Question

There are two questions related to Trade Policies for the Developing Nations. 1. What are some of the growth strategies that have been employed by the developing nations? How successful are these strategies? 2. Describe the flying-geese pattern of economic growth? What countries have pursued this strategy?

Answer 1

Developing nations as the name suggests means they are still in construction mode and there are issues which hinder the growth prospect of these nations and to tackle these issues growth strategies are employed. Development priorities of developing nations include strengthening technological capacities, skills and capacities, Improving exports in the world maret

Some of the growth strategies are  

FDI [ Foreign direct investment ] The need for FDI in developing nations is more pronounced where the capital is scare and the population growth is immense. the major advantages of fdi in the host countries are

1. capital supplier : since the developing nations require investment to achieve growth in national income as the rate of savings and investment is low in these countries

2.technology transfer: FDI brings in assets that are either missing or scarce in developing nations. these asses are new and advanced  technology without which development is not possible

3. Promotor of exports : Foreign enterprises with their networks in the world stand in a unique position to exploit their strength to create a market for host countries goods.

4. employment : direct as well as indirect employemnt is created due to fdi

EXPORT POLICY

Taking the case if India, GOI announced foreign trade policy for the years 2004-05 by realising the fact that a bold approach was needed to tap immense opportunities under globalisation of economy. Basic objectives included increasing India's global share in merchandise and using trade policies for employment generation especially in rural and semi urban areas.

strategies adopted to achieve these targets were

loosing the control leash and creating a business friendly environment by reducing red tape, simplification of procedures, levies factors, bringing down transaction cost etc.

statistics : Trade stats show that actual growth of merchandise trade in the very first year of policy period was 24% higher than the stipulated target of 16%.

THE SPECIFIC INITIATIVES OF 2004-09 POLICY

1 Removal of export taxes

2. agricultural exports

3. gem and jewellery exports

4. bank gaurantee to finance export activities

5. procedural simplification and reduction in transaction costs    

FLYING GEESE PATTERN

This pattern of economic growth was launched in Japan in 1930s. It suggested how a developing country can become developed relatively fast.

what happens is the developing nations adopt to those industries of developed nations which lie under its capacity belt and in the initial period the local demands are met first and when the production increases it enters the export zone. The quality of goods also changes from cheap and simple to expensive and good quality products. This process is repeated over and over again leading to a rapid phase of economic growth.   

Countries that adopted this pattern are Japan, Singapore, Taiwan, Hong kong etc.