INTRA - FIRM TRADE 67 developing countries and protectionism in the developed countries. The proportion of related party imports in US imports (1977) from developing countries is 17 per cent for semi-manufactures and 37 per cent for manufactures. Intra-firm trade is found to be much higher in capital and technology-intensive industries such as machinery (electrical and noii-electrical) and rather low in the more traditional labour-intensive industries such as textiles, clothing and footwear. The argument is based on the proposition that traditional notions of the relation between trade policy and national interests (or rather bourgeois nationalist interests) are inadequate in the present situation where internationalization of production and infra-firm trade are tremendously important. This point is illustrated by the experience of import substitution as well as the prospects of export promotion by the developing countries. Import-substitution policies in the developing countries did not meet with opposition from the TNCs since they often relocated their industries in the developing countries and flourished behind tariff barriers. Even where the smallness of the market precluded profitable investment, TNCs began exporting intermediate inputs, equipment and know-how. The author goes on to argue that differences in attitudes and policies of developing countries towards TNCs did not make a substantial difference in the extent of TNC involvement as measured by the importance of intra-firm trade. This is shown by the fact that differences in the extent of intra-firm trade between countries in the case of individual products were small. The overall differences in the extent of intra-firm trade were due to differences in the product mix of output rather than due to different policies towards TNCs, though he does admit that the latter may affect the product mix of output. While the inadequacy of import-substitution measures as followed in most developing countries is clear (as, for example, in the extremely limited extent of import substitution in India), the generalizations in the book seem a bit sweeping. To a certain extent, indigenous production was stimulated by this process. Secondly, the product mix is determined largely by the pattern of investment and it is here that government policy towards TNCs becomes important. It has been assumed that an increase in the manufactures export to the developed countries will call forth protectionism. The auther however disputes this claim. The fastest growing manufactures exports have been in the capital and technology intensive sectors, precisely those in which intra-firm trade is the maximum. The auther argues that this reflects an increasing relocation of plants by TNCs and sub-contracting in the developing countries due to the incentives offered by their governments and the lower labour costs. Thus, these manufactures exports by developing countries are under the aegis of the TNCs themselves. The author argues that TNCs will increasingly relocate