Growth Stategies Economics
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- Date Submitted: 02/05/2011 07:12 AM
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Growth strategies
Export-led growth
a outward orientated growth strategy, based on openness and increased international trade.
* Growth achieved by concentrating on increasing export and exp revenue (leading factor in AD)
Increasing exports increase GDPhigher incomegrowth in domestic/export markets.
Policies for country to achieve export-led growth:
* Liberalized trade – open up domestic markets to foreign competition
* Liberalized capital flow- reduce restriction on foreign direct investment
* A floating exchange rate
* Investment in the provision of infrastructure
* Deregulation and minimal g`nment intervention
The theory- in reality countries do not need the adoption of these.
Difference between exporting primary products and/or manufactured products:
* Many developing countries depend upon the export of primary products in order to gain export revenue. However, this has been downward for many years due to increasing supply and insignificant increase in demand. Thus, the export led growth based on export of primary products is unlikely to be achieved.
* Focus on increasing manufacturing exports.-->”Asian Tigers”: Japan, S Korea, Hong Kong, Singapore, Taiwan. They export products in which they have comparative advantage, based on low cost labour. This products changed over the time to more sophisticated ones, using capital-intensive production methods and more highly skilled workers.
Problems associated with export-led growth:
* The success with “Asian tigers” increased the protectionism in developed countries as they could not compete against the low wage imports. Thus the g`nments placed tariffs and quotas on the lower-priced goodsprice increases, develop countries export primary prod.
* Necessary conditions for exp-led growth. “Asian tigers” g`nments provided infrastructure, subsidizing output through low credit, promoting savings and improvements in technology. Also g`nments adopted policies about...
Export-led growth
a outward orientated growth strategy, based on openness and increased international trade.
* Growth achieved by concentrating on increasing export and exp revenue (leading factor in AD)
Increasing exports increase GDPhigher incomegrowth in domestic/export markets.
Policies for country to achieve export-led growth:
* Liberalized trade – open up domestic markets to foreign competition
* Liberalized capital flow- reduce restriction on foreign direct investment
* A floating exchange rate
* Investment in the provision of infrastructure
* Deregulation and minimal g`nment intervention
The theory- in reality countries do not need the adoption of these.
Difference between exporting primary products and/or manufactured products:
* Many developing countries depend upon the export of primary products in order to gain export revenue. However, this has been downward for many years due to increasing supply and insignificant increase in demand. Thus, the export led growth based on export of primary products is unlikely to be achieved.
* Focus on increasing manufacturing exports.-->”Asian Tigers”: Japan, S Korea, Hong Kong, Singapore, Taiwan. They export products in which they have comparative advantage, based on low cost labour. This products changed over the time to more sophisticated ones, using capital-intensive production methods and more highly skilled workers.
Problems associated with export-led growth:
* The success with “Asian tigers” increased the protectionism in developed countries as they could not compete against the low wage imports. Thus the g`nments placed tariffs and quotas on the lower-priced goodsprice increases, develop countries export primary prod.
* Necessary conditions for exp-led growth. “Asian tigers” g`nments provided infrastructure, subsidizing output through low credit, promoting savings and improvements in technology. Also g`nments adopted policies about...