In addition to size and geography, government strategies for trade and choices about trade policy determine trade outcomes. Broadly speaking, governments in developing countries have employed two different trade strategies, import substitution and outward- looking development. Import substitution is the production of goods and services that replace (or substitute for) imports. Outward orientation shifts the focus to producing for export for global markets. Before examining these two strategies in Chapter 19 it is necessary to understand some of the core ideas that shape economic reasoning about international trade