Generally, it can be
safely argued without doubt that export is an engine of growth, a potent
strategy for mutual inter-dependence among world nations and of-course an
instrument for technological and industrial emancipation.
Robert D. and Thirlwall A. (1975)
stated that higher levels of exports lead to strengthening productivity,
lowering unit costs and positively impact exports.
Olorunishola (1991) described export
promotion as a stimulus to efficiency because exporting countries are exposed
to foreign competition and technology and there is prospect of world wide
market for products thereby resulting in economies of
scale.
scale.
Export promotion is also likely to alleviate
serious foreign exchange constrains and thereby provides greater access to
international market (Esfahani, 1991).
In export promotion strategy, external
demand is the source of activity. Export promotion focuses only on potential
industries for developing and competing with foreign countries. The main point
of the export promotion strategy is to make production for international trade
and increases export. The advantage of export-led growth would be to provide
developing countries a remedy to unemployment problem: developing countries are
most likely to have a comparative advantages such as labour-intensive
manufactures, which will encourage industries in developing countries to hire
more people (Labour) in the production of labour-intensive product (e.g shoes,
clothes etc). In addition the export market also allows domestic producers to
utilize economies of scale. There is also a low level of trade restrictions
that forces the domestic firms to remain competitive so as to increase
efficiency. Export promotion increases productivity by offering greater
economies of scale. (Helpman and Krugman, 1991).
Export-led growth is also beneficial
to a country with balance of payment problem, in that export-led growth can
create profit, allowing a country to balance their finance, as well as surpass
their debt as long as the facilities and materials for the export exist.
Secondly, increased export growth can trigger greater productivity, thus
creating more exports in an upward spiral cycle. Countries with unemployment
and balance of payment deficits look to export-led growth because of the
possibility of moving to balance of payment equilibrium and full employment.
Export growth leads to job growth and economic growth, said Obama “so at a time
when jobs are in short supply building exports is imperative”.
Other benefits of export promotion
strategy:
1. 1. Export promotion strategy provides at least
as much incentive to earn foreign exchange, and incentives to exporters are
fairly uniform and not discriminatory across the commodity groups.
2.
Export promotion strategy provides the
avoidant of quantitative restorations and use of tariffs with relatively simple
procedures to permit exporters access to the international prices for their
inputs.
3.
A well articulated export promotion strategy
enables a developing country, regardless of the size of its domestic market to
establish plants of economically efficient size and to maintain long production
runs.
4.
In addition, it permits the explanation of
infant industries beyond the size of the domestic market.
5.
Properly programmed and implemented an
outward-looking strategy enables a country to realise the benefits of
international specialization according to comparative advantage. It provides
stimulus to efficiency as a result of exposure in foreign competition and
technology and a prospect of a work-wide market for products.
Finally, industries of a country adopting export
promotion strategy would also reap the benefits of internal economies of scale
that could not have been achieved by proving for only the limited home market
available under protectionist policies