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Trade and Growth: Import-Led or Export-Led? Evidence From Japan and Korea

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  • Robert Z. Lawrence
  • David E. Weinstein

Abstract

It is commonly argued that Japanese trade protection has enabled the nurturing and development internationally competitive firms. The results in our paper suggest that when it comes to TFP growth, this view of Japan is seriously erroneous. We find that lower tariffs and higher import volumes would have been particularly beneficial for Japan during the period 1964 to 1973. Our results also lead us to question whether Japanese exports were a particularly important source of productivity growth. Our findings on Japan suggest that the salutary impact of imports stems more from their contribution to competition than to intermediate inputs. Furthermore our results indicate a reason for why imports are important. Greater imports of competing products spur innovation. Our results suggest that competitive pressures and potentially learning from foreign rivals are important conduits for growth. These channels are even more important as industries converge with the market leader. This suggests that further liberalization by Japan and other East Asian countries may result in future dynamic gains. Our results thus call the views of both the World Bank and the revisionists into question and provide support for those who advocate more liberal trade policies.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7264.

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Date of creation: Jul 1999
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Publication status: published as Stiglitz, Joseph E. and Shahid Yusuf (eds.) Rethinking the East Asia Miracle. Oxford University Press and the World Bank, 2001.
Handle: RePEc:nbr:nberwo:7264

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  1. Andrew B. Bernard & J. Bradford Jensen, 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," NBER Working Papers 6272, National Bureau of Economic Research, Inc.
  2. Andrew B. Bernard & J. Bradford Jensen, 2000. "Exporting and Productivity," Working Papers 00-07, Center for Economic Studies, U.S. Census Bureau.
  3. Sebastian Edwards, 1991. "Trade Orientation, Distortions and Growth in Developing Countries," NBER Working Papers 3716, National Bureau of Economic Research, Inc.
  4. Brian Aitken & Gordon H. Hanson & Ann E. Harrison, 1994. "Spillovers, Foreign Investment, and Export Behavior," NBER Working Papers 4967, National Bureau of Economic Research, Inc.
  5. Sofronis K. Clerides & Saul Lach & James R. Tybout, 1998. "Is Learning By Exporting Important? Micro-Dynamic Evidence From Colombia, Mexico, And Morocco," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 903-947, August.
  6. Nelson, Richard R & Winter, Sidney G, 1974. "Neoclassical vs. Evolutionary Theories of Economic Growth: Critique and Prospectus," Economic Journal, Royal Economic Society, vol. 84(336), pages 886-905, December.
  7. Rodrik, Dani, 1994. "King Kong Meets Godzilla: The World Bank and The East Asian Miracle," CEPR Discussion Papers 944, C.E.P.R. Discussion Papers.
  8. Jeffrey A. Frankel & David Romer & Teresa Cyrus, 1995. "Trade and growth in East Asian countries: cause and effect?," Pacific Basin Working Paper Series 95-03, Federal Reserve Bank of San Francisco.
  9. Richard E. Baldwin, 1992. "On the Growth Effects of Import Competition," NBER Working Papers 4045, National Bureau of Economic Research, Inc.
  10. Jong-Wha Lee, 1995. "Government Interventions and Productivity Growth in Korean ManufacturingIndustries," NBER Working Papers 5060, National Bureau of Economic Research, Inc.
  11. Feder, Gershon, 1983. "On exports and economic growth," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 59-73.
  12. Robert Z. Lawrence, 1993. "Japan's Different Trade Regime: An Analysis with Particular Reference to Seiretsu," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 3-19, Summer.
  13. Lee, Jong-Wha, 1996. " Government Interventions and Productivity Growth," Journal of Economic Growth, Springer, vol. 1(3), pages 391-414, September.
  14. Shin-ichi Fukuda & Hideki Toya, 1995. "Conditional Convergence in East Asian Countries: The Role of Exports in Economic Growth," NBER Chapters, in: Growth Theories in Light of the East Asian Experience, NBER-EASE Volume 4, pages 247-265 National Bureau of Economic Research, Inc.
  15. Boltho, Andrea, 1985. "Was Japan's Industrial Policy Successful?," Cambridge Journal of Economics, Oxford University Press, vol. 9(2), pages 187-201, June.
  16. Dani Rodrik, 1994. "Getting Interventions Right: How South Korea and Taiwan Grew Rich," NBER Working Papers 4964, National Bureau of Economic Research, Inc.
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