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Trade Strategies for Economic Growth & Economic Development - Coggle…
Trade Strategies for Economic Growth & Economic Development
Import Substitution
aka. Import Substitution Industrialization (ISI)
their goods will be able to compete on international market
'developing countries should produce good domestically than import them'
Gov. needs to adopt policies, subsidies and protectionist system
protect local economy from bad influence of MSCs, protect culture and protect domestic workers
Disadvantages
Advantages
long term job lost, loss of comparative advantage benefits, inefficiency in using world resources, inflation due to supply constraints and may cause other countries to take retaliatory protectionist measures
Export promotion
aka. Export-led Growth
openness and increased international trade
concentrates on producing and exporting products
Government's adaptation:
liberalized trade and capital flows, floating exchange rate
investment, deregulation and minimal gov. intervention
Limitations
The success of 'Asian Tigers' leads to a wider protectionist measures from developed countries
Gov. intervention could be vital
MNCs may become too powerful and dominating
May increase income inequality
Trade liberization
removal or reduction of trade barriers
Setbacks
MNCs can be exploitive by manipulating price to gain high profits while workers in developing countries gain little, thus hindering the aim for eco. growth and eco. development
developing countries are expected to gain comp. advantage by increasing world trade
Diversification
Developing countries aim to move and replace from production and export of primary commodities to manufactured or semi-manufactured products
Primary products loss attraction over time, therefore changes need to be done
Limitation
: require highly qualified workers to produce a more sophisticated products
Bilateral and regional trade agreements
Countries in trading bloc give preferential access to products from other member countries
e.g. reducing or abolishing tariff
"the more agreements made, the greater the ability for developing countries to trade, hence gaining growth and development of the economy
Development Strategies :pencil2:
Fairtrade Organization
A scheme to ensure that producers of food/non-food in developing countries receive a fair deal when selling their products
Fairtrade Labelling Organization (FLO) coordinates labelling
Products can be certified it they meet the standards of FLO, which depicts a fair trading condition for the product
Products can be slightly higher in price, but consumers are guaranteed with a greater quality