Monday, June 11, 2007

Evaluation of Outward Looking Growth Policies

problems of outward looking policies (export led growth)

Outward looking policies to increase trade include:
  • free trade
  • devalutaion
  • absence of susbsidies.

1. Developing countries may not be able to compete, especially with new developing industries. infant Industry argument difficult to promote growth.

2. Devaluation can lead to inflation.

3. May require investment in transport and infrastructure. Success of outward looking policies depends on whether there is a framework for trade or not.

4. export industries may require foreign investment and import of foreign workers.

benefits of outward looking policies.

  • specialisation
  • economies of scale
  • world growth
  • increased competition, incentives to cut costs

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