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Liberalization and immense integration of different world economies
The growing liberalization and immense integration of different world economies since the 1950s were the driving force behind persistence of firms to engage in exporting all over the globe.
Over the past two decades, exporting has been one of the fastest growing economic activities that have surpassed growth rates of economic output (IMF, 1995).
Ever since the 90s exports accounted for approximately 20% of world gross domestic product (World Bank ,1995). Ever since, exporting played a crucial role in world economic interaction and its magnitude was expected to grow further as markets become more integrated.
Export development is very critical to different economies. It has been the core of policymakers due to its substantial effect on the macroeconomic and microeconomic level. From a macroeconomic point of view, exporting can enable national economies to increase their foreign exchange reserves, create backward and forward linkages, and provide employment which would result in improved standards of living to all of the society. From a microeconomic perspective, exporting gives firms a competitive lead, while improving their financial position, their resource utilization levels as well as raising technological standards.( Katsikeas,1996)
Over the last few decades there has been a remarkable change in the standpoint of development policy. This shift led to the extensive interest of researchers to examine the relationship between trade and growth.
Up till the mid-1970s development policy was confined to the import-substitution model that urged countries to focus on building their domestic manufacturing capacity and substitute domestically produced goods for imports.
However, economic troubles emerged in the 1970s, leading different countries to suffer from slower growth and accelerating inflation. The import-substitution model had been claimed to exhausted itself, and countries that used to prosper following it where no longer in an advantaged position. An alternative approach had to be searched for. Economists thus started to think in favor of market directed economic activity.
Ever since there has been a tremendous redirection of policy towards an export-led growth model which recommends the exact opposite.
Rather than focusing on production for domestic markets, countries were advised to concentrate and aim for producing for exporting. (Palley, 2003)
By the early 1980s export-led strategy and export promotion had already achieved a broad agreement among researchers and policy makers,
Most economics considered it to be the conventional wisdom in in the developing world.
( Tyler, 1981; Balassa, 1985 ,Balassa, 1980 ,Heitger, 1987)
Over the last decades, numerous researchers have modeled exports as an engine for growth, with the presumption that higher exports can lead to greater capacity utilization, economies to scale, adoption of more efficient technology or higher foreign exchange earnings.
Most of the empirical researchers over the last decades have shown a close link between economic growth and export growth ( Chudson 1964, Balassa 1987 Sprout and Weaver 1993, Summers and Peter 2001, Soderborn and Teal 2003).
It is widely perceived that no country with closed and inward oriented policies has been able to achieve high growth rates. As Baldwin demonstrated export expansion often plays a key role in initiating development in its two aspects, growth and change. (Baldwin 1966)
Exports are good for growth and poverty alleviation but they are not easy to develop.
Most of the developing countries consider export promotion and development a precedence for economic development. Sustained export promotion efforts will assist in earning foreign exchange necessary to finance imports.
This will consequently lead to reduced balance of payments problems and lower foreign debts. In addition and create further employment for people.
East Asian economies are mere example that developing countries can compete effectively in international markets. They present a blueprint for economic growth valid to many developing countries. The focus of East Asia’s exports on manufactured products is the outcome of its meticulous mixture of land scarceness and a somewhat educated and skilled labor force.
Export promotion is not only desirable but also absolutely necessary in some countries in order to widen a narrow export base. Foreign exchange earnings from a very limited number of export products often cannot generate additional foreign exchange, especially when there has been a decline in the international prices for some traditional export products for developing countries, the demand for which is relatively price and income inelastic.
A vital constituent of all countries foreign trade policies is the national export strategy that focuses on promoting and developing those products and markets that gives the country its competitive edge in exporting.
In this context, Trade Point Organizations (TPOs) are founded to develop and implement the country's export promotion and development programs.
These have two main roles to play, to offer specialized assistance to the producers of products for export, and act as a catalyst for associated services provided by other public and private units that lead to the facilitation of the exporting process.
In many occasions, TPOs have an advisory role to governments on foreign trade and related matters. TPOs might also act as link between the export community and the governments, as these are having close connection with the export community
Of course, It is also possible for the export community to create direct contacts with foreign markets and with the government through alternative contacts, however, these other contacts should not put off the TPO from acting for the advantage of exporters.
Specialized institutions devoted to this task should carry out export promotion and development activities. In this context, TPOs are key actors that offer support and guidance to enterprises.
The role of TPOs depends on the stage of development of a country. In developing countries, where SMEs play a major role, a TPO has to make efforts to expose them to the international market place. SMEs with export potential should be selected and the TPO should work closely and intensively with them in order to turn them finally into successful exporters.(ATPF, 2000)
However, success in penetrating foreign markets mainly depends on the competitiveness of the export products of a country. Therefore the main task of a TPO should be enhancing the competitiveness of the export sector. The role of TPOs in achieving this objective has been more challenging in the context of the present global economic environment. The globalization process, the WTO as well as regional groupings have not only created opportunities but have also posed challenges to TPOs. For that reason, they have to play a dynamic role in the present context to make exporters more competitive in the international market. (ATPF, 2000)
The digital economy has formed a new world for the trade promotion organizations. In many aspects, the TPO is no different than its clients in respect to being forced to respond to changes of the business rules and scheme. These must respond with rapidity and efficiency as well as flexibility.
The digital economy is, moreover, forcing the national trade promotion organization to recreate, itself. All trade promotion organizations must explore potentials of the international market place and support their customers to exploit the internet as a communication and business device.
Furthermore, they should alter the content of their help through offering guidance on e-trade, e-markets and Internet marketing while expanding their own e-awareness, e-competency and e-promotion programs. The needs of their clients in this aspect should be catered for and continuous feedback sought for development and improvement. (ITC, 2000)
In addition, the means of communication between TPOs and their clients should be achieved through e-mail and the Internet, as well as to establish online networks to raise and expand response aptitude.
Providing tailor-made guidance and information to enterprises is a key feature to distinguish TPOs from services offered through other Internet sources. In particular, the objective of TPOs trade information services is termed by International Trade Center (ITC), as “To assist the country’s businesses to explore business opportunities effectively by the provision of targeted market information which results in high levels of customer satisfaction” (ITC, 2001)
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