Policy discussions about assisting countries to make use of trade preferences tend to focus on the provision of hard infrastructure to facilitate interaction with external economies from modern sector exports. This is as opposed to harnessing potential knowledge spillovers. This omission is emblematic of tensions within new trade/new growth theory.
Using two country case studies in Asia – Bangladesh and Cambodia – this article shows how different approaches making use of trade preferences have resulted in divergent industrial structures and firm-level technological capability indicators.
Less stringent rules of-origin requirements may offer new opportunities for late industrialisers in sub-Saharan Africa to tap into the modern export sector, but a more interventionist approach towards harnessing knowledge spillovers may also be necessary.