Exports of Manufactures and Economic Growth

The author's 1982 article on the fallacy of composition questioned the feasibility of generalizing the "G4" (Hong Kong (China), the Republic of Korea, Singapore, and Taiwan (China)) growth model based on rapid growth of exports, on grounds that if all developing economies pursued it, their combined manufactured exports would eventually trigger protection in industrial countries. The1984 book of author identified a safe speed limit of about 10-15 percent annually for growth of developing country exports of manufactures, well below the 25-35 percent rate of Korea and Taiwan, China in the 1960s and 1970s. This study revisits this question in the light of a quarter-century of experience. It finds that developing countries' aggregate manufactured exports grew at about 10 percent annually, a robust pace but within the speed limits he had envisioned. Even so, in key sectors such as apparel, import penetration levels have exceeded thresholds that his earlier estimates would have suggested would provoke protection, suggesting the importance of increased World Trade Organization (WTO) discipline. The base of manufactured exports from poor countries remains small relative to that of China and the original G4, so there should be considerable room for export growth from these newcomers. However, a new macroeconomic version of the fallacy of composition problem could arise: the growing tendency of China and some other major emerging market economies to pursue rapidly rising trade surpluses that have their counterpart in an increasingly unsustainable U.S. current account deficit.

Bibliographic Details

Main Author:	Cline, William R.
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2008
Subjects:	ABSOLUTE VALUE, ACCOUNTING, ADJUSTMENT COSTS, AGRICULTURE, ANNUAL GROWTH, ASSET PRICE, BASE YEAR, BENCHMARK, BENCHMARKS, BENEFITS OF TRADE, CAPITAL FLOWS, CAPITAL GOODS, CAPITAL INFLOWS, COMMODITY, CONSTANT DOLLARS, CONSUMER PRICE INDEX, COUNTRY MARKETS, CURRENCY APPRECIATIONS, CURRENCY MARKETS, CURRENCY REALIGNMENT, CURRENT ACCOUNT, CURRENT ACCOUNT DEFICIT, CURRENT ACCOUNT DEFICITS, CURRENT ACCOUNT IMBALANCE, CURRENT ACCOUNT POSITIONS, DEBT CRISIS, DEMAND GROWTH, DEPRECIATION, DEVALUATIONS, DEVELOPED COUNTRIES, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPING ECONOMIES, DEVELOPMENT STRATEGY, DOLLAR VALUES, DOMESTIC CONSUMPTION, DOMESTIC DEMAND, DOMESTIC MARKETS, DOMESTIC PRODUCTION, ECONOMIC GROWTH, ECONOMIC POLICIES, ECONOMIES OF SCALE, ELASTICITY OF EXPORT, EMERGING MARKET, EMERGING MARKET ECONOMIES, EQUILIBRIUM, EQUIPMENT, EXCHANGE MARKETS, EXCHANGE RATE INTERVENTION, EXCHANGE RATE NEEDS, EXPANSION OF EXPORTS, EXPORT DEMAND, EXPORT EARNINGS, EXPORT GROWTH, EXPORT GROWTH RATE, EXPORT GROWTH RATES, EXPORT STRUCTURE, EXPORT VOLUMES, EXPORTERS, EXTERNAL DEBT, EXTERNAL DEFICIT, EXTERNAL DEMAND, EXTERNAL POSITION, FEDERAL RESERVE, FINANCIAL CAPITAL, FINANCIAL CRISIS, FISCAL POLICIES, FOREIGN CURRENCIES, FOREIGN CURRENCY, FOREIGN EXCHANGE, FOREIGN EXCHANGE RATES, FOREIGN RESERVES, GDP, GDP PER CAPITA, GENERAL EQUILIBRIUM, GENERAL EQUILIBRIUM MODEL, GLOBAL CAPITAL, GLOBAL CAPITAL FLOWS, GLOBAL MARKETS, GROSS NATIONAL INCOME, GROWTH MODELS, GROWTH RATE, GROWTH RATES, IMBALANCE, IMBALANCES, IMPORT, IMPORT GROWTH, IMPORT-SUBSTITUTING INDUSTRIALIZATION, IMPORTS, INCOME ELASTICITY, INDUSTRIAL COUNTRIES, INDUSTRIAL COUNTRY, INFLATION, INTEREST RATES, INTERNATIONAL BANK, INTERNATIONAL DEVELOPMENT, INTERNATIONAL ECONOMICS, INTERNATIONAL ECONOMIES, INTERNATIONAL ECONOMY, INTERNATIONAL INVESTMENT, INTERNATIONAL INVESTORS, INTERNATIONAL MARKET, INTERNATIONAL STANDARD, LEVELS OF IMPORT, LOSS OF CONFIDENCE, MACROECONOMIC ANALYSIS, MARKET EXCHANGE RATES, MARKET FORCES, MARKET PENETRATION, MARKET PRICE, MARKET PRICES, MARKET SHARE, MERCANTILISM, MONETARY FUND, MULTILATERAL TRADE, MULTILATERAL TRADE NEGOTIATIONS, NATURAL RESOURCES, NET EXPORTS, NEWLY INDUSTRIALIZED COUNTRIES, OIL EXPORTER, OIL IMPORTER, OIL PRICES, OIL RESOURCES, OUTPUT, PENSION, PER CAPITA INCOME, POVERTY REDUCTION, PRICE INDEX, PRICE OF EXPORTS, PROTECTIONIST, PURCHASING POWER, PURCHASING POWER PARITY, RAPID EXPANSION, RAPID EXPORT GROWTH, RAPID GROWTH, REAL APPRECIATION, REAL APPRECIATIONS, REAL EFFECTIVE EXCHANGE RATES, REAL EXCHANGE RATE, REAL EXPORTS, REAL GDP, REAL GROWTH RATE, REAL GROWTH RATES, REAL IMPORT, RECESSION, RELATIVE PRICES, RETURN, SOURCING, SURPLUS LABOR, TERMS OF TRADE, TERMS OF TRADE EFFECT, TOTAL EXPORTS, TRADE BALANCE, TRADE DEFICIT, TRADE GROWTH, TRADE LIBERALIZATION, TRADE NEGOTIATIONS, TRADE POLICY, TRADE STRATEGY, TRADE STRUCTURE, TRADE SURPLUS, TRADE SURPLUSES, TRADING, TRADING PARTNER, TRADING PARTNERS, UPWARD PRESSURE, URUGUAY ROUND, VALUATION, VALUATION CHANGES, VALUE ADDED, WARRANTS, WORLD MARKETS, WTO,
Online Access:	http://documents.worldbank.org/curated/en/366231468146085416/Exports-of-manufactures-and-economic-growth-the-fallacy-of-composition-revisited https://hdl.handle.net/10986/28031
Tags:	Add Tag No Tags, Be the first to tag this record!