ABSTRACT
The government's search for revenue most likely affected the pattern of international trade both by lowering the profitability in export industries and by altering the import demand in the economy. This chapter describes a picture of an economy in which worsening conditions for exporting firms diminish the availability of foreign exchange and in which an increasing share of the inadequate foreign exchange is used for importation of consumption goods. The availability of foreign exchange declined drastically during the 1970s, much because of the government's policies. The issue of foreign exchange availability has a supply side and a demand side. Both were negatively affected by the government's search for revenue. The chapter demonstrates capital goods imports went down to a mere 6 per cent of total imports in the early 1980s from a figure of over 40 per cent in the early 1960s. The chapter examines the composition of imports and the relation between investments and capital goods imports.
