Edited by William A. Kerr and James D. Gaisford
Chapter 42: Export Promotion Policies
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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