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Difficulty: MediumEconomics in the Global Age

The growth of export processing zones (EPZs) in the late twentieth century represents a key element of the new international division of labor. In these zones, developing countries provide land, infrastructure, and cheap labor, while multinational corporations bring technology, capital, and access to global markets. Governments offer tax holidays, freedom from import and export duties, and relaxed labor regulations to attract foreign investment. This strategy has allowed several developing nations to transition from agricultural economies to manufacturing hubs, though it has also sparked debates over labor exploitation and national economic sovereignty.

—World Resources Institute, report on global industrialization, 1994

Which of the following best explains how the economic strategy described in the passage differed from the dominant economic policies of many developing nations in the mid-twentieth century?

  1. A
    It focused on reviving mercantilist policies to strictly limit foreign imports and accumulate gold reserves.
  2. It prioritized integration into global markets through export-oriented manufacturing rather than protecting domestic industries.Answer
  3. C
    It relied on direct foreign colonial administration to build infrastructure and manage local trade.
  4. D
    It focused primarily on agricultural self-sufficiency through the introduction of genetically modified crops.

Answer

The strategy described in the passage prioritized integration into global markets through export-oriented manufacturing, whereas mid-twentieth-century policies often focused on protecting domestic industries.
The correct answer is correct because the establishment of export processing zones represents a key component of export-oriented industrialization, which focuses on integrating into the global market. In contrast, many developing nations in the mid-twentieth century practiced import-substitution industrialization, which used tariffs and state intervention to protect domestic industries from foreign competition.

Step-by-Step Solution

1
Analyze the passage to identify the key features of export processing zones (EPZs).
EPZs involve developing nations offering tax cuts, infrastructure, and cheap labor to attract multinational corporations and foreign investment for manufacturing.
Understanding the source's description of global economic strategies in the late twentieth century is necessary for comparison.
2
Recall the dominant economic strategies of developing nations in the mid-twentieth century.
Many developing countries relied on state-directed economies or import-substitution industrialization (ISI) to build domestic industries and limit foreign influence.
Establishing a historical baseline is required to identify how late-twentieth-century globalization differed from earlier policies.
3
Compare the two approaches and identify the primary difference.
The EPZ strategy represents an embrace of global markets and export-oriented growth, whereas mid-twentieth-century policies prioritized protecting domestic markets from international competition.
This direct comparison answers the specific prompt.

Key Concept

The transition from state-directed/import-substitution economies to export-oriented development and neoliberalism in the late twentieth century.
Estimated Time:1m 30s
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Topics

Economics in the Global Age

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