Key Takeaways. An export-led growth strategy is
one where a country seeks economic development by opening itself up to international trade
. The opposite of an export-led growth strategy is import substitution, where countries strive to become self-sufficient by developing their own industries.
Which policy is an export-led growth strategy?
Export-led growth is an economic strategy used by some developing countries. This strategy seeks
to find a niche in the world economy for a certain type of export
. Industries producing this export may receive governmental subsidies and better access to the local markets.
Is export-led growth good?
Advantages of export-led growth
Growing export sales
provide revenues and profits for businesses
which can then feed through to an increase in capital investment spending through the accelerator effect. Higher investment increases a country's productive capacity which then increases the potential for exports.
Which country has adopted an export-led growth strategy?
The last thirty years have seen tremendous spread of the export-led growth paradigm. The strategy was pioneered by Germany and Japan in 1950s and 1960s. In the 1970s and 1980s it was adopted by the four East Asian Tigers—
South Korea, Taiwan, Hong Kong, and Singapore
.
What is an export-led multiplier?
an expansion of the economy with EXPORTS serving as a ‘leading sector
‘. As exports rise, they inject additional income into the domestic economy and increase total demand for domestically produced output (see EXPORT MULTIPLIER).
What is consumption led growth?
Increased consumption will encourage businesses to drive up production, which will lead to job creation and rising income, leading to a further increase in aggregate demand, and so on. … When an economy embarks on consumption-led growth, its consumption will
increase
.
What is Mauritius main source of income?
The economy of Mauritius is a mixed developing economy based on
agriculture, exports, financial services, and tourism
. Since the 1980s, the government of Mauritius has sought to diversify the country's economy beyond its dependence on just agriculture, particularly sugar production.
What is export strategy?
An exporting strategy starts
with the products or services that you offer
. … Doing trade and market research on foreign partners, distributors, buyers and customers can help your company get an idea of what products or services can be sold in different markets.
Can a country develop without exports?
“But the expansion of the world economy, though favourable for many developing countries, was built on unsustainable global demand and financing patterns. … Thus, reverting to pre-crisis growth strategies cannot be an option.”
What are the dangers of an export economy?
For countries heavily reliant on exporting commodities,
the volatility of world prices
provides an obvious risk. But even with manufactured products whose prices are more predictable, export-driven countries risk suffering when there is a downturn in global demand leaving huge amounts of spare capacity.
How does export contribute to economic growth?
export growth may reflect
a rise in the demand for the country's outputs
, and this in turn will be realised in economic growth. II. by raising the level of exports, additional foreign exchange will be generated, and this facilitates the purchase of productive intermediate goods.
What were the risks associated with China's export-led growth strategy?
Along the way, export-led growth has also created
serious structural imbalances highlighted
by underutilised savings, slow growth of residential income and domestic consumption, and heavy reliance on investment.
How does import substitution compare to export-led growth?
How does import substitution compare to export-led growth? Import substitution
seeks to develop local industries to produce items that the country had been importing
, whereas export-led growth seeks to develop local industries that can compete in specific niches in the world economy.
Is it better to have a higher or lower multiplier effect and why?
With a
high multiplier
, any change in aggregate demand will tend to be substantially magnified, and so the economy will be more unstable. With a low multiplier, by contrast, changes in aggregate demand will not be multiplied much, so the economy will tend to be more stable.
What causes increase in exports?
Productivity
: The more productive a country's workers are, the lower the labour costs per unit and cheaper its products. A rise in productivity is likely to lead to greater number of households and firms buying more of the country's products – so exports should rise and imports fall.
How important is exports to a country's growth?
A trade surplus contributes to economic growth in a country. When there are more exports, it means that there is
a high level of output from a country's factories and industrial facilities
, as well as a greater number of people that are being employed in order to keep these factories in operation.
