This is the main risk that entrepreneurs should be aware of. Advantages Disadvantages insufficient knowledge of market and culture no or very few extra staff required lower profit margins agent knows and has access to the market and distribution channels dependence on commitment of partner more complete market coverage possible no direct customer contact What are the disadvantages of indirect exporting explain in your own words? Chan, S & Clark, C 2013, Flexibility, Foresight and Fortuna in Taiwans Development, Routledge, New York. Nevertheless, governmental officials cannot always predict emerging trends the world economy (Dickson 2013, p. 1991). International trade open up the world potential market to increase producer sales quantity and increase competition on foreign country. Extending to a global scale One of the primary benefits of exporting is access to a global market of buyers. (2020, May 23). With the best exchange rate possible you can save a significant amount of money for your business. Wang Bo Ren(2006) argued that the export-oriented industrialization model need some prerequisites: some of the domestic industrial sector has already high level of technology and production management experience, also the adequate management personnel and skilled workforce. In July 2017 exports contracted to 3.9 per cent. They paid attention to both domestic and foreign markets since the purchasing power of local clients was also high. Several advantages and disadvantages of industrialization are worth taking into consideration. It can be a lucrative way for businesses to expand their operations and increase their profits. Assessing the Situation of Women Working in the Calabarzon, Assessing the situation of women working in CALABARZON, Imperialism & the Globalisation of Production (PhD thesis), Red Carpets and Red Tape: Institutions and the Geography of FDI in Vietnam. Also, in small countries is the amount of the unemployed labor force, the surplus products and disused resources which is comparatively small than large countries and they only need to achieve a small export scale to solve these problems. Just from $9/Page. Too much dependence on middlemen: The main drawbacks of indirect exporting is too much dependence of the exporter producer on the middlemen operating in the channel. what makes muscle tissue different from other tissues? Additionally, the GDP of this country grew by 300 percent within the period between 1960 and 1986 (Chan & Clark 2013, p. 1958). Thus, export-oriented industrialization can be successful if entrepreneurs adopt technologies that raise the volume of production or improve the quality of good manufactured by companies. Disadvantages The disadvantages of Industrialization are discussed below: The immediate result is in the gradual disappearance of many natural resources, the pollution of land, water and air.. July 3, 2022 gr oe These challenges can include: management focus. Successfully executed, this strategy generates a flow of money from abroad that the country can then use to strengthen its domestic economy and raise living standards. However, it is important to remember that income inequality, which is measured by Gini coefficient, was higher in some western countries, even in comparison with some Asian states that relied on export-oriented industrialization. These products enjoyed significant demand in the foreign market. When that many people lived close together in unsanitary conditions, it was not unusual for diseases to start spreading rapidly. Living conditions around the new factories were not always better. 8. What does this mean emulate what you respect in your friends? Domestic Resources Get A Bad Hit Some companies are importing competitions or substitutes for domestic products. The world started to see that the balance of trade was shifting to the producer, increasing the wealth of businesses, and adding tax revenues to society. They paid attention to both domestic and foreign markets since the purchasing power of local clients was also high. Prior results do not guarantee a similar outcome. The researchers look for the most crucial data which is inevitable for the research. The work was also quite dangerous. Need a custom Essay sample written from scratch by Login However, it is important for businesses to carefully consider the advantages and disadvantages of exporting before entering into international trade. 9. The main advantage comes from the fact that industrialization gives us more goods that can be bought at affordable prices. There are two methods of primary research: Later, in this strategy economic growth will be analyzed. 5. Globalization activity doesn't only reduce trade boundary but it lot more effects like one country come closer to the economy of other country, it help in mixture of culture, it helps in transfe At present, the most eloquent example of export-oriented industrialization is China. 1 Export. The researcher can bring forward his findings either in the form of quantitative or qualitative or mixed research methodologies only when the data is collected based on the preliminary data gathering process and the secondary data gathering process. Moreover, it is critical to look at the experience of western countries that took a different approach. It will be used different resources related to the topic. No one at any other time in history outside of a monarchy controlled that much of the economy. Neoliberalism Revisted: Economic Restructuring and Mexicos Political Future. professional specifically for you? 2020. In theory, ISI was expected . Exporting offers plenty of benefits and opportunities, including: Access to more consumers and businesses. Your privacy is extremely important to us. It is necessary to focus on less developed countries which implemented this policy after the end of World War II. Use this information strictly at your own risk. If you are the copyright owner of this paper and no longer wish to have your work published on IvyPanda. It has led to a form of sedentary productivity where we focus on convenience more than wellness. It means a person can make wealth with a decent job as an employee and maintain their living standard. This outcome didnt always happen. Foreign aid can also reduce the number of hunger people and accelerate the industrialization of undeveloped countries. After World War II, this approach to economic development has been adopted by different countries. This is the main prerequisite for a persons ability to climb the social ladder and become competitive in the labor market. This situation could be observed in Taiwan, Singapore, and India (Hamilton 1996, p. 1). IvyPanda, 23 May 2020, ivypanda.com/essays/export-oriented-industrialization-and-its-principles/. Meaning of export-oriented industrialization. High relative inflation might then have the effect of making export industries less competitive in overseas markets and domestic producers less price competitive against imports Export-led growth might be unsustainable if it contributes extraction of natural resources beyond what is required for long term balanced growth to be maintained. Clothing and export diversification : still a route to growth for low-income countries ? 4. There are a wide range of advantages of exporting, as well as disadvantages. The agricultural industry relies on automation, longer shelf life, and other interventions that allow for large-scale farming instead of homesteading. Hence the PPC will shift outward. To browse Academia.edu and the wider internet faster and more securely, please take a few seconds toupgrade your browser. 4. It is up to us to clean up the pollution that comes about as a side effect to these efforts. The most eloquent example is Nigeria which exports oil and gas; however, other areas of this economy remain underdeveloped (Campbell 2013, p. 15). must. Industrialization changed our world for the better in many ways. The bitter truth is that compliances are getting tougher with time for exporters. Export-Oriented Industrialization (EOI): Arguments for and Against What Have Been Experienced of Developing Countries With Regard to EOI 1. The contemporary challenges to labour regulation in low income settings of the South are also ripe for a less deterministic analysis of the impact of trade regulation once contemporary regulatory action is considered broadly, and across governance levels. That means the countries without industrialization hold themselves back because they sell the items needed to evolve their economies for short-term gains instead of long-term results. Allocation of means of production will be done in a more efficient way. Large slums began forming in many of the communities where entire families were sometimes living in studio apartments. The disadvantage for an import substitution based industry, ISI, is although it achieves growth it does so through a greater period of time. It created structures where the average person could earn a decent living while having more time with their family, even if the conditions were sometimes unsafe or unsanitary. Market research, marketing campaigns and initiatives, administrative costs, travel costs for employees - these costs can add up significantly. 1996. The wealthy built our modern society through the efforts of desperate people who wanted to help their children and grandchildren have a better life. This economic policy has been described as one of the factors that . Read "Restructuring the export-oriented industrialization in the Pearl River Delta, China: Institutional evolution and emerging tension" on DeepDyve - Instant access. They usually have long-standing customers for whom they source products on a regular basis. You could significantly expand your markets, leaving you less dependent on any single one. We dont walk to work because we can drive there. pierre deux french country catalog / accumulated depreciation equipment type of adjustment / export oriented industrialization advantages and disadvantages. 23 May. This issue should be taken into account by legislators who should work on the development of social policies. For such a thing, they are offering several additional benefits as well. Advantages of export-led growth Growing export sales provide revenues and profits for businesses which can then feed through to an increase in capital investment spending through the accelerator effect. . 6. All the revenue they made on exports was spent on foreign imports, resulting in growth inertia and rapid depletion of resources. 6. Information and translations of export-oriented industrialization in the most comprehensive dictionary definitions resource on the web. The local market is limited and because of the high competition, the prices for your products on the local market can be significantly lower, than in the foreign markets. Although this created a Middle Class in many societies, the result also reinforced the power of the aristocracy. And this strategy is a trade and economic policy which this strategy aiming industrialization process of a country. Export-Oriented Industrialization (EOI): Arguments For and Against What Have Been Experienced of Developing Countries With Regard to EOI Jan. 16, 2013 12 likes 24,252 views Download Now Download to read offline Economy & Finance Dr.Choen Krainara Follow Consultant Advertisement Recommended What are the advantages of export oriented industrialization? Export-oriented industrialization (EOI) is the industrialization process governed by economic policies that are aimed towards enhancing the export sector of a country. An export-oriented industrial policy is justified in relation to manufacturing products with a high degree of processing, it stimulates the development of innovations and the creation of goods that can compete with goods produced in other states. Here's a quick summary: Advantages of exporting There are multiple advantages of exporting for businesses of all sizes. Export-oriented industrialization ( EOI) sometimes called export substitution industrialization ( ESI ), export led industrialization ( ELI) or export-led growth is a trade and economic policy aiming to speed up the industrialization process of a country by exporting goods for which the nation has a comparative advantage. This advantage would eventually lead to a stronger free-market economy where those with the most innovation could get rewarded for their creativity. Overall, export-oriented industrialization can be described as the economic policy which lays stress on the production and export of those products for which a country has a comparative advantage (Bair 2009, p. 29). If the value of the foreign currency in which a business is paid declines significantly, it can eat into the profits that the business generates from its exports. Disadvantages. 5. 2. Copyright 2022 IPL.org All rights reserved. What are the advantages/disadvantages of a dollarized economy? Export have many kind of advantages. (2020) 'Export-Oriented Industrialization and Its Principles'. Some firms may not have the technical know-how where these modifications are concerned and might have to incur the costs associated with hiring an expert. The story that often gets told when discussing industrialization is the life of Charles Goodyear. 2. It identified what is advantages of export-oriented industrialization and what problems can it create for the development of economy. In many cases, companies that are based in less developed countries can achieve leading positions in the market because their production is more cost-efficient (Dickson 2013, p. 1991). Globalization is a process of linking the world through many aspects, from the economic to the culture, the political. Overall, it is possible to argue that export-oriented industrialization can indeed contribute to the growth of economy because this policy can increase the income level and purchasing power of people living in less developed countries. There werent any regulations in place to protect employees, so many people worked with equipment that didnt have safety features. As well as, several disadvantages have in this strategy. But in large countries is the number of unemployed people and surplus products huge and a large increase in export cannot solve these problems. A ) Discuss the forms of restriction on international trade. If this initiative is absent, the economy of a country may stop to grow. Nevertheless, policy-makers and economists should remember that the implementation of this strategy depends on such factors accessibility of market, the level of corruption, skills of local workers, and willingness of entrepreneurs to invest into new technologies. The technological advances that led to our modern approach to medicine came about because of industrialization. 7. Although that means were not significantly reducing animal populations to meet our fueling needs, it doesnt shift us away from a finite resource. By using our site, you agree to our collection of information through the use of cookies. The Advantages and Disadvantages of Industrialization. The services sector in India has shown a tremendous growth which can be attributed to ever increasing IT sector in India. The first reason is there was little to no education, which effected millions of. Make a couple products, and make them well, Slowly stop making simple items and start making more complex ones, Reliant on government for subsidies and tariff barriers, Other countries would often undercut them, thus killing a large portion of the country. Nevertheless, this policy can be successful if several prerequisite conditions are present. This paper is aimed at examining the advantages and disadvantages of export-oriented industrialization. Advantages of exporting. in different nations. Get your 100% original paper on any topic done in as little as 3 hours Learn More The developed countries adopted a different approach to the development of economy. These examples suggest that policy-makers should understand the drawbacks of export-oriented industrialization. Why would a business export? This advantage applies to services because industrialization provided equipment that made jobs easier to complete. Industrialization created the surge in automation that we experience today. This may require additional staff and therefore lead to an expansion. Sorry, preview is currently unavailable. In this case, much attention should be paid to manufacturing sector that cannot become competitive. This industrialization is led by exports of goods in which the country has a comparative advantage. Export processing zones comprise not only a spatial entity, movement to and from which is closely monitored but also a package of incentives. As a result of searching the existing literature, the researcher was able to obtain data that correlated exceptionally well with the research topic. Export-led growth is an economic strategy used by some developing countries. Sale of excess production capacity. Nevertheless, this situation can be attributed to such factors as corruption, lack of infrastructure and the collapse of the educational system (Campbell 2013, p. 15). Labor is the most expensive part of the manufacturing process for most industries. If you're courageous enough to meet the requirements of foreign markets and prepared enough with resources, you can skyrocket your export business. This phenomenon is often described as a resource curse which means that the exportation of resources is associated with the decline of other industries. Another advantage of exporting is that it can help businesses to take advantage of economies of scale. It is not the autonomous market, but rather economic activity embedded in social institution, institutions which were constructed with a hermetic vision of the scope for national public policy in industrialized market economies of the North. Enter the email address you signed up with and we'll email you a reset link. However, in the following decades, the country switched to the production of advanced technologies, usually electronics (Rasiah & Schmidt 2010, p. 48). Export-oriented industrialization (EOI) sometimes called export substitution industrialization (ESI), export led industrialization (ELI) or export-led growth is a trade and economic policy aiming to speed up the industrialization process of a country by exporting goods for which the nation has a comparative advantage. Overall, the resource curse can affect both developing and advanced countries. 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