Row 661

Row ID: 661 | Dataset Entry | Axioma AXP Content Repository

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I work in the legal field of international trade but I've been far far far removed from the academic and theoretical side of things, so bear with my ramblings that may not be coherent. But your main takeaway from me is that a.) it depends on a country's circumstances and b.) as a developing country it all hinges on its raw materials, and c.) a point that I don't discuss is FDI.

As an initial matter, I don't really see how import substitution and export-led strategies are mutually exclusive. Case in point, illegal export subsidies (i.e., subsidies that are contingent on export performance) and import substitution are two different concepts that can co-exist--this link may be a good 30,000 feet primer ([https://www.wto.org/english/thewto\_e/whatis\_e/tif\_e/agrm8\_e.htm](https://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm8_e.htm)). Of course, there are very exceptions for developing countries.

Here's a realistic example that both can co-exist. Let's use aluminum and car manufacturing in a given country (let's call it Zootopia) for example. Aluminum is an important raw material to make a car, but car manufacturers located in Zootopia are heavily dependent on aluminum imports because domestic aluminum prices are high. Zootopian government then implements various policies including imposting tariffs on imported aluminum (read up section 232) and also subsidizing aluminum domestic production so that its car manufacturers are a.) not reliant on imported aluminum b.) offsets expensive domestic aluminum and c.) in part boosts aluminum exports by making domestic aluminum more competitive in terms of price.

Obviously developing countries are different from Zootopia because they don't have the mature capacity to make aluminum and cars, and most likely only have raw material. So here's an example where I can see that a developing country picks more of an exmphasis an import substitution strategy. Let's use a fictitious country, such as an early-day non-developed Wakanda (if you don't know that country, please watch Black Panther) as an example. It runs into a windfall of vibranium but at the same time, it doesn't want to export it because it wants to control the supply (read up the WTO case China-rare earths for real life example). So naturally, as an "import substitution" measure it extracts and processes it vibranium for its various uses, hence catalyzing its "industrialization." Obviously, what ended up with Wakanda is that it went to a more isolationist policy, but you should get the idea that Wakanda could have been a world power early on if it wanted to.

Going back to real life, Africa is in a situation like Wakanda with its untapped rare earths resources. However, it's all being excavated and extracted by foreign entities such as those in the US and China. So going back to your thesis about how ISI can help a country "enter a new market" or "create robust industry" just look to Wakanda, but you need to 1.) identify what makes it hard to make industrialization work for those countries (e.g., these countries already have a lot of sovereign debt to the likes of China and other big foreign corporations) and 2.) identify what needs to be done to make it work (perhaps a more bona fide multilateral union (making the Africa Union into a more cohesive one like the EU) or bilateral trade agreement with more emphasis on technical assistance (read up some background talk on the US-Kenya FTA).

Well those are just my random thoughts that popped into my mind over the last 5 minutes, but please understand that international trade is a broad spectrum topic and as with many things in lie, there is no simple real-life answer.

FieldValue
text I work in the legal field of international trade but I've been far far far removed from the academic and theoretical side of things, so bear with my ramblings that may not be coherent. But your main takeaway from me is that a.) it depends on a country's circumstances and b.) as a developing country it all hinges on its raw materials, and c.) a point that I don't discuss is FDI. As an initial matter, I don't really see how import substitution and export-led strategies are mutually exclusive. …
label r/internationaltrade
dataType comment
communityName r/Internationaltrade
datetime 2021-07-05
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Raw Record

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  "text": "I work in the legal field of international trade but I've been far far far removed from the academic and theoretical side of things, so bear with my ramblings that may not be coherent. But your main takeaway from me is that a.) it depends on a country's circumstances and b.) as a developing country it all hinges on its raw materials, and c.) a point that I don't discuss is FDI.  \n\nAs an initial matter, I don't really see how import substitution and export-led strategies are mutually exclusive.  Case in point, illegal export subsidies (i.e., subsidies that are contingent on export performance) and import substitution are two different concepts that can co-exist--this link may be a good 30,000 feet primer ([https://www.wto.org/english/thewto\\_e/whatis\\_e/tif\\_e/agrm8\\_e.htm](https://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm8_e.htm)).  Of course, there are very exceptions for developing countries.    \n\nHere's a realistic example that both can co-exist.  Let's use aluminum and car manufacturing in a given country (let's call it Zootopia) for example.  Aluminum is an important raw material to make a car, but car manufacturers located in Zootopia are heavily dependent on aluminum imports because domestic aluminum prices are high.  Zootopian government then implements various policies including imposting tariffs on imported aluminum (read up section 232)  and also subsidizing aluminum domestic production so that its car manufacturers are a.) not reliant on imported aluminum b.) offsets expensive domestic aluminum and c.) in part boosts aluminum exports by making domestic aluminum more competitive in terms of price.\n\nObviously developing countries are different from Zootopia because they don't have the mature capacity to make aluminum and cars, and most likely only have raw material.  So here's an example where I can see that a developing country picks more of an exmphasis an import substitution strategy.  Let's use a fictitious country, such as an early-day non-developed Wakanda (if you don't know that country, please watch Black Panther) as an example.  It runs into a windfall of vibranium but at the same time, it doesn't want to export it because it wants to control the supply (read up the WTO case China-rare earths for real life example).  So naturally, as an \"import substitution\" measure it extracts and processes it vibranium for its various uses, hence catalyzing its \"industrialization.\" Obviously, what ended up with Wakanda is that it went to a more isolationist policy, but you should get the idea that Wakanda could have been a world power early on if it wanted to. \n\nGoing back to real life, Africa is in a situation like Wakanda with its untapped rare earths resources.  However, it's all being excavated and extracted by foreign entities such as those in the US and China.  So going back to your thesis about how ISI can help a country \"enter a new market\" or \"create robust industry\" just look to Wakanda, but you need to 1.) identify what makes it hard to make industrialization work for those countries (e.g., these countries  already have a lot of sovereign debt to the likes of China and other big foreign corporations)  and 2.) identify what needs to be done to make it work (perhaps a more bona fide multilateral union (making the Africa Union into a more cohesive one like the EU) or bilateral trade agreement with more emphasis on technical assistance (read up some background talk on the US-Kenya FTA).  \n\nWell those are just my random thoughts that popped into my mind over the last 5 minutes, but please understand that international trade is a broad spectrum topic and as with many things in lie, there is no simple real-life answer.",
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