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1. Strategies Which Will Enable Achievement of Economic Growth and/or…
1. Strategies Which Will Enable Achievement of Economic Growth and/or Development
1. Import substitution
ISI (Import Substitution Industrialization
Produce goods domestically rather than importation
Economic growth
More competitiveness on world markets and future gain from economies of scale
Opposite of:
Export led growth
Adv. of free trade on comparative adv.
Conditions to work:
1) organizing selection of goods to produce domestically
2) Subsidies made available
3) Protectionist system with tariff barriers
Adv.
Protect jobs
Protect economy from power
Protect local culture and social habits
Disadv.
Inefficiency in domestic industries
Protect job in short run
No benefits from comparative adv and specialization
Other countries may take retaliatory measures
High rate of inflation
2. Export Promotion
Export led
Outward orientation
Openness and increased international trade
Policies
Liberalized trade
Liberalized capital flow
Floating Exchange Rate
Investment
Deregulation
Problems:
'Asia Tigers'
Increased protectionism
MNC's become too powerful
Income inequality
3. Economic Integration
Preferential access schemes and regional free-trade agreements
Possible Adv.
Larger export markets, economic scale for producers
Diversification, reduce dependence on narrow range of commodities
Regional cooperation
Links to ports and other infrastructure networks
Stimulus for inward foreign direct investment
Free movement of labor
Free movement of capital
Greater political stability and cooperation
Greater efficiency
Increased bargaining power
Less expensive imported goods
Trade Creation
Possible Disadv.
Role of WTO undermined
Trade more complicated
Rising unemployment
Trade diversion
Export of primary products to gain export revenue
Increasing manufacturing exports
