1 Zo1s5 Hela Baoan \ FOURTHYEAR | Rafore Wife bot _DR.ESLAM ABD EL- Hay |‘Applied Cconomies Lescon (1) Wrade strategies and Trade Policies The trade strategy is a long term plan to achieve specific objectives. In order to achieve such objectives, we have to follow certain trade policies. Wrade Policies Import Substitution Export Promotion Different Names 1. Import substitution strategy 2, Inward looking policy 3. Trade protectionism 4, Trade pessimists I. Export promotion strategy 2. Outward looking policy 3. Free trade 4. Trade optimists Definition It seeks to promote industrialization by setting high trade barriers to foreign goods to encourage local production. This policy use tariffs or quotas on certain imported commodities as an attempt to substitute imports with domestic production. When a country succeeds in producing a product, it gradually removes the protection system and move towards Export Promotion. Start in Egypt 1952 Government support for manufacturing industry sectors in which a country has a comparative advantage. It focuses on the benefits of free trade and competition. It focuses on best production, efficient production, best qualities and lowest prices. It encourages the free movement of goods and services and capital. Start in China 1949 (= Liban hel EL Rareripplied Economies " 2016 Notes: e The export promotion supposes to be the next step after the import substitution. ¢ Egypt had once the potential to shift to the EP in the 80’s, as it produce kattan wear, but Egypt neglect the shifting process. 1. This policy protects the local activities in terms of three types of protections; a. Protection of Infant industry: products at early stages need protection, still starting production with low level of experience and technology. b. Protection of strategic activities: such as military weapons. c. Protection of employment: the matter is not protection for goods or activities but employment, to protect labor. F: industry as it includes a lot of activities and thus absorb: part of labor force. 2. Saving of foreign currency: reducing deficit in BOP. 3. Self Reliance: less dependency on other countries. ent Revenue: Tariffs represents one of very important sources of government.