What is export-led growth and a potential risk?

What is export-led growth and a potential risk?

• A. Growth driven by selling goods abroad; risks include exposure to global demand fluctuations and neglect of domestic needs.
• B. Growth achieved through domestic consumption only.
• C. Growth from heavy reliance on domestic agriculture.
• D. Growth driven by tourism only.

Answer: (A)

Export-led growth means expanding the economy by selling more goods and services to other countries. This often raises foreign exchange earnings, boosts production, and creates jobs, helping development when a country integrates with global markets. But there are clear risks. If global demand for exports falls, growth can slow quickly. Relying heavily on external markets can also push up the country’s currency, making other domestic industries less competitive. It may also divert resources away from meeting domestic needs, and the economy becomes vulnerable to world price swings, trade shocks, or changes in trade rules. Other options describe growth driven purely by domestic consumption, domestic agriculture, or tourism, which are not export-led.

Export-led growth means expanding the economy by selling more goods and services to other countries. This often raises foreign exchange earnings, boosts production, and creates jobs, helping development when a country integrates with global markets.

But there are clear risks. If global demand for exports falls, growth can slow quickly. Relying heavily on external markets can also push up the country’s currency, making other domestic industries less competitive. It may also divert resources away from meeting domestic needs, and the economy becomes vulnerable to world price swings, trade shocks, or changes in trade rules.

Other options describe growth driven purely by domestic consumption, domestic agriculture, or tourism, which are not export-led.