Is Export Led Growth Passé?

Finally, export growth slowed, not primarily because Indian goods suddenly became uncompetitive, but because growth in the country s traditional export markets decelerated.

Policies aimed at ensuring export led growth also include export subsidies and barriers to imports.

Domestic demand led growth will be a more reliable strategy than export led growth.

Seduced by China s spectacular growth, the region shifted from US to China centric export growth.

Between 2001 and 2008, export growth accounted for more than 40 of China s overall economic growth.

A growth slowdown is hardly shocking for an export led economy.

Most important, export led growth must give way to domestic economic drivers.

The lesson is clear export led growth is the way to go.

In emerging markets, slow growth in the advanced economies has shut down a traditional development path export led growth.

So shrinking export markets will slow down growth promoting structural change at home.

Export growth is down sharply, turning negative vis à vis the eurozone s periphery.

This export investment nexus provides a second platform for thinking about growth policies.

The ability to export helped growth, but there was a need to distinguish between export promotion and trade liberalization in a more general sense.

China s rebalancing is apparent, first and foremost, in the export sector. Export growth has slowed from its 2001 2008 average of 29 annually to below 10 , making foreign demand a far less critical engine of growth.

Export led growth meant that China could produce without worrying about developing the domestic market.

The US current account deficit has been narrowing in recent quarters, thanks to export growth.

To escape the crisis, Germany used rapid export growth especially to meet voracious Chinese demand.

This investigation and criticism of Germany s export based growth model has incited outrage in Germany.

Ten most dynamic commodities in world exports (ranked by growth in export value), 1985 2002.

Under these conditions, export led growth by major economies is a threat to the world economy.

That is why it should not hanker after any ersatz export led or state directed growth.

Reduced military expenditures. Faster growth in the developing world providing better export markets and investment opportunities.

Long term sustainability of debt depends mainly on the growth and export prospects of debtor countries.

Export growth was often very fast, as in the Philippines, Mexico, and to some extent Morocco.

The slowdown of global growth and actual double dip recession risks in the US and Japan will invariably impede export growth, even in Germany.

In an optimal world, the surpluses of countries pursuing export led growth would be willingly matched by the deficits of those pursuing debt led growth.

The East Asian and other economies that achieved dynamic growth and became industrialized did not follow import substitution strategies instead, they pursued export oriented growth.

Indeed, even after the new stimulus package, China will still depend on investment and export for growth.

As a result, in US dollar terms, import demand grew by 38.7 , outpacing export growth of 31 .

After all, export led growth policies can succeed only if other countries are willing to run deficits.

Meanwhile, the faltering European economy and slowing GDP growth in China and elsewhere are impeding export demand.

Since then, China has aggressively pursued a fast growth, export, and investment heavy model of economic development.

In general, growth was broadly based, supported by robust export growth and higher commodity prices as well as strong domestic demand driven by low interest rates.

Open trade could not be the sole objective of the negotiations, as was demonstrated by the relationship between export growth and income growth in many countries.

Reserve accumulation was also a by product of China s deliberate currency undervaluation to promote export led growth strategy.

Without that exchange rate adjustment, faster export growth would expose the Chinese economy to the risk of overheating.

Most important, the projections of exogenous factors such as export and GDP growth rates often remain too optimistic.

As China s economy grows relative to the economies of its trading partners, the efficacy of its export led growth model must inevitably fade. As a corollary, the returns on massive infrastructure investment, much of which is directed toward supporting export growth, must also fade.

Nevertheless, developing countries have been falling over each other to establish export zones and subsidize assembly operations of multinational enterprises. The lesson is clear export led growth is the way to go.

But exchange rates do affect the pattern of growth, and it is in China s own interest to restructure and move away from high dependence on export led growth.

Chinese growth is widely regarded as furiously export driven, but domestic investment has in fact been the major component.

As a result, there are now major questions about the sustenance of China's long powerful export led growth model.

First, China will begin to wean itself from the manufacturing model that has underpinned export and investment led growth.

This would undermine other economic sectors competitiveness and stifle export oriented manufacturing growth, thereby stalling these economies structural transformation.