Import substitution policy versus export led growth strategy

To give boost to exports which contracted by 1. As we began our planning for development, the two options were open to us with regarded to our foreign trade policy.

It may be noted that over a period of time sinceexchange rate of rupee has declined, that is, rupee has depreciated. But long-term strategy to double our share of world export by is lacking in our foreign trade policy for This was further reduced to 85 per cent into 65 per cent in and to 50 per cent in Now, in average customs duty has been reduced to 20 per cent only.

The initial date is largely attributed to the impact of the Great Depression of the s, when Latin American countries, which exported primary products and imported almost all of the industrialized goods they consumed, were prevented from importing due to a sharp decline in their foreign sales.

Import Substitution Industrialization (ISI)

The exporter will not be required to make any request to the bank for issuance of a bank export and realization certificate BRC. This was an inward-looking economic theory practiced by developing nations after WW2. Market Determined Exchange Rate: Following the World War Two, a number of Latin American as well as East and Southeast Asian countries deliberately adopted import substitution strategies.

They contended that import liberalisation would kill domestic industries as they would not be able to compete with the cheap foreign products. There is urgent need for replacing this with a single-rate value-added tax VAT.

Secondly, import substitution strategy will create the necessary conditions to develop the strategic industries and achieve industrialisation.

Lastly, the export-oriented development model, to some extent, may strengthen the characteristic of dualisation in developing economies. To accelerate services export, the foreign trade policy has also provided sops-in terms of duty free entitlement — to individual service providers who earn forex of at least Rs.

Import substitution industrialization

Ownership transfer of SEZ unit sales has been permitted. This kind of risk is obvious, especially for developing countries. A committee headed by P. In other words, for the first time greater emphasis was placed on export promotion in our trade policy by removing anti-export bias of our earlier policy.

Examples List on Import Substitution Policy Versus Export Led Growth Strategy

Bilateral Trade Agreements with some countries were made to step up exports. L McCombie et al As in the path-breaking study about the trends in exports, Dr.

An important advantage of export-oriented strategy arises from economies of scale which can be reaped more effectively. Apart from setting up the export promotion council, the policy has announced two other major initiatives to boost services exports.

Therefore to remove this anti-export bias and promote the growth of exports, customs duties were reduced and inaverage rate of customs duties have been reduced to 20 per cent. Peru implemented ISI inand the policy lasted through to the end of the decade in some form. EOI increases market sensitivity to exogenous factors, and is partially responsible for the damage done by the Asian financial crisis to the economies of countries who used export-oriented industrialization.

A scheme of providing cash assistance to the exporters was started.

Export-Led Growth Strategies Through History

In this regard export obligation period has been extended to a maximum of 12 years. Second, technological progress that was taking place in developed countries was of the nature that saved the use of raw materials which underdeveloped countries were exporting.

This may not be undesirable in itself, but it would require larger inflows of external capital in the next few years and this is not available on appropriate terms. The facility was extended up to 31 December without any quantitative, 4. The initial solution to this dilemma was called import substitution industrialization.

Duty-free import of capital goods for use in production for exports: The second option was to adopt import-substitution as a major element of our trade policy.

The dynamic policy initiatives announced by the Government in the new foreign trade policy towards expansion and diversification of export markets, technological upgrade increased flexibility and procedural simplifications will help our exporters retain market share, and will hopefully reverse the declining trend in our exports.

The belief was that greater openness would encourage greater diffusion of productive technology and technical know-how.This essay focuses on import substitution policy; an export led growth strategy, it also discusses the differences the main differences between the two strategies.

IMPORT SUBSTITUTION STRATEGY. EXPORT PROMOTION VS. IMPORT SUBSTITUTION. Uploaded by. In this paper two different industrialization strategy, import substitution (IS) and export promotion (EP), will be introduced. Then the relation between these strategies and growth will be analyzed. Which strategy is better for higher growth rates, especially in a globalized world.

The export orientation of trade policy (or outward-looking growth strategy) is believed to have many advantages and is regarded as superior to import-substitution policy. We explain some of these advantages below. Opposite to the IS strategy, EP is a trade and economic policy aiming to speed-up the industrialization process of a country through exporting goods for which the nation has a comparative advantage.

Export-led growth implies opening domestic markets to foreign competition in exchange for market access in other countries. Import Substitution. A discussion and analysis of Import Substitution Strategy and Export-led Growth Strategy, looking at the Chinese economy.

A discussion and analysis of Import Substitution Strategy and Export-led Growth Strategy, looking at the Chinese economy. reduce the dependence on foreign trade and implement foreign trade policy with both the import. on "Import Substitution Policy Versus Export Led Growth Strategy" A) what are the main attractions of an import substitution strategy B)how do you explain that several developing countries have not suceeded to deepen the proc.

Import substitution policy versus export led growth strategy
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