Backwash Effect

Summary of Backwash Effect

An adverse economic condition which arises from excess emphasis upon export expansion. The condition is common among developing countries, which are compelled to expand exports to secure foreign currency with which to fund essential imports. By targeting export industries for expansion, resources are often denied to industries producing for the home market. As a result, domestic manufacturing suffers and industrial self-sufficiency is delayed.

(Main Author: William J. Miller)