Competitiveness is the everlasting strength of any economy for its international trade. Development of economy is depending upon the development of economic globalization and international market which come through strategy advantage which adopted by country for international market. A country is becoming more and more severe by owing to different economic strength and different degree of division of labour and availability of recourses.

As my topic Comparative efficacy of Import substitution vs. Export promotion in stimulating growth in developing countries with specific reference to any one east Asian country . I selected China for research objective.

Introduction of Country

China’s foreign trade has developed greatly because China had adopted strategy to making China a large trading nation and on the road to becoming a powerful one. China is 1st country which development rate is high. China is hub of all manufacturing industry. There are from every country at list one company which have production plant in china because china has comparative advantage like availability of recourses and low labour cost.

Introduction of topic

Countries develop more than others because their strategies on international trade have a role on this import substitution (IS) and export promotion (EP) will be introduced. These strategies are compared.

There is research done that Import substitution versue export promotion a continuing dilemma for developing country like china. Developing China has adopted a number of approaches in their attempts to move their economies from backward orientation towards a more modern one. For this process is required to change from rural traditional dominance to modern industrial mode for the simple reason that development was corresponded with industrialization. As result that china growing now more than other country because it adopted import substitution versus export promotion strategy

Import substitution vs. Export promotion

Import Substitution (Inward-looking)

“Policies that stress economic development Policies self-reliance on the part of Lest Develop Country including the development of indigenous-appropriate technology and the imposition of substantial protective tariffs and Non tariff barriers to promote import substitution, and the discouragement of private foreign investment.

Export Promotion (Outward-looking)

Policies that encourage free Development Policies for trade where the free movement of capital, workers, enterprises, and students and a welcome to MNCs and an open system of communications.

Developing countries experienced a decline in world markets for their primary products deterioration in terms of trade and growing deficits in their balance of payments. For the industrialisation the developing countries had to choose between competing modes of industrialisation: import substitution (IS) and export promotion (EP).

Promotion of Infant Industry: A Case for IS Strategy

The IS strategy is an attempt to replace commodities that are being imported, usually manufactured consumer goods, with domestic sources of production and supply. The typical strategy is first to erect tariff barriers or quotas on certain imported commodities, then to try to set up a local industry to produce these goods. This might or might not involve joint ventures with foreign companies which are encouraged to set up their plants behind the protective wall.

Although initial costs of production may be higher than former import prices the economic rationale put forward or the establishment of import substituting manufacturing operations is either that the industry will eventually be able to reap the benefits of large-scale production and lower costs or that the balance of payments will improve due to imports of fewer consumer goods. Often a combination of both arguments is advanced. Eventually it is hoped the infant industry will grow up and be able to compete in world markets. It will then be able to generate net foreign exchange earnings once it has lowered its average cost of production.