Export-led development

Export-led industrialization rarely links the production of internationally marketable goods to the basic needs of a developing country. The export goods are often unusable in the country where they are produced or are only sub-assemblies of a final product completed in an industrial country. The technologies used are only partially transferable to domestic needs and few skills are acquired by the workers. In many cases governments have to invest considerable amounts of scarce foreign exchange in the necessary infrastructure to attract the transnational companies, which usually form the basis of export industries. Liberal tax and profit remittance rules may also be needed, thus the yield of foreign exchange is often quite negligible or even negative.

Although successfully applied by the newly industrializing countries, such as Taiwan and South Korea, during the 1970s, it no longer constitutes a viable model for the appropriate development of other developing countries. The markets of the industrialized countries are increasingly saturated with such exports and are imposing a variety of protectionist barriers. There is therefore little possibility of basing development on such exports.