Question

There are two questions related to Trade Policies for the Developing Nations - Respond both questions by one paragraph for each

1. What are some of the growth strategies that have been employed by the developing nations? How successful are these strategies?

2. Describe the flying-geese pattern of economic growth? What countries have pursued this strategy?

Answer 1

Answer 1:

The developing nations have employed various strategies. From World War II to around 1970 many developing nations followed the policy of limiting exports of manufactured goods to increase the growth rate of manufacturing sector. This was based on infant industry argument. Thus, they imposed tariffs and import quotas on the goods of developed nations initially. However, this lead to increase in cost of production and also increased inefficiency of domestic firms.

Then, the policy which proved to be successful for the developing nations from 1960s onward was export oriented industralization which led to increase in the exports of manufactured goods primarily to advanced nations . Some of the East Asian economies achieved growth rate of more than 10 per cent by following this policy.

Thus, rather than import substitution, export oriented industralization has benefited these nations.