The Future Composition of Developing Country Exports

A factor leading to recent demands for increased protection in industrial markets is that developing countries achieved substantial export capacities in a number of industrial sectors over a remarkably short period of time, and this increase was largely unanticipated in the developed market economy countries. A further difficulty resulted from the fact that this increased capacity in sectors such as steel, shipbuilding, and electronics came ‘on stream’ at a time when these industries were experiencing a prolonged cyclical downturn which left demand very depressed relative to historical levels. Lack of effective demand, coupled with an inflow of goods from new foreign competitors, contributed to reduced profits and employment in the developed countries. This led to increased pressure for new protectionist measures by representatives of both labour and management, who faced the loss of domestic employment or declining profits.