Handbook on International Trade Policy
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Handbook on International Trade Policy

Edited by William A. Kerr and James D. Gaisford

The Handbook on International Trade Policy is an insightful and comprehensive reference tool focusing on trade policy issues in the era of globalization. Each specially commissioned chapter deals with important international trade issues, discusses the current literature on the subject, and explores major controversies. The Handbook also directs the interested reader to further sources of information.
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Chapter 42: Export Promotion Policies

James B. Gerber


James B. Gerber Export promotion is an economic development strategy emphasizing the exploitation of a country’s actual or potential comparative advantage through production for foreign markets. It is often contrasted with import substitution industrialization (ISI) policy since it is ‘outward looking’ while ISI is ‘inward looking’. Modern forms of export promotion first came to prominence in the 1960s when several East Asian countries turned away from ISI strategies and began to promote manufactured exports (Bruton 1998). The success of these Asian export economies, known variously as the Little Dragons or Four Tigers,1 called into question the idea of export pessimism, the belief that low and middle income developing economies could not compete with manufactured goods in developed country markets. By the mid-to-late 1980s, export promotion had completely replaced ISI as orthodoxy. In addition to the demonstration effect of East Asian export economies, several other factors stood behind the success of export promotion as a policy idea. Prominent among them were the loss of confidence in interventionist, state-led management of the economy, as exemplified by the Thatcher and Reagan reforms in the United Kingdom and the United States, and the failure of traditional import substitution industrialization policies to address the worsening economic conditions of Latin America stemming from the debt crisis of the 1980s. A third major factor that contributed to developing country adoption of export promotion is the communication and transportation revolution of the last decades of the twentieth century. Technological changes in transport and communications...

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