industry in one of the least developed countries, Bangladesh. The industry has had latent comparative advantage but was totally different from the known comparative advantage industry (jute products). This case defied the theory of comparative advantage yet eventually and signally succeeded. Likewise, the policy space can be widened by studying the possible effects of international arrangements on developing economies and utilizing them as a de facto industrial policy. Even Brexit and the US-China trade frictions may have similar effects. Academics should play a role in devising this.
