Productivity and externalities : models of export led growth

In developing countries, industrialization for successful export-led growth has been associated with rapid structural change and growth in productivity. Standard neoclassical growth models have difficulty explaining this change in performance. This paper has developed a simple analytical model incorporating export externalities that capture the large increases in the share of trade and total factor productivity that are associated with export-led growth. It also has developed a second model that breaks growth into its various components, which includes the effects of: (a) factor accumulation; (b) moving factors from areas of low productivity to area of high productivity; (c) exporting heavy and light manufactures; and (d) importing capital goods. The paper implements the second model with data from an archetypal semi-industrial country. The model accounts for the higher total factor productivity growth observed in countries pursuing export-led growth strategies. It also captures the pattern of structural change that such countries experience.

[1]  D. Keesing.  How support services can expand manufactured exports : new methods of assistance , 1990 .

[2]  B. Balassa,et al.  Exports, policy choices, and economic growth in developing countries after the 1973 oil shock , 1985 .

[3]  Ian Malcolm David Little.  Economic Development: Theory, Policy, and International Relations , 1982 .

[4]  Gershon Feder.  On exports and economic growth , 1983 .

[5]  E. Helpman.  Growth, technological progress, and trade , 1988 .

[6]  W. Mayer.  The Infant-Export Industry Argument , 1984 .

[7]  D. Lal.  Foreign Trade Regimes and Economic Development: Anatomy and Consequences of Exchange Control Regimes. Jagdish N. Bhagwati , 1981 .

[8]  A. Powell,et al.  Patterns in Household Demand and Saving , 1977 .

[9]  R. Vernon.  Technological development : the historical experience , 1989 .

[10]  David Kendrick,et al.  GAMS, a user's guide , 1988, SGNM.

[11]  S. Kuznets.  Economic Growth of Nations: Total Output and Production Structure , 1971 .

[12]  I. Little,et al.  Industry and trade in some developing countries: A comparative study , 1970 .

[13]  S. Robinson,et al.  Trade policies and productivity change in semi-industrialized countries , 1984 .

[14]  W. Easterly.  Economic stagnation, fixed factors, and policy thresholds , 1994 .

[15]  B. Balassa.  Exports and economic growth: Further evidence , 1978 .

[16]  K. Arrow.  The Economic Implications of Learning by Doing , 1962 .

[17]  M. Michaely.  Exports and growth: An empirical investigation , 1977 .

[18]  B. Balassa.  Development Strategies in Semi-Industrial Economies , 1982 .

[19]  Jagdish N. Bhagwati,et al.  The theory and practice of commercial policy : departures from unified exchange rates , 1968 .

[20]  Alwyn Young,et al.  Learning by Doing and the Dynamic Effects of International Trade , 1991 .

[21]  W. Jung,et al.  Exports, growth and causality in developing countries , 1985 .

[22]  Jagdish N. Bhagwati,et al.  Export promoting trade strategy : issues and evidence , 1988 .

[23]  The impact of alternative development strategies: Simulations with a dynamic input-output model , 1986 .

[24]  De Melo,et al.  The Treatment of Foreign Trade in Computable General Equilibrium Models of Small Economies , 1986 .

[25]  Yung W. Rhee,et al.  Sources of Technological Capability in South Korea , 1984 .

[26]  L. Westphal.  The republic of Korea's experience with export-led industrial development , 1978 .

[27]  P. Romer.  Endogenous Technological Change , 1989, Journal of Political Economy.

[28]  B. Balassa.  The Structure of Protection in Developing Countries , 1971 .

[29]  R. Levine,et al.  A Sensitivity Analysis of Cross-Country Growth Regressions , 1991 .

[30]  R. Porter,et al.  Exports and growth : An empirical re-investigation , 1978 .

[31]  Linsu Kim,et al.  Reflections on Korea's acquisition of technological capability , 1984 .

[32]  Andrei Shleifer,et al.  Income Distribution, Market Size, and Industrialization , 1988 .

[33]  R. Barro.  Government Spending in a Simple Model of Endogeneous Growth , 1988, Journal of Political Economy.

[34]  Simulating alternative development strategies : some suggestions from Korea's experience , 1987 .

[35]  R. Lucas.  On the Mechanics of Economic Development , 1988 .

[36]  S. Robinson.  Sources of Growth in Less Developed Countries: A Cross-Section Study , 1971 .

[37]  B. Balassa.  A ‘Stages Approach’ to Comparative Advantage , 1979 .

[38]  W. Lewis.  Economic Development with Unlimited Supplies of Labour , 1954 .

[39]  H. Chenery,et al.  Industrialization and Growth: A Comparative Study , 1986 .

[40]  M. Bruno.  ESTIMATION OF FACTOR CONTRIBUTION TO GROWTH UNDER STRUCTURAL DISEQUILIBRIUM , 1968 .

[41]  William R. Easterly.  How Do National Policies Affect Long-Run Growth?: A Research Agenda , 1992 .

[42]  P. Romer.  Increasing Returns and Long-Run Growth , 1986, Journal of Political Economy.