Selective Polices for Export Promotion

This paper considers the rationale for and limitations to selective export promotion policies in developing countries, with a focus on manufactured exports. It draws upon the experience of the most successful exporters in the developing world - the 'Asian Tigers' and 'new Tigers' - to illustrate the policy needs of upgrading and 'dynamizing' comparative advantage. It describes the different export structure and performance of these countries, and considers the role of domestic technological effort in developing their competitive advantages. It considers the role of 'permissive' and 'positive' policies in promoting exports: the former consist of a conducive macroeconomic and business environment, the latter of more direct interventions in product and factor markets (including those in export promotion, human capital development, technological activity, credit allocation, trade and foreign direct investment). The wide differences between the Asian countries in their policy interventions is highlighted as the explanation for their differing export performances. The paper goes on to consider the theoretical rationale for policy interventions, especially those of a selective nature. It closes with some of the practical difficulties in designing and implementing selective policies.