ABSTRACT
Since the Second World War, the General Agreement on Tariffs and Trade (GATT) has provided the framework for regularizing the m u l t i - lateral trading practices of most advanced industrial states. I n a series of agreements, starting w i t h the Geneva talks of the 1940s and including the Tokyo and Kennedy rounds of the 1960s and 1970s, major trading nations negotiated massive reductions i n tariffs on manufactured goods. O n average, tariffs fell f rom about 40 percent to about 5 percent. That trade liberalization, coupled w i t h the development of ful ly convertible currencies and the emergence of effective machinery for managing international exchange, encouraged a remarkably rapid expansion i n w o r l d trade. Between 1950 and 1975, global output increased by some 200 percent, while the volume of trade expanded by about 500 percent. I n one spurt, starting i n the mid-1960s, the exports of advanced industrial states grew 80 percent faster than industrial production-a rate that was about twice as fast as the expansion of the GDP (Stewart 1984).
