They cannot transform China s export and investment oriented political economic system.

In both, strong investment and export drives reflected an expanded role for market based incentives.

Bosworth and Collins, 2003, report the econometric evidence in support of the export investment nexus.

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

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

Although much depends on greater regional investment in increasing export capacity, further Chinese investment in the region would most likely follow.

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

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

While much of that investment will flow to the US, the surplus countries want to diversify their investment of these new net export earnings.

Indeed, a stronger currency can paradoxically feed external surpluses, while discouraging investment in export oriented industries.

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

Finally, after welcoming foreign investment, which contributed greatly to Chinese manufacturing growth and export competitiveness, some in China would now tighten restrictions on foreign investment to protect China s domestic industries.

On the micro side, too little public investment means poor infrastructure and high export costs. Brazil has none of neighboring Argentina s hefty export taxes, but its heavy transport costs have the same effect.

The EXIM Bank provides credits to overseas investments through the Overseas Investment Facility, and an Overseas Investment Insurance scheme is run by the Malaysia Export Credit Insurance Berhad to cover political risks.

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

But, given increasing capacity utilization in the export industries, as well as higher investment requirements owing to the normal capital replacement cycle, domestic investment demand is now also rising.

Now China must choose between the export based, investment driven growth model of the past and a new, more viable economic order.

Recent global economic trends called for major policy initiatives, for example for export diversification, investment in infrastructure and control of price volatility.

It requires sizeable and critical amounts of external financing, such as grant assistance, loans, export earnings and foreign direct investment or other capital market flows.

As one of the main recipients of foreign direct investment his country was aware of the need for effective investment policies in order to promote economic growth, generate employment, enhance domestic capabilities and expand export capacity.

Once foreign investment and higher commodity export prices are excluded from the growth calculations, Latin America s recent economic performance barely exceeds its unexceptional historical average.

These economies, the study concluded, achieved high growth rates by getting the basics right, promoting investment, nurturing human capital, and opening up to export manufacturing.

However, while financial stringency proved attractive to foreign investors, a tight monetary and fiscal stance did little to stimulate domestic investment or to improve export prospects.

We have long recognized that export trade is the most sustainable source of resources for development as well as the best stimulant to investment and employment.

With the private sector in free fall, consumption and investment would decline sharply. America s ability to export would also be undermined, because foreign markets would likely be affected, and because, in any case, if export firms cannot get credit, they most likely cannot produce.

Astonishingly, many interpret Germany s export boom and current account surplus, which measures these capital exports, as an indicator of the strength of Germany as an investment location.

Bilateral investment treaties of the United States, Japan and Canada did not prohibit a set of performance requirements, such as export requirements, employment requirements for local workers, technology transfer requirements and the like, so that investment recipient countries could maintain some policy space.

The Ministry of Trade and Industry established a sensible incentive scheme for export oriented investment and a black empowerment program that encourages investors to help the previously neglected workforce.

The broad outlines of this transformation are well known a shift from export and investment led growth to an economic structure that draws greater support from domestic private consumption.

A successful export strategy hinges not on how much countries export, but on what they export and how their export sectors are integrated with other domestic economic activities.

The Economic Commission for Latin America and the Caribbean promoted more market oriented regional integration in order to realize greater stability, reduce deficits, encourage export growth and diversification and increase foreign investment.

There has been a strengthened focus on South South cooperation, which has seen trade among developing countries growing faster than their total export trade and an increasing flow of investment.

There were no surprises in the basic thrust of the strategy a structural shift in China s investment and export led growth model toward a more balanced consumer based and services led economy.

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.

The laws and decrees establishing this preferential treatment include the Foreign Investment Act and its regulations (Law No. 127 of 1992) and Decree No. 4691 and Decree No. 3192 on industrial export processing zones.

Indeed, the impact of real exchange rate depreciation on growth is likely to be short lived unless increased corporate profits in the export sector lead to higher household consumption and investment.

In the modern era of globalization, export led growth is supplemented by policies to attract foreign direct investment (FDI), a combination that has been particularly successful in China.

The ECLAC region has suffered from decrease in ODA, capital flows and foreign direct investment levels, and that region's average debt to export ratio (over 1.5) is higher than any other developing region.

Developing and developed countries differ in their use of export subsidies, the former tending to rely on a more selective approach and the latter tending to use, inter alia, export promotion regimes, export financing and export guarantees.

But the viability of Deng s model is nearing its end, and China is now addicted to inefficient state led fixed investment and unsustainable export led growth, rather than domestic consumption, to generate jobs and growth.

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

As investment growth slows and export markets endure their unpredictable business cycles and protectionist moods, China will increasingly rely upon consumption for creation of jobs and income and the service industry is where most consumption occurs.

As export and outsourcing opportunities increasingly depend on satisfying security regulations in export destinations, undemanding domestic regulation hinders technology or the outsourcing of export development.

Weak global growth is shrinking export markets, and many commodity prices are plunging. The combination of tighter credit conditions in the advanced economies and dimmer economic prospects in low income countries is hitting investment flows.

Recognizing that many developing countries are highly dependent on primary commodities as their principal source of export revenues, employment, income generation and domestic savings, and as the driving force of investment, economic growth and social development,