Historians of economic development examine two strategies for economic growth: Import Substitution Industrialization (ISI), or manufacturing at home what you used to buy from others, and Export-Led Growth, or making more products to sell abroad. Historians typically favor export-driven growth. It has a better track record. It worked for the Asian Tigers, whereas ISI failed in Latin America in the 1970s. And Export-Led Growth allows each country to specialize more and make better use of their Comparative Advantage, which economists argue leads to greater global efficiency.
I'd like to apply these theories to my new community. We export pineapples and cheese. We import ice cream, vegetables, meat, and trucks. If we want to increase our standard of living and have more ice cream, economists would probably recommend that we grow even more pineapples and sell them to buy more ice cream.
Can we apply this at the village level? One company's pineapple plantation alone is seven thousand hectares--70 square kilometers. While we're grateful to have these jobs in the community, large scale monoculture has environmental disadvantages.
Maybe we can use our milk to make more ice cream. That's inefficient, economists say--better to increase the industrial pineapple farming and leave ice cream production to the ice cream factories elsewhere. But there's also the issue of transaction costs and transportation costs. I'm sure it's less efficient to make ice cream at home, but you don't have to ship it or market it. You can sell it directly to your neighbors. And maybe our lives will be better, because now we're ice cream artisans in addition to employees. And it's nice to to feel ownership for your ice cream.
So--ice cream or pineapples? What do you think?