11 Arguments against (demerits/disadvantages) for export promotion industrialization strategy
- It leads to rural-urban migration., Most export substituting industries are urban based and this encourages people to move from rural areas to urban centers. This leads to development of slums, open urban unemployment, increased crime rate and poor living conditions in general.
- It leads to technological unemployment. The strategy encourages the use of capital intensive techniques of production which in the long run replaces labour hence technological unemployment. This is true especially with foreign investors who prefer to use capital intensive techniques of production.
- 3. Environmental degradation. Export promoting industries lead to environmental degradation in form of noise, air and water pollution. This negatively affects the
- It promotes uneven regional development in economy. This is due to the concentration of most of the export promoting industries in urban areas. This leads to under development of rural areas.
- It increases economic dependence of the country. Export promoting industries highly depend on imported capital and raw materials from developed countries. In addition, the strategy promotes dependence on foreign markets which undermines the country’s need for self-reliance.
- It promotes profit repatriation. Some export promoting industries are owned by foreign investors and this promotes capital flight hence limited capital accumulation in the economy.
- It leads to balance of payment problems in the country. This is due to increased importation of expensive factor inputs in form of raw materials, intermediate goods and expatriates. This leads to increased expenditure on imports relative to the revenue from exports hence balance of payment problems.
- It encourages brain drain. Brain drain refers to the massive movement of skilled labour from one country to another especially from developing, to developed countries. This leads to scarcity of skilled manpower in the developing countries.
- It reduces government revenue. The government loses revenue in form of subsidization and tax holidays given to the infant export promoting industries. This makes it difficult for the government to meet her recurrent and development expenditures.
- It leads to over exploitation of resources. This leads to lack of sustainability in the long run due to exhaustion of the non-renewable resources by the export promoting industries that use the locally available raw materials.
- It leads to shortage of commodities in the domestic market. This is because the strategy emphasizes production for exports at the expense of local consumption.
CATEGORIES Economics
TAGS Dr. Bbosa Science
