6. Export oriented trade policy & development strategy:
outward looking trade strategy –
… or the neoliberal agenda.
Allows a nation to realize, as fully as possible, the inherent gains from their comparative advantage through free markets.
Often means primary-export-led growth (drawbacks: vulnerability due to volatile price swings, plus low profit potential).
Starting in the 1960s there was the beginnings of an intellectual return to free trade thinking and attempts were made to encourage Latin American countries to export more to the developed countries.
Stimulus here was the budding success of the Asian Tigers or NICs (Newly Industrialized Countries: Hong Kong, Korea, Singapore and Taiwan) who were successfully penetrating MDNs’ (More Developed Nations’) markets.
- Encouraged by the advice of the World Bank, several governments including those of Brazil and Colombia began to reduce levels of domestic protection and to give incentives to export producers.
[a] By 1970 this had become an accepted way of sustaining industrial expansion.