Export-oriented industrialization
- Export-oriented industrialization
Export-Oriented Industrialisation (EOI) sometimes called export substitution industrialization (ESI) 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. Reduced tariff barriers, floating exchange rate (devaluation of national currency is often employed to facilitate exports), and government support for exporting sectors are all an example of policies adopted to promote EOI, and ultimately economic development. Export-Oriented Industrialisation was particularly characteristic of the development of the national economies of the Asian Tigers: Hong Kong, South Korea, Taiwan and Singapore in the post World War II period. The purpose of international institutions such as the World Trade Organization, work in favour of such trade strategies and promote multilateral trade policy rules to put every nation on the same playing field.
It has been mostly successful, although it can be sensitive to the market. The 1998 economic crisis hurt the economies of countries who used export-oriented industrialization. It is criticized for its lack of product diversity, which makes the economies potentially unstable.
Export-oriented industrialization is often contrasted with import substitution industrialization. It grew as a reaction to import substitution.
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