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What are the differences between an outward-oriented growth strategy and an inward-oriented growth strategy?

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An outward-oriented growth strategy is one that is oriented towards export and trade, and an inward-oriented growth strategy involves selling to consumers in one's own country and focusing on economic development.

While both strategies can be successful, most countries need to combine the two. An outward-oriented strategy for undeveloped countries can result in their simply being exploited for natural resources by wealthier countries and trapped into dependency. Often, corrupt elites benefit most from exports of raw materials such as ores and oil. Higher up the development ladder, though, countries such as Germany and Japan have had great success with high-value exports. Even in such cases, though, this does leave a country dependent on other countries and exposes it to political risks.

Countries with large internal markets such as the United States can fuel growth by manufacturing and selling goods to their own consumers. This model allows for inward research and development and...

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