Chapter 10: Dilemmas of Development


International Commodity Cartel
Kashmir would seek to partner with other states that have large mineral supplies to try to control the supply of the raw materials in world markets in order to drive up their price and maximize their revenues. The mineral supplies are not easily substitutable, but seven other states have large natural reserves, including China.


The other states have rejected your offer to form a bloc similar to OPEC. In particular, Chinese economic diversity means they are able to manipulate their supply of mineral resources to the world market with little short-term consequence. As a result, market volatility may relatively benefit China in the long-term if it means the six other states get priced out of the mineral resources market. The Prime Minister asks you to choose a more reliable market strategy. Which of these market strategies will you pursue?

What do you do now?

Import-Substituting IndustrializationISI is a national development strategy that avoids industrialized international economic linkages in order to focus on domestic production. This approach uses high tariffs, subsidies, and other protectionist measures to forego imported goods and services in favor of developing 'national champion’ firms. National champion firms are firms that the government believes could do the best job of producing the substitutable industrial goods.
Export-Led GrowthELG is a market-accepting strategy that argues international economic linkages are good because the international economy provides important opportunities for development such as access to managerial expertise, labor, capital, and technology. This strategy entails switching preference for government credit and foreign currency from firms producing for local markets to firms producing for export markets.