key term - Export-oriented industrialization

Definition

Export-oriented industrialization (EOI) is an economic development strategy that focuses on producing goods for export in order to stimulate economic growth. This approach emphasizes integrating into the global market and relies on external demand for domestic industries, often leading to increased foreign investment and technological transfer.

5 Must Know Facts For Your Next Test

1. Export-oriented industrialization gained prominence in the late 20th century, particularly in East Asian economies like South Korea and Taiwan, where it led to rapid economic growth.
2. This strategy often involves government support through subsidies, tax incentives, and infrastructure development to boost export sectors.
3. EOI helps countries develop competitive industries by exposing them to global markets, fostering innovation, and improving productivity.
4. The approach contrasts with import substitution industrialization, which prioritizes domestic markets over international competition.
5. Critics of EOI point out that reliance on global markets can make economies vulnerable to external shocks and fluctuations in demand.

Review Questions

• How did export-oriented industrialization contribute to the economic success of certain countries during the late 20th century?
  • Export-oriented industrialization played a critical role in the economic success of countries like South Korea and Taiwan by encouraging the production of goods for international markets. This approach allowed these nations to leverage foreign demand, leading to increased foreign investment and technological advancements. As a result, their economies grew rapidly, transitioning from primarily agrarian societies to industrial powerhouses, significantly improving living standards.
• Evaluate the advantages and disadvantages of export-oriented industrialization as a development strategy for emerging economies.
  • Export-oriented industrialization offers several advantages, such as access to global markets, increased foreign direct investment, and opportunities for technology transfer. However, it also presents disadvantages, including vulnerability to global economic fluctuations and potential neglect of domestic markets. Emerging economies must carefully balance these factors to ensure sustainable growth while mitigating risks associated with reliance on exports.
• In what ways did export-oriented industrialization influence the geopolitical landscape during the Cold War and decolonization periods?
  • Export-oriented industrialization influenced the geopolitical landscape by creating alliances between developing nations and Western powers that supported economic growth through trade. During the Cold War, countries adopting EOI often aligned with capitalist ideologies, attracting foreign investment from Western nations seeking to counter communist influences. This dynamic contributed to the emergence of new economic players on the world stage while simultaneously reshaping global trade patterns in the wake of decolonization, as newly independent nations sought models for development.

Related terms

Import substitution industrialization: An economic policy aimed at replacing foreign imports with domestic production to promote local industries and reduce dependency on foreign goods.

Globalization:

The process of increased interconnectedness among countries through trade, investment, and cultural exchange, significantly impacting economies and societies worldwide.

Foreign direct investment: Investment made by a company or individual in one country in business interests in another country, often seen as a key component in export-oriented industrialization strategies.