Export Promotion vs. Import Substitution: Impact of the Trade Strategy on Economic Development

摘要

Economic theory suggests that resources should be allocated between the two basic trade strategies--export promotion and import substitution--until the marginal amount of foreign exchange earned or saved is equal. The problem is that it is not obvious which to emphasize to achieve the optimum mix. The paper investigates the impact of the alternative strategies on development in Egyptian agriculture. Ultimately, the question of the optimal trade strategy is an empirical one which can be partly answered by evidence of comparative advantage.