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Trade Strategy, Investment, and Exports: Another Look at East Asia

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  • Dani Rodrik

Abstract

The export booms in South Korea and Taiwan starting in the early 1960s are anomalous when compared with later export booms in other, non-East Asian countries such as Chile and Turkey. First, these booms have taken place in the context of comparatively small changes in relative prices in favor of exportables. Second, they have been associated from the start with booms in investment. This paper offers an argument and a formal model to suggest that exports in East Asia may have been driven by an increase in the profitability of investment, with outward orientation a consequence of the investment boom rather than its instigator. In economies like South Korea and Taiwan, an increase in investment required an increase in imports of capital goods. Since savings rose alongside the desired investment, the investment boom was accompanied by a boom in both exports and imports. Moreover, this could happen with a relatively small change in the relative price of exportables.

Suggested Citation

  • Dani Rodrik, 1995. "Trade Strategy, Investment, and Exports: Another Look at East Asia," NBER Working Papers 5339, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5339 Note: EFG ITI
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    References listed on IDEAS

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    1. Dani Rodrik, 1994. "Getting Interventions Right: How South Korea and Taiwan Grew Rich," NBER Working Papers 4964, National Bureau of Economic Research, Inc.
    2. Alwyn Young, 1993. "Lessons from the East Asian NICs: A Contrarian View," NBER Working Papers 4482, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Srour, Ilina & Taymaz, Erol & Vivarelli, Marco, 2013. "Skill-Biased Technological Change and Skill-Enhancing Trade in Turkey: Evidence from Longitudinal Microdata," IZA Discussion Papers 7320, Institute for the Study of Labor (IZA).
    2. Klaus Wälde & Christina Wood, 2004. "The empirics of trade and growth: where are the policy recommendations?," International Economics and Economic Policy, Springer, vol. 1(2), pages 275-292, January.
    3. Elif Bascavusoglu-Moreau & Mustafa Colakoglu, 2011. "Impact of SME policies on innovation capabilities: The Turkish case," STPS Working Papers 1105, STPS - Science and Technology Policy Studies Center, Middle East Technical University, revised May 2011.
    4. Robbins, Donald J., 2003. "The impact of trade liberalization upon inequality in developing countries : a review of theory and evidence," ILO Working Papers 993650553402676, International Labour Organization.
    5. Epaphra, Manamba, 2014. "The Revenue Implications of Trade Liberalization in Tanzania," MPRA Paper 62330, University Library of Munich, Germany, revised 2014.
    6. Elena Meschi & Erol Taymaz & Marco Vivarelli, 2016. "Globalization, technological change and labor demand: a firm-level analysis for Turkey," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(4), pages 655-680, November.
    7. Ilina Srour & Marco Vivarelli & Erol Taymaz, 2013. "Technological Change and Skill-based Employment Disparities: Evidence from Turkey," DISCE - Quaderni del Dipartimento di Scienze Economiche e Sociali dises1393, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    8. Pablo Ruiz Napoles, 2007. "Protectionism, free trade and preferential trade: the Mexican experience 1970-2005," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 60(240), pages 49-81.
    9. Ilina Srour & Erol Taymaz & Marco Vivarelli, 2014. "Globalization, Technology and Skills: Evidence from Turkish Longitudinal Microdata," ERC Working Papers 1405, ERC - Economic Research Center, Middle East Technical University, revised Jun 2014.
    10. Jomo Kwame Sundaram & Rudiger von Arnim, 2008. "Economic liberalization and constraints to development in sub-Saharan africa," Working Papers 67, United Nations, Department of Economics and Social Affairs.
    11. Augustin Kwasi Fosu, 2000. "The International Dimension of African Economic Growth," CID Working Papers 34, Center for International Development at Harvard University.
    12. Pablo Ruiz Napoles, 2007. "Protectionism, free trade and preferential trade: the Mexican experience 1970-2005," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 60(240), pages 49-81.
    13. repec:ilo:ilowps:365055 is not listed on IDEAS
    14. Ozcelik, Emre & Taymaz, Erol, 2004. "Does innovativeness matter for international competitiveness in developing countries?: The case of Turkish manufacturing industries," Research Policy, Elsevier, vol. 33(3), pages 409-424, April.
    15. Leyaro Vincent, 2015. "Threshold and Interaction Effects in the Trade, Growth, and Inequality Relationship," WIDER Working Paper Series 009, World Institute for Development Economic Research (UNU-WIDER).
    16. Elbadawi, Ibrahim A., 1999. "Can Africa export manufactures? The role of endowment, exchange rates, and transaction costs," Policy Research Working Paper Series 2120, The World Bank.
    17. Alan M. Taylor, 1999. "Latin America and Foreign Capital in the Twentieth Century: Economics, Politics, and Institutional Change," NBER Working Papers 7394, National Bureau of Economic Research, Inc.
    18. Olivier Cortès & Sébastien Jean, 1996. "Pays émergents, emploi déficient ?," Working Papers 1996-05, CEPII research center.
    19. Seguino, Stephanie, 2000. "Gender Inequality and Economic Growth: A Cross-Country Analysis," World Development, Elsevier, vol. 28(7), pages 1211-1230, July.

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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