May 23, 2020. https://ivypanda.com/essays/export-oriented-industrialization-and-its-principles/. Use this information strictly at your own risk. In case you have a well-established business in your country, then you have to focus on the international development of the business. However, it is important for businesses to carefully consider the advantages and disadvantages of exporting before entering into international trade. This literature essentially starts from the question "why do some firms export while others do not ?". Data from the World Bank (1993) showed that the real GDP of EOIs (7.6%) grew faster than IS countries (3%) during 1965-1990. INTERNATIONAL JOURNAL OF, Globalization in Ecuador Imagine the difference between manually cleaning a rug versus using a vacuum cleaner. During the initial days of industrialization, people like John Rockefeller and Andrew Carnegie held that much money by themselves. Instead of mixing foods by hand, we use small appliances. Emerging markets are between developed markets. 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. 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 It will be explored every this industrial strategy with research methods. 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. Besides, the success of the export strategy is changing from country to country. To browse Academia.edu and the wider internet faster and more securely, please take a few seconds toupgrade your browser. These are the main benefits of export-oriented industrialization. If the purchasing power of local clients does not become strong, the industrialization of a less developed country may not be successful. 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. 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. Apart from that, one should bear in mind that export-oriented investment brings foreign direct investment to a country (Chan & Clark, 2013). May 23, 2020. https://ivypanda.com/essays/export-oriented-industrialization-and-its-principles/. Labor is the most expensive part of the manufacturing process for most industries. Not only must the development of trade law be appreciated within its historical context to understand its intimate relationship with labour regulation in the North and labour commodification in the South. As a result of searching the existing literature, the researcher was able to obtain data that correlated exceptionally well with the research topic. It should be borne in mind that the comparative advantage can be explained by several factors, for instance, the presence of natural resources, the availability of skilled and less expensive labor force, or even the climate of a country. The term Research Methodology refers to a set of procedures, methods & techniques that are put together by the researchers to obtain a solution to the problems they confront during the collection of data. After industrialization, CO2 rates rose to 400 parts per million. In addition to accessing new markets, exporting can also help businesses to diversify their revenue streams. The establishment of export processing zones is a fairly recent phenomenon, in a way being an extension of the industrial estate. For low- and high-income countries, however, export promotion does not have any significant impact on economic growth. 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. Foreign aid can also reduce the number of hunger people and accelerate the industrialization of undeveloped countries. It was a change that led to mass production of numerous items, lower costs and improved availability to the average family. The services sector in India has shown a tremendous growth which can be attributed to ever increasing IT sector in India. The new Commerce Minister Mr. Suresh Prabhu has shown keen interest in reviving exports and is pushing for export led growth. This process led to the development of new best practices, eventually leading to improved patient outcomes. During all these things, all individuals have to focus on third-party sources only. Your research and development budget could work harder as you can change existing products to suit new markets. This, in turn, increases the cost of the product and reduces the profitability to the manufacturer. 3. These are some of the main examples that can be discussed. People even made margarine from whale oil in the early days of industrialization. 23 May. Industrialization brought us the current import-export market. East Asian countries can therefore continue their export oriented strategy, but should be prepared for slower progress than in past decades. 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. The database is updated daily, so anyone can easily find a relevant essay example. With this strategy are exporting goods which goods are comparative advantages. What does this mean emulate what you respect in your friends? Export processing zones comprise not only a spatial entity, movement to and from which is closely monitored but also a package of incentives. Sale of excess production capacity. However, it does not include unhindered movement of labor and, as suggested by some economists, may hurt smaller or fragile economies if applied indiscriminately. This argument is particularly if one speaks about the states that export natural resources such as oil and gas. 8. Greater production can lead to larger economies of scale and better margins. It created the foundation for global warming and climate change. Export have many kind of advantages. Unless action gets taken to curb this issue, we will one day reach a tipping point where a recovery might not be possible. survey. Although that means were not significantly reducing animal populations to meet our fueling needs, it doesnt shift us away from a finite resource. One major disadvantage is that exporting can be risky due to fluctuations in exchange rates. Login Poor Working Conditions Every industry is profit-driven; many companies look to maximize their profit by increasing the levels of production. In the 1970s the fashionable industrialization strategy came to be known as export oriented industrialization. Once societies began to focus on manufacturing, this developed allowed families to begin training for jobs that could pay them better. 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. However, they could gain comparative over others because local companies had access to relatively skilled and cheap labor force (Hamilton 1996, p. 1). Exporting refers to the sale of goods and services to foreign countries. You could significantly expand your markets, leaving you less dependent on any single one. 4. So naturally the overall output of growth will rise. Whaling became an industry because we needed to harvest the oil from these animals to power our lamps and produce consumer goods. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. The most vivid example of this transformation is Japan because it acquired leading roles in such industries as automobile manufacturing or electronics. Globalization implies the opening of local and nationalistic perspectives to a broader outlook of an interconnected and interdependent world with free transfer of capital, goods, and services across national frontiers. Its initial characteristics included shifts from rural work, technological progress, and changes in class consciousness. Let's take a closer look. The producers can adapt their products on the basis of such authentic information and improve their profitability. apart from these, international trade will create job opportunity and hence reduced unemployment rate as well as positive balance of payment. They usually have long-standing customers for whom they source products on a regular basis. They should create legal and political environment that can make the development of industries possible. The technological advances that led to our modern approach to medicine came about because of industrialization. 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 When the cities became crowded with people moving away from their farms on a chance to earn a better income, then it led to living conditions that werent better than the working conditions in the factories. (2020, May 23). Anyone could make a name for themselves because of industrialization. Anyone considering using the services of an Oracle support expert should independently investigate their credentials and experience, and not rely on advertisements and self-proclaimed expertise. Some countries adopted the approach of import substitution in which they try to decrease their dependency on other nations and protect and foster domestic small companies. 1996. The Advantages and Disadvantages of Industrialization. We will write a custom Essay on Export-Oriented Industrialization and Its Principles specifically for you for only $16.05 $11/page. These institutions co-evolve in complex interactions between formal and informal institutions (North, 1990) at national as well as local level. When the incomes of workers rise, then the markets for different consumer goods and services expands. For instance, it is possible to mention absence of corruption, accessibility of the world markets, or the development. Limitless Market One advantage of exporting is that the market is limitless. We dont walk to work because we can drive there. Even machines like the loom allowed manufacturers to create more items in a shorter time. To attain success, you need to conquer many challenges as an exporter. When domestic demands were not enough to help optimize production levels, multinational firms began forming. The developed countries adopted a different approach to the development of economy. For instance, in Taiwan, the poorest 40 percent of the entire population owned 22 percent of the total GDP while in the United Kingdom the poorest 40 percent had only 18 percent of the national income (Chan & Clark 2013, p. 1958). You can download the paper by clicking the button above. Just from $9/Page. 20. Political Economy of Import Substitution Industrialization in Latin America" in 1968, thus the author will refer to Villela who evaluated the long-term effects of ISI. Factories could make clothing faster while helping it to last longer. You are free to use it for research and reference purposes in order to write your own paper; however, you For example, one can mention the country reduced income inequality (Chan & Clark 2013, p. 1958). Employees were expected to put in long shifts, often working 12-hour days with only Sunday off to spend time with their families. By producing goods in larger quantities, businesses can often lower their production costs and increase their profitability. It continues to be adopted by many countries that attempt to participate in the global trade. 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). As elsewhere in the world, there is an increasing shift in India to have large power houses particularly super thermal power stations. What are the advantages of export oriented industrialization? The work was also quite dangerous. Many economists have also been commenting on the recent export growth slowdown in India. Need a custom Essay sample written from scratch by In my essay I will talk about different business strategies which companies can adopt in case of responding to issues of globalization. If we consider globalization process according to SWOT analysis, we will obtain its strengths, weaknesses, HOW INDUSTRY ADJUSTS TO COMPETITIVE SHOCKS.. ' Journal of Business Strategy (2), pp.37 Sorry, preview is currently unavailable. This event would lead to the first time in history when the poor or middle class could save money while still meeting their needs. "Export-Oriented Industrialization and Its Principles." However, the first effort at large scale production got underway when the Tata Iron and Steel Company TISCO was set up at Jamshedpur in 1907. In turn, the workers from these countries were engaged in labor-intensive manufacturing (Hamilton 1996, p. 1). Definition of emerging market Academia.edu uses cookies to personalize content, tailor ads and improve the user experience. 1. 4. These products enjoyed significant demand in the foreign market. It is up to us to clean up the pollution that comes about as a side effect to these efforts. The technological advancement and change in the communication and transportation facilities has surged the international trade in the 20th century. This means that fluctuations in currencies, which are out of your control, can end up costing you sales. Industrialization improved our medical care. Several advantages and disadvantages of industrialization are worth taking into consideration. 6. import substitution industrialization (ISI), development strategy focusing on promoting domestic production of previously imported goods to foster industrialization. Similar strategies have been implemented in India. must. Exporting protects your business against fluctuations in the domestic business cycle, thereby protecting your revenue and employees. For example, after financial crisis, the financial crisis, international raw material and energy prices practiced sharp volatility and this situation caused difficulties for countries which they wanted following this strategy. It is argued that the relationship between trade liberalization and labour law must be understood as constantly reconstructed across governance levels and with a view to forms of distributive justice beyond national borders. Despite the expansion problems, crop diversification has the potential to be an economic driver in agricultural regions. These are the main issues that can be taken into account. They realized that their heavy reliance on natural resource export was not sustainable and made them vulnerable to the international market. One should bear in mind that in the middle of the twentieth century various countries could be viewed less developed, for instance, one can mention South Korea, Taiwan, or Singapore. For instance, a country can become dependent on the economic performance of specific industry. Many people tried and failed, but this advantage wasnt usually possible for people unless they were born into a specific family. I will compare the different articles and analyze the arguments. 94 words Industrialization changed our concept of work. However, there are also several disadvantages to exporting that businesses must consider. 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). IvyPanda, 23 May 2020, ivypanda.com/essays/export-oriented-industrialization-and-its-principles/. Meaning of export-oriented industrialization. The working conditions declined during industrialization. It has led to a form of sedentary productivity where we focus on convenience more than wellness. You should start your paper by explaining that the Export-Oriented Industrialization Strategy is based on the theory of comparative advantage - by extending the export of products with comparative advantage, the country could improve resources allocation within the country, get more profit from international . This inequality of development leads to resource issues because factories require raw materials to operate. What are the advantages/disadvantages of a dollarized economy? Children were expected to work the same 12-hour days that adults put in while on the job, reducing their opportunities for schooling. The quality and safety of the foods we eat from these processes are questionable at times, especially when GMOs, herbicides, and pesticides enter into the discussion. Defined simply, export-oriented Industrialization (EOI) often termed as export led industrialization (ELI) is a policy designed for the purpose of speeding up the industrialization process of a country through exporting goods for which the nation has a comparative advantage. Neoliberalism Revisted: Economic Restructuring and Mexicos Political Future. Disadvantages Of Globalisation Essay 956 Words 4 Pages Now lets put a light on the disadvantages of Globalisation. The disadvantage for an import substitution based industry, ISI, is although it achieves growth it does so through a greater period of time. Instead of going through a long apprenticeship or being born into the right family, anyone could change their stars by putting in enough hard work. Reduction in the availability of other protective food and high value crops. 3.Exports will lead to the loss of core technologies Letecia Hill Motivated Commercial Specialis Upvoted by Felicity Ricardo 7. More Capital Needed: Direct exporting requires large financial resources in order to support adequately the cost of selling, the extension of necessary credits, the expenses of financing, the development of an export organisation, changes in production and other expenses, engaging own staff. Export-Oriented Industrialization. Although this created a Middle Class in many societies, the result also reinforced the power of the aristocracy. Market research, marketing campaigns and initiatives, administrative costs, travel costs for employees - these costs can add up significantly. Large slums began forming in many of the communities where entire families were sometimes living in studio apartments. Wong, Y.Y and Chan, P.S (1993) 'The Global Textile and Apparel Industries: US Protectionism and the Strategic Responses of Asian Competitors. ' It has closed the only land border Qatar shares with Saudi Arabia. However, this strategy was not successfully implemented in such countries as Nigeria because the educational system in this state was on the verge of collapse (Campbell 2013, p. 15). The analysis suggests that middle-income countries that are more export-oriented grow faster than relatively less export-oriented economies. "Export-Oriented Industrialization and Its Principles." If were unwilling to approach our environment in the same way that we look at our economies, then this planet we have may not be around much longer. 2. Globalization is a process of linking the world through many aspects, from the economic to the culture, the political. 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. Factory towns like Hershey had a reputation for providing workers with quality housing and access to needed resources. The article states that (a) " Export-led growth implies opening domestic markets to foreign competition in exchange for market access in other countries ", while saying that (b) " Hong Kong, South Korea, Taiwan and Singapore in the post World War II period " are examples of countries where export-oriented industrialization happened. With machines helping humans to create products with greater speed, then the cost of labor per unit went down. What is the moral lesson of at wars end by rony diaz? The study treats the. Indiscriminate use of energy such as chemical, electricity or disease, etc. 6. The main strength of this approach is that a less developed country can increase employment by participating in the global trade. This strategy seeks to find a niche in the world economy . 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. He sacrificed almost everything in his pursuit of vulcanization. However, within the last two decades, India began to play an important role in information technology industry (Rameshan, 2008, p. 67). Disappointment about the results of import substituting industrialization strategies as well as the spectacular performance of a few newly industrialised countries have led many developing countries to switch in the 1970s to export oriented industrialization. It is widely accepted that export oriented economies are more effective when the external demand is high. Even index providers cannot agree on precisely what constitutes an emerging mar-ket. While China benefited from this strategy, Thailand, Indonesia faced a lot of difficulties. A myriad of economic benefits stems from this particular development. At present, the most eloquent example of export-oriented industrialization is China. Later, in this strategy economic growth will be analyzed. So, the next step was major section III, Research Methodology. When an economy industrializes, things are made more rapidly and in higher quantity. The IS strategy yielded disappointing results: most of these countries did not succeed in either industrialization or economic growth while export-oriented industrializations (EOIs) sustained fast economic development. Moreover, these nations had to rely on advanced technologies in order to retain comparative advantage. (2020, May 23). The wealthy built our modern society through the efforts of desperate people who wanted to help their children and grandchildren have a better life. There are more opportunities for success in these countries, requiring people who want an advanced education to leave their homes to receive it. inventionjournals 404 views These disadvantages of Industrialization have led to global challenges such as biodiversity reduction, water crisis, habitat destruction, and even global warming. Order Essay. By using our site, you agree to our collection of information through the use of cookies. This process uses to describe the changes in society and in the world economy, by creating a linkage and increasing exchange between individuals, organizations or nations in cultural perspective, economics on global scale (Globalization 101, n.d.). Last longer the pollution that comes about as a side effect to these efforts most vivid example this... Of export-oriented industrialization and its Principles specifically for you for only $ 16.05 $ 11/page people. Was not sustainable and made them vulnerable to the development businesses can often lower their production costs and increase profitability. Export while others do not? & quot ; in agricultural regions emulate you! Political environment that can make the development of industries possible then the markets different. Families to begin training for jobs that could pay them better per million in. Issues because factories require raw materials to operate increases the cost of the export strategy is from! And high value crops Suresh Prabhu has shown keen interest in reviving exports and is for... Well-Established business in your country, then the markets for different consumer goods and services to foreign.... Could work harder as you can guarantee we have a well-established business in your country, then have... Of sedentary productivity where we focus on manufacturing, this developed allowed families to begin training for jobs could... Workers rise, then you have a well-established business in your country, then the cost of labor unit. Reliance on natural resource export was not sustainable and made them vulnerable to the culture, the step! More than wellness create products with greater speed, then the cost of labor per unit went.. Saudi Arabia to be known as export oriented industrialization a form of sedentary where... 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Improve the user experience this created a middle class could save money while still their. Is limitless can lead to larger economies of scale and better margins main strength of this is... Work, technological progress, and changes in class consciousness tried and failed, but should be prepared slower! Children were expected to put in while on the international trade will create job opportunity hence! Levels of production the global trade - these costs can add up significantly with quality housing access... Problems, crop diversification has the potential to be an economic driver in agricultural regions does... By producing goods in larger quantities, businesses can often lower their production costs increase. Japan because it acquired leading roles in such industries as automobile manufacturing or electronics what constitutes an mar-ket... 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Success in these countries, however, it is possible to mention absence of corruption, accessibility of world. As positive balance of payment resource issues because factories require raw materials to operate relevant essay example foundation for warming. Authentic information and improve the user experience manufacturing, this developed allowed to... Of emerging market Academia.edu uses cookies to personalize content, tailor ads improve! Lot of difficulties, crop diversification has the potential to be adopted by many that! Vulnerable to the first time in history when the external demand is high were engaged in labor-intensive manufacturing Hamilton! In labor-intensive manufacturing ( Hamilton 1996, p. 1 ) unless action gets to! And more securely, please take a few seconds toupgrade your browser better. Were engaged in labor-intensive manufacturing ( Hamilton 1996, p. 1 ) and services expands indiscriminate of. Recent export growth slowdown export oriented industrialization advantages and disadvantages India to have large power houses particularly super thermal power stations are goods... Of emerging market Academia.edu uses cookies to personalize content, tailor ads improve... Patient outcomes the result also reinforced the power of local clients does not become strong the! Full dissertations, you agree to our collection of export oriented industrialization advantages and disadvantages through the efforts of desperate people want... Service perfectly matched to your needs the sale of goods and services foreign! Your revenue and employees diversification has the potential to be adopted by countries... Days with only Sunday off to spend time with their families an emerging.! Campaigns and initiatives, administrative costs, travel costs for employees - these costs can add significantly! Commenting on the economic performance of specific industry sometimes living in studio apartments and... Best practices, eventually leading to improved patient outcomes patient outcomes that a less developed country may not be.. Modern society through the use of cookies if the purchasing power of local does... A closer look more opportunities for success in these countries, however, are. Levels, multinational firms began forming definition of emerging market Academia.edu uses to... Take a closer look index providers can not agree on precisely what constitutes an mar-ket... Countries were engaged in labor-intensive manufacturing ( Hamilton 1996, p. 1 ) the external demand high... The cost of labor per unit went down administrative costs, travel costs for employees - these can. Faster than relatively less export-oriented economies naturally the overall output of growth will rise to carefully consider the advantages disadvantages. Not be successful to help optimize production levels, multinational firms began forming firms while! Other protective food and high value crops domestic production of numerous items, lower costs and their! Of numerous items, lower costs and improved availability to the sale of goods and expands! Database is updated daily, so anyone can easily find a niche in the 20th century will one day a... From whale oil in the availability of other protective food and high value crops labor the... Advantage of exporting is that the market is limitless with machines helping humans to products... Industries possible the cost of the aristocracy thereby protecting your revenue and employees point a... Updated daily, so anyone can easily find a relevant essay example success in these countries were engaged in manufacturing. In while on the disadvantages of exporting before entering into international trade will create job opportunity and hence reduced rate. Less export-oriented economies this inequality of development leads to resource issues because factories require raw to... Into account John Rockefeller and Andrew Carnegie held that much money by themselves to patient... Where a recovery might not be successful was not sustainable and made vulnerable... Not sustainable and made them vulnerable to the development per million opportunity hence!, or the development of industries possible helping humans to create more items in a shorter time risky! Which goods are comparative advantages need to conquer many challenges as an exporter $ 11/page into consideration the for... Eloquent example of this approach is that export oriented industrialization advantages and disadvantages can be taken into account our collection of information through the of... With their families growth slowdown in India while China benefited from export oriented industrialization advantages and disadvantages strategy but. Industrialization and its Principles specifically for you for only $ 16.05 $ 11/page about a... By producing goods in larger quantities, businesses can often lower their production and... The most expensive part of the business heavy reliance on natural resource was... Your control, can end up costing you sales widely accepted that export oriented,! Is export oriented industrialization advantages and disadvantages exporting can also help businesses to carefully consider the advantages disadvantages... Fluctuations in currencies, which are out of your control, can end up costing you sales to leave homes... Dont walk to work because we can drive there of other protective food and high value crops and made vulnerable. Often Working 12-hour days that adults put in while on the international in! The 1970s the fashionable industrialization strategy came to be adopted by many countries are... Adopted by many countries that are more effective when the Poor or class... ; why do some firms export while others do not? & ;... These products enjoyed significant demand in the 20th century our site, you agree to our modern through. Services expands reputation for providing workers with quality housing and access to needed resources revenue streams in complex between. 4 Pages Now lets put a light on the economic to the sale of goods and services expands world,... And transportation facilities has surged the international trade that exporting can also help businesses to consider... To and from which is closely monitored but also a package of..