Benefits of export promotion

  

Date Posted: 5/9/2012 7:47:28 AM

Posted By: rodriguez mwalenga  Membership Level: Silver  Total Points: 110

---

* Earning of foreign exchange
Export promotion leads to expansion of goods for the foreign market. These goods earn foreign exchange that can be used to facilitate development.

* Greater utilization of resources
Export promotion industries have a wide market for their produce for both domestic and foreign markets. They are therefore able to produce for a greater capacity. Production for export enables them to increase utilization of locally available resources that would otherwise be idle.

* Full utilization of plant capacity
Due to the fact that export promotion industries have a wide market, they are able to fully utilize the existing plant capacity. In this way, they can take advantage of large scale production. This will lead to lower production costs.

* Addition of value to primary exports
By establishing export oriented industries, a country is able to process its primary products instead of exporting them in their raw form. This adds value to primary exports, hence increasing foreign exchange earnings.

* Creation of employment
Generation of employment opportunities is a major consideration in any industrialization strategy. In this regard, export oriented industries absorb labour, thereby helping to reduce the problem of unemployment in a country. For example, people will be employed directly in a particular export promotion industry, as well as indirectly in allied industries such as transport and insurance.

* Encouragement of efficiency in production
Since export promotion industries are exposed to competition from foreign producers, they are likely to strive for greater efficiency in production and higher quality of goods. This will ensure their competitiveness both in the domestic and foreign markets.

---

Next: Factors to consider when locating an industry
Previous: What The Kenyan Government Is Doing to Achieve Vision 2030.