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The Contradictions of Export-led Growth

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  • Thomas I. Palley

Abstract

The export-led growth paradigm is a development strategy aimed at growing productive capacity by focusing on foreign markets. It rose to prominence in the late 1970s and became part of a new consensus among economists about the benefits of economic openness. According to Thomas I. Palley, this paradigm is no longer relevant because of changed conditions in both emerging-market (EM) and developed economies. He outlines the stages of the export-led growth paradigm leading to its adoption worldwide, as well as the various critiques of this agenda that have become increasingly prescient. He concludes that we should reduce reliance on strategies aimed at attracting export-oriented foreign direct investment and institute a new paradigm based on a domestic demand–led growth model. Otherwise, the global economy is likely to experience asymmetric stagnation and increased economic tensions between EM and industrialized economies.

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  • Thomas I. Palley, 2011. "The Contradictions of Export-led Growth," Economics Public Policy Brief Archive ppb_119, Levy Economics Institute.
    • Handle: RePEc:lev:levppb:ppb_119
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    References listed on IDEAS

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    1. Robert A. Blecker & Arslan Razmi, 2010. "Export-led Growth, Real Exchange Rates and the Fallacy of Composition," Chapters,in: Handbook of Alternative Theories of Economic Growth, chapter 19 Edward Elgar Publishing.
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    6. Marshall, CBE, FBA, P.J., 2003. "Proceedings of the British Academy, Volume 120, Biographical Memoirs of Fellows, II," OUP Catalogue, Oxford University Press, number 9780197263020.
    7. Marshall, CBE, FBA, P.J., 2005. "Proceedings of the British Academy, Volume 131, 2004 Lectures," OUP Catalogue, Oxford University Press, number 9780197263518.
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    10. Sarkar, Prabirjit & Singer, H. W., 1991. "Manufactured exports of developing countries and their terms of trade since 1965," World Development, Elsevier, vol. 19(4), pages 333-340, April.
    11. Brewer, Anthony, 1985. "Trade with fixed real wages and mobile capital," Journal of International Economics, Elsevier, vol. 18(1-2), pages 177-186, February.
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