The
theoretical underpinning up which export promotion is anchored is on
Hecksher-Ohline factor endowment trade theory. According to this theory,
countries that are rich in capital should specialize in the production and export
of capital intensive commodities while those that have much labour should focus
on production and export of labour-intensive commodities. They also argued that
the redirection of demand which results from international trade
also equalizes
the prices of factors of production (Gbosi, 1999).
According
to Morton and Tullock (1978), international trade brings gains to a nation
whether rich or poor and that it acts as a stimulus to growth. Some observers,
though accepting the above assertion, are of the view that the growth is
insignificant among the developing countries for the reason that they are less
developed and lacked responsiveness to market opportunities and dynamic
influences of international trade that is characterized by developed market
economies.
Gerald
(1976), holds that the reason for limited gain from international trade by less
developed countries, is the inadequacy of market opportunities, pointed that
the slow growth of export earning from many primary commodities, the rest
attendant in less developed countries, current degree of specialization in such
exports and difficulties of obtaining access to overseas markets for a more
diversified range of export products.
In
line with the above assertion, Breand (1958) opined that the economies of many
of the poor nations of the world are characterized by a dynamic export sector.
He further contended that the productivity of the export sector is often higher
than that of the domestic sector. In his view, Kindleberger (1968), also agreed
that a rise in export usually leads to an increase in national output. It is
against this background that Rostow (1960), identified export as the leading
sector of an economy.
Little,
et al., (1970), and Bela (1971),
opined that exports forces integration into work markets and a more efficient
allocation of resources, because external markets impose discipline by
eliminating uncompetitive firms, implying that exports effect positively the
supply-side of the economy.
Export promotion as noted by Ajakaiye (2001)
can only come into being if and if there are exportable products. He further
held the export promotion involves the realization of the country’s natural
resources and the full exploration of the resources for exportation.
In a study on how to actualize the objective
of export promotion Arthur Lewis (1991) focus on the effect of foreign exchange
which is a constraint on a developing economy’s export. From this study he made
his point clear by stating that even though foreign exchange problem occurs in
the course of export promotion that a country can still overcome the problem by
adopting the method of standardized export products. He also emphasised that no
matter the value of a given country’s current to another that the country can
still make substantial profit by exporting high quality products hence balance
its economy through growth in its Gross Domestic Product.
ARTICLE SOURCE: CHIAMAKA NANCY OKEAGU
ECONOMICS DEPARTMENT, EBONYI STATE UNIVERSITY