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Role of government in trade and investment boom: lessons from East Asia

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  • Manmohan Agarwal
  • Susmita Mitra

Abstract

This paper extends the empirical analysis on Rodrik’s (1995a) domestic investment‐led export growth model for East Asia to nine East Asian countries for a longer time period, 1960 through 2004, and tests whether openness Granger‐caused investment or vice versa. Our results suggest that there can be no single conclusion about the role of investment in East Asia. Causality has also changed for some countries in different time periods. We question the exogeneity of the investment boom in East Asia, a key assumption made by Rodrik. Government’s incentives encouraged investment in export industries through different channels.

Suggested Citation

  • Manmohan Agarwal & Susmita Mitra, 2010. "Role of government in trade and investment boom: lessons from East Asia," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 13(4), pages 285-304.
  • Handle: RePEc:taf:jecprf:v:13:y:2010:i:4:p:285-304
    DOI: 10.1080/17487870.2010.523954
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    Cited by:

    1. Lein-lein Chen & Melvin Jameson, 2012. "Rents, party cadres and the proliferation of Special Economic Zones in China," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 15(3), pages 207-221, September.
    2. Zhenji Jin & Yue Shang & Jian Xu, 2018. "The Impact of Government Subsidies on Private R&D and Firm Performance: Does Ownership Matter in China’s Manufacturing Industry?," Sustainability, MDPI, vol. 10(7), pages 1-20, June.

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