Tying in international trade: evidence on countertrade

This paper questions the common view that countertrade is an inefficient form of exchange in international trade and illustrates this on the basis of 230 countertrade contracts that have been signed between firms in oecd countries and cpes/ldcs in the period of 1984 and 1988. more specifically, it is argued that countertrade can be understood as an attempt to change the terms of trade of countertrading countries on the one hand and as a response to moral hazard incentive problems thatarise in technology trade and risk sharing arrangements on the other. the paper then goes on to discuss the trade policy implications of the findings of the paper and their consequences for the trade negotiations in the uruguay round.;