Abstract
Trade strategies accepted in a country can explain why countries facing the same external environment, achieve different results of export performance. The article draws attention to both theoretical evolution of development policies and trade strategies and their impact on an economy. Of course, the success of exporting depends on the conditions of external markets, i. e. on demand conditions (slow economic growth and unstable demand reduce possibilities for exporting), but supply conditions, which are affected by the trade strategy in a country, determine the place of exports in an economy and the significance of export promotion strategy and activities.This is especially meaningful for evaluating the case of the Lithuanian economy which was affected by the change of development policies from inward-oriented to outward-oriented, liberalising its highly protectionist trade regime and which is only beginning its export promotion activities.
Highlights
The success of exporting depends on the conditions of external markets, i. e. on demand conditions, but supply conditions, which are affected by the trade strategy in a country, determine the place of exports in an economy and the significance of export promotion strategy and activities
This is especially meaningful for evaluating the case of the Lithuanian economy which was affected by the change of development policies from inward-oriented to outward-oriented, liberalising its highly protectionist trade regime and which is only beginning its export promotion activities
The theoretical perspective presented in the article allows to analyse a series of events in Lithuanian economy along with an assessment of these theories
Summary
By 1950 two positive aspects of IS were recognised: (1) if there exists the possibility to develop a balanced economy, there is no need to depend on unstable foreign market demand, resulting in widely fluctuating export earnings; (2) the infant industry argument; East Asian countries' significant export growth under unfavourable world international trade tendencies empirically did not confirm the first suggestion. Exposure to world prices encourages the efficient allocation of domestic resources according to international opportunity costs and allows firms to achieve greater effectiveness Both strategies, import substitution and export promotion, have their own rationale and are related to different problems and consequences, leading to new theoretical recommendations. Liang (1992) presented broader range of trade strategies in Figure 2 consisting of five mutually exclusive trade strategies based on incentive structures either for EP or IS
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