Economic liberalization refers to those government policies which promote economic growth by opening up trade to international markets, extending the use of markets and lessening the restrictions and regulations placed on business. China, Brazil and India, three of the fastest growing transitioning economies, achieved their economic growth after their governments liberalized their approach to business. This has led some economists to believe that economic reform is of greater importance than political reform in developing economies.
Economic liberalization does not always come without its drawbacks. Domestic companies may face difficulties in competing with foreign companies once the international trade barriers are removed. There is also the risk of brain drain and the environmental degradation that can follow in the wake of deregulation. Many developing third world countries, however, view economic liberalization as an approach for which there is no alternative.