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By Dilip K. Das (auth.)

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Protection is carried to extremes. Instances where the cost of imports for producing domestically exceed the import value of the final product are not unheared of. High cost, low-quality output persists under this regime. • The quantitative restrictions under the import-substitution regime lead to a built-in tendency for relative prices to diverge from their optimum. The end result is that currencies tend to become increasingly overvalued, which adversely affects exports and results in inappropriate allocation of resources.

Their exports reflect the skill-intensity of their resource endowment and accord with the Heckscher-Ohlinian theoretical premise. The second tier NICs reached the threshold of industrialisation later, and their industrial structure is not as firmly established as those of the first tier NICs. They have a relatively lower percentage of capital goods and consumer engineering exports. All their manufactured exports originate from those industries which need low investment in physical and human capital.

Their export promotion strategy implies a more or less even-handed or neutral regime, without a bias against exports. This contrasts with the policy regime in a country like India, which has a discernible bias against exports. The experience of the last two decades has been a source of lasting controversy and subject to varying interpretations by 32 International Trade Policy economists. Ranis 18 and Little 19 see the growth of the East Asian countries as the predictable result of freeing trade and removing discrimination against exports.

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