Foreign Exchange-constrained Developing Economies

In foreign exchange-constrained developing economies, imported goods enter into the production of almost every commodity, as raw materials or intermediate goods. They may not be entering as direct inputs but may be the inputs of some input entering into the production of that commodity. In such countries, the economy is so integrated with the international economy that without any imports it may be not possible to produce anything. Imports also enter directly or indirectly into the production of the essential wage goods. Thus to employ labour also implies the use of certain amount of foreign exchange. The availability of foreign exchange thus vitally affects every aspect of the economy.