Author Question: The consensus today is that import-substitution protectionist industrial policy has not served the ... (Read 109 times)

skymedlock · **on:** Jun 30, 2018

The consensus today is that import-substitution protectionist industrial policy has not served the developing countries' growth ambitions well.

This fact proves that policies relying on export-driven growth are the winning ticket for these countries.

Question 2

Which of the following is NOT a likely result of intraindustry trade based on internal economies of scale?

A) Job creation at domestic firms entering international trade
B) Lower prices for the domestic consumers of the product now being traded
C) Increased sales and lower per unit costs for the firm doing the exporting
D) Higher prices for the exported product

britb2u · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Although there are many who draw precisely this lesson from the East Asian Miracle of the past half-century, such a conclusion does not necessarily follow logically. Although the four HPAEs succeeded in their economic as well as in their export sector growth, they differed among themselves considerably in the degree and manner with which they abjured protectionist policies. In any case, export-promotion policies may distort relative prices to the same extent as import protectionist policies, and hence may lead to the same waste and misallocation of national resources.

Answer to Question 2

D