Beyond import substitution and export promotion: A new typology of trade strategies

There is considerable confusion in the literature as to what exactly is meant by ‘export promotion’, or ‘outward‐orientation’. This article identifies five mutually‐exclusive trade strategies, and defines the underlying sectoral and market orientations of each. It then measures empirically the strategies of six developing countries. The empirical findings indicate that some of the successful East Asian countries actually pursued an infant industry‐based, exporter‐oriented, ‘protected export promotion’ strategy, not the commonly perceived, static comparative advantage‐based ‘export promotion’ strategy; their protectionist policies are not mere exceptions, but integral elements of their export‐oriented strategy.     

Effective exchange rates for exports in Pakistan

Effective exchange rates for exports in Pakistan can be calculated which take into account the major export incentive measures in operation and their divergent treatment of specific exports. This quantification of export policies into an overall measure of the implicit (effective) foreign exchange rate structure permits an evaluation of the impact of export promotion measures on foreign exchange earning capacity. The major export incentive schemes were found to provide the highes’ subsidies to those exports with the highest total import components and the lowest relative earnings of net foreign exchange. Thus de velopment policy in some cases failed adequately to encourage these producers with relatively higher levels of domestic value‐added to export their products.     

The growth of Indian nitrogen fertilizer manufacture: Some lessons for industrial planning

Large‐scale manufacture of nitrogen fertilizers in India originated during the Second World War as a result of the interruption of the import of rice from Burma. The growth of production has been at the prodigious rate of 22 per cent per annum in the 17‐year period 1949/50–1965/6. Demand has never acted as a constraint; this suggests that agro‐industry can play an important part in an industrializing strategy for development. In spite of this success two negative features have characterized the economic history of fertilizer production: gestation lags and under‐utilized capacity. Had the establishments worked at design capacity and had the average gestation lag not exceeded three years, less than 60 per cent of the 2.1 million tons of nutrient imported into India during these 17 years would have been required. This highlights the need to include in planning models of output expansion both of these variables, getstation lag and low capacity utilization. Some of their causes have been exogenous to the industry. But a number are internal and recurrent. Unjustified technical risks, plant dis‐integration, faulty process selection and inadequate project appraisal in investment decision‐making. Attempts to reduce the balance of payments deficit have had a negative feedback on the foreign exchange flow by reducing the industry's average annual output. Such negative effects should be included in formulating import control, import substitution and export promotion policies. Finally the ubiquity of excess capacity and the invariance of labour force size with the degree of capacity utilization in this sector is shown to lead to large over‐estimates of the future required‐labour force when certain forecasting techniques are used, even in the absence of trends to increasing labour productivity.     

Political Instability and Export Performance in Sub-Saharan Africa

The political landscape of post-independent sub-Saharan Africa (SSA) has been one of rampant coups d'etat. Existing evidence suggests such elite political instability (PI) has been growth-inhibiting even when exports are accounted for. In the light of the increasing interest in the role of export-promotion strategies in fostering economic growth, however, the present paper examines the impact of PI on export performance in these economies. The paper explores the hypothesis that the lack of a stable political environment adversely influences export performance via competitiveness, and that PI may actually play a more crucial role in export than in overall GDP growth. Based on detailed data on the incidence of coups in 30 SSA countries, real export growth over 1967-1986 is regressed on a principal-component of the various forms of coup events - "successful" coups, abortive coups, and coup plots - as well as on export structure, terms of trade, production capacity, and exchange rate misalignment. The results support the above hypothesis of an adverse impact of PI on export growth, and further suggest that PI has been even more deleterious to exports than to overall GDP.     

Exports and growth: Additional evidence

In a recent article in this journal [Sheehey, 1990], evidence was presented that the results of a substantial number of studies on exports and growth are biased by a built‐in correlation between exports and GDP. In this note, drawing on the parallel literature on government and growth, the analysis is carried further by investigating for 1960–81 how strong a relationship between exports and growth emerges when alternate export variables not subject to this bias are introduced.     

Employment effects of output and technological progress in Malaysian manufacturing

A major factor contributing to the growth in industrial employment in Malaysia was the implementation of the export‐oriented industrialisation strategy. With the withdrawal of GSP privileges to the USA, the inevitable loss of comparative advantage in labour cost and the emergence of trading blocs, it is feared that the growth of the export‐oriented sectors in manufacturing will be impeded, causing a serious unemployment problem. This fear is compounded by the increasing shift to technology‐intensive methods of production which displace labour. This article shows that domestic demand and export expansion exert positive and almost equal influence on industrial employment. Any negative impact on employment due to a shortfall in exports could be neutralised if an appropriate choice of import‐substituting and export expansion policies is adopted. Displacement of labour due to the substitution effect of using technology‐ and capital‐intensive production is largely compensated for by the increase in labour utilisation due to the output effect of increased production for both the domestic and foreign markets.     

Horror and Hope: (re)presenting militarised children in global North–South relations

Elite planners in the Eastern Caribbean sub-region pin their hopes of economic viability on tourism, a vibrant offshore financial (and other) services sector and an increase in export activity from companies operating out of industrial parks. Framed against the perception of an inevitable globalisation process underway, with limitations posed to high-level or diversified manufacturing, power holders have sought to concentrate on the promotion of 'export services' as a viable cover against new competitive challenges. This article argues, however, that this state of affairs betrays a crisis-of-mission within the ruling class on how to reconstruct political economies marked by the hegemony of merchant capital. Rather than a move towards what are globally the most remunerative factors of production--high-level manufacturing and services--a rather curious consensus has emerged which proclaims a solid future for export services without roots and/or ganglia to local manufacturing. The success of such an 'export services' model anywhere in the Eastern Caribbean will not turn as much on the quality of human resources as it will on overcoming the short-term horizon of local politicians, and the low-risk predilections of the wealthy planter-merchant elite. The latter's conscious 'opt out' strategy on the question of manufacturing diversity has made for a strikingly conservative enterprise culture. More specifically, merchant capitalist societies like those in the Eastern Caribbean insufficiently display the sociocultural attributes required for the creation of high-level services: innovation-mediated risk, research and development competence, and affinities to industrial processes and networks.     

Export instability and the domestic economy: Questions of causality

The conventional view concerning the impact of export instability on the domestic economies of developing countries is one of pessimism. Export instability is thought to adversely affect the short‐run stability and longer‐run growth of income. Empirical evidence on these matters is, however, inconclusive. This article applies a Granger/Sims reduced form approach to examining whether export instability generates short‐run instability in domestic income. For each of a sample of 20 trade‐dependent countries the results obtained strongly support the contention that export instability induces short‐run macroeconomic instability.     

Tariffs and economic development: Some theoretical issues 1

There is evidence to suggest that in Brazil import substituting industrialization has brought an increased dependence on the foreign sector. Further growth is highly dependent upon the ability to increase exports, and economic policy exercises an important function in such export expansion. In an attempt to analyse the behaviour of manufactured exports, a regression model, complemented with in‐depth interviews with individual firms, is posited and tested with Brazilian data. In analysing policy variables and other determining factors in terms of their effects on manufactured export performance, it is found that exchange rate policy, tax incentives, LAFTA, and a recession‐boom effect have all played important roles in shaping Brazilian industrial export growth.     

Is there a long‐run relationship between population growth and living standards? The case of India

This note examines the existence of a long‐run, cointegrating relationship between population and per capita GDP in India for 1950–93. Unit root tests show that per capita GDP is integrated of order one while population is integrated of order zero; further, estimation of the bi‐variate relationship using the cointegration procedure of Johansen shows that no long‐run relationship exists. Thus, population growth neither causes per capita income growth nor is caused by it. A corollary is that population growth neither stimulates per capita income growth nor detracts from it.     

The measurement of development effort—A suggestion

A notable shortcoming of development economics has been a failure to design an objective indicator allowing for an evaluation of the effort made in particular developing countries. Own‐country effort has been noted in the literature to be an important ingredient in the illusive recipe of development‐success; and so the above problem is of considerable interest, both theoretical and practical. This paper analyses the interrelationships between three groups of commonly used ‘effort‐indicators’ ; and in addition studies the relationships between each and growth of per capita income of a sample of developing countries. The findings suggest that at the present time, effective development efforts tend to lie less in the area of belt‐tightening and mobilisation of domestic savings, and more in the area of explicit export promotion.     

Gender wage inequality and export‐led growth in South Korea

This article investigates the relationship between gender, wage inequality, and export‐led growth in South Korea. The persistent gender wage gap in Korea's manufacturing sector is found to be linked to women's segregation in the country's major export industries where real wage growth has lagged productivity growth, despite favorable market conditions that might drive up women's wages relative to those of men. The interaction of state‐ and firm‐level hiring, training, and promotion practices that structure women's and men's employment opportunities differently appear to have resulted in a relatively weaker fall‐back position for women in labour markets. Econometric results are consistent with the hypothesis that women's weaker fall‐back position limits their ability to bargain for wage increases commensurate with productivity growth. Further, evidence is presented which links gender wage inequality to the growth of Korean exports.     

Export concentration and export performance in developing countries, 1954–67

The relationship between export concentration and various aspects of the export performance of 31 developing nations during the period 1954–67 is considered in this paper.¹ Estimates of the magnitude, instability and time‐trend of both the geographic concentration of exports and export earnings are utilised to estimate the direction and strength of association between these aspects of export concentration, instability and growth.² The analysis reveals diverse patterns of geographic export concentration among the countries, but offers little support for conventional views of an important direct relationship between export concentration and the instability or growth rate of export earnings.³     

Thai interest rates∗

Using conventional assumptions of price control by buffer devices, several aspects of control of trade in cocoa by buffer funds, buffer stocks and export quotas are explored with the provisions of the Draft International Cocoa Agreement in mind. Analysis of revenue and price effects of these devices is facilitated by drawing on literature concerning cocoa market parameters.

Expanding the short‐run diagrammatic analysis of buffer funds by Snape and Yamey, possible revenue effects under optimum marketing‐board farmer prices are shown when (a) the farmer price is held constant for two years and shifts in demand and supply are experienced and (b) farmer price is allowed to fluctuate from one year to the next according to optimum considerations (under constraints regarding the maximum and minimum farmer price). Surpluses and export proceeds are shown to increase with a farmer price (net of transportation costs) equal to or lower than the world price. Control, however, may destabilize export proceeds and world price.

Use of proposed buffer stock and export quota devices in a market already controlled by buffer funds is shown, under conditions specified, to have uncertain effects on export proceeds. Buffer funds may reduce and destabilize producer country proceeds while export quotas have the opposite effect. A buffer stock in a market already controlled by a buffer fund interested in maximizing short‐run export proceeds may not, with cocoa market parameters hypothesized, be an improvement over the buffer fund during years for which the ceiling price is to be supported.     

International tourism and export instability

Export diversification has been suggested as a strategy for decreasing the level of export earnings instability which is experienced by many developing countries. In recent years the international tourism sector has made an increasingly important contribution to the economies of many low income countries. This article examines whether diversification into the non‐traditional tourism sector has succeeded in decreasing the instability of export earnings. It was found that although tourism has the advantage of high growth rates and is a major source of foreign currency receipts, earnings from international tourism did not bring about a significant decrease in the instability of export earnings of most of the developing and industrialised countries considered. Furthermore, a net increase in the instability of earnings from tourism and merchandise exports occurred in a number of countries, and may be a particular problem in small, open developing economies.     

Some Scenarios for Russian Oil Exports up to 2020

This article analyses the potential for Russian oil export growth through the next decade. It concludes that supply for exports will continue to grow, albeit moderately. The greater or lesser intensity of that growth will depend on the evolution of both production and internal consumption, and especially on the reaction by investors to sector changes promoted by government energy policy. From this analysis, we find three likely scenarios for Russian oil exports. The most positive envisages it will be possible to diversify exports while the most negative suggests that Russia will have scant opportunity to develop an export diversification strategy.     

Tansnationals and foreign trade: Evidence from Brazil

A recursive model of exports and imports of manufactures, in which imports depend in part on exports, is estimated using data for a cross‐section of 17,053 industrial firms. In this sample, 652 firms are foreign‐owned. Explanatory variables include firm size, skill intensity, advertising and other variables in addition to foreign ownership. Foreign ownership has a large, independent effect on both export performance and import propensities, but foreign ownership in itself explains little of the relatively low export/import ratios registered by affiliates of transnationals.     

Changing development models in small economies: The case of Jamaica from the 1950s to the 1990s

By examining in detail the successes and failures of different development models in one developing country over a four-decade period, this article sketches a development model for small economies in the 1990s as an alternative to the neoliberal model pushed by the International Monetary Fund. It reviews the experience of Jamaica with various development models from the 1950s to the 1990s, with special attention focused on the experience of the Seaga government of the 1980s. It also draws lessons from the successful development experience of small European countries and of the East Asian Newly Industrialized countries. In normative terms, the alternative development model attempts to combine growth with equity and democracy. In analytical terms, it takes account of the constellation of domestic forces and appropriate political strategies, as well as of international economic and political conditions. The main features are a strong role for the state in economic interactions with transnational corporations, in identification of export markets and promotion of export production, in selective protection of domestic industry with an export potential, in promotion of agriculture linked to industrial development, in improvement of human resources and promotion of regional economic integration. Within these parameters, a crucial role is assigned to the domestic private sector and a complementary one to foreign investment. Distribution is to be addressed primarily through distribution of productive assets and access to health care and education. Evelyne Huber is professor of political science at the University of North Carolina, Chapel Hill. She is a coauthor ofDemocratic Socialism in Jamaica andCapitalist Development and Democracy. She is currently involved in research on the changing role of the state in Latin America and on comparative social policy. John D. Stephens is professor of political science and sociology at the University of North Carolina, Chapel Hill. He is a coauthor ofDemocratic Socialism in Jamaica andCapitalist Development and Democracy. His current research focuses on options for social democracy and comparative social policy.     

STRATEGY FORMATION IN PUBLIC AGENCIES

The main contribution of this study is the identification of three modes of strategy for public agencies based on strategic thought in a corporate environment. Strategic design, internal strategic scanning, and strategic governance embody three distinct modes of strategy relevant in the public sector. Programming actions, combining capabilities, and formation of networks capture the essence of these strategic orientations. By offering an organization‐based view of public sector strategy, this study puts public agencies at the centre of strategic examination. The fundamental unit of analysis within agencies is administrative duty, which connects administrative action with the democratic decision‐making process. These three strategy modes are based on complementary and, in some respects, contradictory theoretical assumptions, but all offer opportunities for confronting the diverse environments faced by public agencies. Each strategic orientation has a distinct approach to such features as the role of management, occupational groups, the environment, and types of capital.     

Developing countries' terms of trade in manufactures, 1967–87: A note

Terms of trade, relating only to manufactured exports and imports, are calculated for a sample of 37 industrialised and developing countries over the 1967 to 1987 period. It is found that the terms of trade movements were significantly more favourable for higher‐income countries. This result highlights the importance of export diversification as part of a development strategy.