Import substitution policy versus export led growth strategy

import substitution pdf

A common characteristic of industries in IS economies was that, they often failed to adopt new technologies even when they were available. This is a preview of subscription content, log in to check access. Sixth edition.

disadvantages of export promotion strategy

The expansion of manufactured exports is not limited as in the case of IS by the growth of domestic market. If free trade widens the gap between rich and poor nations and makes poor nations poorer, it follows that a poor country should avoid free trade.

Export-led growth strategy strengthens the dualisation in China. A package of policies, called import substitution ISconsists of a broad range of control, restriction and prohibitions such as import quotas and high tariffs on imports.

The infant-industry argument states that sectors and industries that can reasonably be expected to gain comparative advantage, after some learning period, should be protected.

Thus, the initial closing of the market to foreign imports provided a onetime spurt of innovation as new firms were established to take advantage of the profit offered by the protected market.

Import substitution policy versus export led growth strategy

Also, through international trade, people in the country will get more economic welfare to improve their life conditions; what is more, after the extension of external markets, the country can promote the related industries and departments, which can solve the problem of surplus products and unused resources. Sixth edition. In contrast, GDP grew by 7. In these circumstances the evaluation of any particular trade strategy must include not only the implications for the allocation of resources, but also the consequences for the rate of accumulation and of technological progress. Steven Radelet. Instead of the jobs expected to result from import substitution, countries implementing the import substitution strategy get the high prices,reduced production, and poor quality that come from reduced competition. Finally, export-led growth strategy facilitates the transfer of advanced technology.

We guarantee your paper will be written by an appropriately qualified and experienced writer. The East Asian countries have demonstrated clearly the viability of trade policies in promoting industrialisation through reliance on foreign markets as opposed to domestic markets and were based on dynamic comparative advantage that went beyond reliance on primary commodities.

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Import Substitution and Export Promotion