I presented this subject that "Outward-Looking Development Policies" in the course International Economics(Fatih SAYGILI)(2010-2011,Ege University,Economics)
2. What are we going to discuss today?
0.The Origin of Export-led Growth Strategy
1.Defination of Outward-Looking Development Strategies
2.Washington Consensus
3.Import-Substitution and Export-led Growth
4.Trade Reform in Selected Developing Countries
5.The Four Asian Tigers
6.How did the Four Asian Countries Achieve ?
7.And Turkey
3. 0.The Origin of Export-led Growth Strategy
The origin of export-led growth strategy is based on
A. Smith and D. Ricardo’s thoughts.
• A. Smith suggests to increase exports to least developed countries (colonial
countries) needed for the development.
• And D. Ricardo’s "Comparative Advantage Theory (CAT)”, the main starting
point of today's export-led growth strategy
5. • There are some tests about the relationship
between economic growth and export in
economic literature.
• Some of them say that export affects economic growth
The main of these studies are as follows:
Tyler (1981), Kavoussi (1984), Rivera-Batiz and Romer (1991), Grossman (1991),
Bahmani-Oskooee and Alse (1993), Sengupta and Espana (1994), Kwan and Kwok
(1995), Doraisami (1996), Bahmani-Oskooee and Niroomand (1999).
• And some economists say that there is no significant relationship
Akbar and Naqvi (2000), Ahmed et al.(2000), Panas and Vamvoukas (2002).
6. Some important effects on economic growth of exports can be
summarized as follows:
• First, export increases competitiveness.
• Second, productivity growth in foreign trade,
as well as to obtain new technologies(technology imports) and providing the spread
of technologies.
• Third, specialization and benefit from comparative advantages
• Fourth, some economies has narrow domestic market but they can get
opportunities to make the economic scale of production with exporting
• Fifth, by increasing foreign exchange inflow reduces pressure of
foreign exchange payments. Thus allows an increase in imports of goods and services.
9. Criterion Outward looking strategy Inward looking strategy
Problems Production of primary goods orientation according to
as bases for outward looking cost disadvantages
strategy Protectionism and
Vulnerability due to world inefficiency
market developments (ToT, price Narrow domestic markets
shocks) High share of imports in
Initiation of new industries inputs (no absolute foreign
exchange use, but only change
of imported goods)
Reduction of protectionism
and moving towards export-
orientation
Universität Hohenheim, Institut
9
490a
10. • After the oil crises of 1973, economies in the world went
into a quest.
• In August 1982, Mexican crisis
11. Washington Consensus
• in 1985 the US Treasury Secretary, James Baker
• the term was initially coined in 1989 by John Williamson to describe a
set of ten specific economic policy prescriptions that he considered
should constitute the "standard" reform package promoted for crisis-
wracked developing countries
• by Washington, D.C.-based institutions such as the IMF, World Bank,
and the US Treasury Department
12. The causes of the economic crisis:
• The overgrown with protectionism and excessive state intervention
in the public sector
Economic crisis management:
• reduce government intervention in the medium term
• a growth strategy based on exports to support the market economy
13. • some countries tried to apply this package which is about freee market
and a growth strategy based on exports
• Argentina experience resulted in the crisis(1999-2002), this is not the
only example
- in next slides we will see exprience of Turkey
• At that time economy of Argentina was not ready yet to apply these
changes
14. • Turkey applied without creating the
necessary regulatory mechanisms and without
taking adequate protective measures.
As a result Turkey met two of the crisis(1994 and 2001)
• Turkey had in a large public sector deficits and
trade deficits before the crises
• for example, in 1993 foreign trade deficit increased by 72.7% to
$14.1 billion
• Similar to the same indicators in 2000, foreign trade deficit
increased by 89.9% to $26.3 billion
18. • The Four Asian Tigers pursued an export-driven
model of economic development with the exportation
of goods to highly-industrialized nations.
• All four Asian Tigers have a highly educated and
skilled workforce and have specialized in areas where
they had a competitive advantage. For example, Hong
Kong and Singapore became world
leading international financial centers, while South
Korea and Taiwan became world leaders
in information technology.
19. • and these countries(NICs ;Hong Kong, Singapore, South Korea,
and Taiwan) also produce and export high-tech products
• The highest concentration on labor-intensive exports( primarily
textiles and garments) is currently in Pakistan(94%) , followed at some
distance by China(58%) , India(50%), Indonesia(49%).
• The lowest wages are probably in China and Indonesia, while Hong
Kong is a high-wage economy.
20. Indicator: High-technology exports (% of manufactured exports)
70
60
50
Hong Kong
40 Singapore
South Korea
30 Pakistan
China
Turkey
20
10
0
1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
21. in Japan
Exports of goods and services (% of GDP)
20
18
16
14
12
10
Exports of goods and services (%
8 of GDP)
6
4
2
0
1964
1960
1962
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
22. in Japan
GDP per capita (current US$)
45000
40000
35000
30000
25000
20000 GDP per capita (current US$)
15000
10000
5000
0
1960
1964
1962
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
23. in Hong Kong
Exports of goods and services (% of GDP)
250
200
150
Exports of goods and services (% of
100 GDP)
50
0
1974
2002
1960
1962
1964
1966
1968
1970
1972
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2004
2006
2008
2010
24. 100
150
200
250
50
0
1960
1962
1964
1966
1968
1970
1972
1974
1976
in Hong Kong
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
GDP per capita (current US$)
2008
2010
GDP per capita (current US$)
25. in Singapore
Exports of goods and services (% of GDP)
250
200
150
Exports of goods and
100 services (% of GDP)
50
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
26. in Singapore
GDP per capita (current US$)
45000
40000
35000
30000
25000
GDP per capita
20000
(current US$)
15000
10000
5000
0
2006
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2008
2010
27. in South Korea
Exports of goods and services (% of GDP)
60
50
40
30
Exports of goods and
services (% of GDP)
20
10
0
1976
1978
1960
1962
1964
1966
1968
1970
1972
1974
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
28. 5000
10000
15000
20000
25000
0
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
in South Korea
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
GDP per capita (current US$)
2008
2010
(current US$)
GDP per capita
29. DEVELOPMENT OF EXPORTS in TURKEY
• Year 1980 was a turning point for the Turkish economy
and foreign trade policies.
• At that year, decisions on January 24, known as a
comprehensive economic package to be implemented.
30. The main purpose of this package;
• ensure the functioning of the national economy, according to the
rules of free market mechanism
• and achieve integration with the world economy
With this programme
• Turkey abandoned the import substitution industrialization strategy
that makes the country’s economy outside a closed so that Turkey
adopted "export-oriented industrialization" strategy.
31. • With liberalizing Foreign Exchange Regime in 1990
and further strengthened Turkish Liras' convertibility features, and the
TL was released with the export and import.
• January 24, 1980 within the framework of decisions, made as a result
of the devaluation of TL against the U.S. dollar value has been
reduced by 49% and is intended to give impetus to exports with
domestic demand is trapped.
32. • Application of fixed exchange rate was abandoned and set on a daily
basis so that a realistic exchange rate policy and flexible exchange
rate system was introduced and tried to be applied.
• Government has been supporting to exporters with a varity ways such
as legal regulations, tax refunds, income tax exemption, allocation
of foreign exchange, imports of raw materials and export credits as a
customs deductible, some monetary and fiscal incentives provided.
33. • in 1987 the Turkish Eximbank was established to improve the
competitiveness of Turkish exporters in foreign markets and to
support Turkey export-oriented strategy
• Turkey’s export was 2.3 billion $ in 1979 in 1990 was 12.9 billion $
For 2010, in medium-term program(2010-2013), exports of Turkey were
estimated $111.7 billion
For 2013 in medium-term program(2010-2013), exports of Turkey were
estimated $160 billion
34. 0
5
10
15
20
25
30
1960
1962
1964
1966
1968
1970
in Turkey
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Exports of goods and services (% of GDP)
services (% of GDP)
Exports of goods and
35. 2000
6000
8000
10000
12000
4000
0
1960
1962
1964
1966
1968
in Turkey
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
GDP per capita (current US$)
2008
2010
(current US$)
GDP per capita