Manufacturing for Export in the Developing World: Problems and Possibilities

Manufacturing for Export in the Developing World: Problems and Possibilities

Manufacturing for Export in the Developing World: Problems and Possibilities

Manufacturing for Export in the Developing World: Problems and Possibilities

Synopsis

In recent years, much has been made of the success of developing countries, particularly in East Asia, which have achieved economic growth by manufacturing goods which are then exported to developed economies.
Case studies of five countries uncover serious potential difficulties in maintaining the pace of manufacturing for export in the developing countries, and shows that there is no simple relationship between import liberalization and manufacturing for export.

Excerpt

The interrelationship between trade and industrial development has been a key issue in economic research and development studies in the post-World War II era. Industrialization has played a crucial role in the national modernization policies of all developing countries. World trade has become a source of opportunities for many nations and at the same time the medium for the spread and the spill-over effects of economic growth in the field of output, and of disturbances caused by national policies, imbalances, or changes in competitive positions. Industrialization and trade have also been important factors in social and industrial changes. Many developing countries have gone through different stages of industrial development during the past decades. With the increasing role of industry in their economies, trade in manufacturing has also become an important channel for strengthening their position in the world economy.

For most of the twentieth century, changes in trade proportions have been strongly related to the increasing role of industry in the life of nations. The colonial division of labour-characterized by the flow of natural resources from the agricultural or raw-material-exporting countries to the industrialized world-which by and large dominated trade patterns since the industrial revolution, has been gradually replaced by a new pattern: the industrial division of labour. Comparative advantages related to natural resource endowments were replaced by 'acquired' advantages. In order to strengthen their international comparative position, nations and firms have been focusing increasingly on human resource developments, innovative capabilities, and new strategies in production and services.

Between 1950 and 1990, world trade in industrial products expanded almost twice as fast as did the output of manufacturing industries. During this period, major shifts occurred which corres-

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