Trade Policy

Trade Policy

Step 1

Outward Oriented Trade Policy

This policy states that trade and industrial policies do not discriminate between goods produce in the domestic market and those that are exported.

Inward Oriented Trade Policy

Whereas an inward oriented trade policy is more biased and tends to encourage domestic production against foreign trade.

Inward Oriented Trade Policy

Outward Oriented Trade Policy

 1. Often described as import substitution strategy.

  Neutral strategy, it is not necessarily export oriented.

 2. Protection of domestic products from foreign competition.

  Neither in favor of exports nor it is against import substitution.

 3. Encourage economic growth through self-sufficiency.

  Encourages export-led economic growth.

 4. Nurture domestic markets to meet local demands.

  The essence of outward oriented strategy is neutrality.

Outward Oriented Strategy

Outward oriented approach is significant as it is neutral strategy. It does not distinguish between purchase of goods produce in the domestic market and foreign goods. This policy is important as it is an open policy and it results in an increase in opportunities from global sourcing that leads to improvement in cost and efficiency, and international competition also benefits consumers with wide range of choices and better quality.

Inward Oriented Strategy

Inward oriented policy is essential as it protects domestic industries from foreign competition. It favors and encourages domestic production, such a trade policy assists domestic industries to prosper and flourish (Carbaugh, 2011).

Step 2

1. Developed countries are reluctant to lower protection on agricultural goods as these countries are self-sustainable and can support themselves on their own produced agricultural goods, therefore discourage foreign trade. This will help keep them other countries out and charge prices that producer in the domestic market wants. Protection is imposed on those goods for which the market cannot be sustained and is weakened.

2. The data shows that amount of revenue that government earned from taxes on international trade has been fluctuating. ...