What is the difference between import substitution industrialization and export-oriented industrialization?

What is the difference between import substitution industrialization and export-oriented industrialization?

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.

What does import substitution and industrialization mean?

Import substitution industrialization is an economic theory adhered to by developing countries that wish to decrease their dependence on developed countries. ISI targets the protection and incubation of newly formed domestic industries to fully develop sectors so the goods produced are competitive with imported goods.

What is export promotion?

Export promotion has been defined as “those public policy measures which actually or potentially enhance exporting activity at the company, industry, or national level”.

What is export promotion strategies?

Export promotion strategies comprise policy interventions including exchange rate policies (Bhagwati, 1988) to any ‘specific measures that generally amount to the government bearing a portion of the private cost of production of export’ (OECD, 1984).

What are the advantages of export promotion?

Export promotion leads to expansion of goods for the foreign market. These goods earn foreign exchange that can be used to facilitate development. Export promotion industries have a wide market for their produce for both domestic and foreign markets. They are therefore able to produce for a greater capacity.

What is import substitution?

Import substitution is a strategy under trade policy that abolishes the import of foreign products and encourages production in the domestic market. The purpose of this policy is to change the economic structure of the country by replacing foreign goods with domestic goods.

What is import promotion?

Import-promotion policies are measures intended to increase the volume of a country’s imports from a particular trading partner or group of trading partners.

What is called export promotion?

Trade promotion (sometimes referred to as export promotion) is an umbrella term for economic policies, development interventions and private initiatives aimed at improving the trade performance of an economic area.