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Is there persistence in the growth of manufactured exports? Evidence from newly industrializing countries

  • Mody, Ashoka
  • Yilmaz, Kamil
  • DEC

Price and income elasticities estimated from a country's export demand function are used both to predict and to prescribe effective export strategies. But the focus on elasticities has led to the neglect of an important empirical regularity: a strong persistencein the growth rate of a country's exports. The authors shift the spotlight to this phenomenon and describe the degree and pattern of persistence. They find that a country's exports are influenced not only by the elasticities, but also by the quality of its transactional infrastructure (proxied by the penetration of telecommunications). More important, when world income rises, exports rise relatively uniformly for different country groups. As world income contracts, the decline in exports is greater and is especially sharp for certain countries. The authors infer from this asymmetry in income elasticity of demand, and from the observed persistence of exports, that long-term buyer supplier relationships lead to the creation of"insiders"and"outsiders"in the world market for manufactured goods, a condition that tends to perpetuate itself.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1276.

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Date of creation: 31 Mar 1994
Date of revision:
Handle: RePEc:wbk:wbrwps:1276
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  1. Landesmann, Michael & Snell, Andrew, 1989. "The Consequences of Mrs. Thatcher for U.K. Manufacturing Exports," Economic Journal, Royal Economic Society, vol. 99(394), pages 1-27, March.
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  3. Marquez, Jaime & McNeilly, Caryl, 1988. "Income and Price Elasticities for Exports of Developing Countries," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 306-14, May.
  4. William Alterman, 1991. "Price Trends in U.S. Trade: New Data, New Insights," NBER Chapters, in: International Economic Transactions: Issues in Measurement and Empirical Research, pages 109-143 National Bureau of Economic Research, Inc.
  5. Krugman, Paul, 1979. "A Model of Innovation, Technology Transfer, and the World Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 253-66, April.
  6. Feenstra, Robert C, 1994. "New Product Varieties and the Measurement of International Prices," American Economic Review, American Economic Association, vol. 84(1), pages 157-77, March.
  7. Riedel, James, 1988. "The Demand for LDC Exports of Manufactures: Estimates from Hong Kong," Economic Journal, Royal Economic Society, vol. 98(389), pages 138-48, March.
  8. Muscatelli, Vito Antonio & Srinivasan, T G & Vines, David, 1992. "Demand and Supply Factors in the Determination of NIE Exports: A Simultaneous Error-Correction Model for Hong Kong Exports," CEPR Discussion Papers 671, C.E.P.R. Discussion Papers.
  9. Muscatelli, V A & Srinivasan, T G & Vines, D, 1992. "Demand and Supply Factors in the Determination of NIE Exports: A Simultaneous Error-Correction Model for Hong Kong," Economic Journal, Royal Economic Society, vol. 102(415), pages 1467-77, November.
  10. Egan, Mary Lou & Mody, Ashoka, 1992. "Buyer-seller links in export development," World Development, Elsevier, vol. 20(3), pages 321-334, March.
  11. Krugman, Paul, 1989. "Differences in income elasticities and trends in real exchange rates," European Economic Review, Elsevier, vol. 33(5), pages 1031-1046, May.
  12. Pashigian, B Peter, 1988. "Demand Uncertainty and Sales: A Study of Fashion and Markdown Pricin g," American Economic Review, American Economic Association, vol. 78(5), pages 936-53, December.
  13. Zvi Griliches & Jerry A. Hausman, 1984. "Errors in Variables in Panel Data," NBER Technical Working Papers 0037, National Bureau of Economic Research, Inc.
  14. Paul R. Krugman & Richard E. Baldwin, 1987. "The Persistence of the U.S. Trade Deficit," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(1), pages 1-56.
  15. Aw, Bee Yan, 1992. "An empirical model of mark-ups in a quality-differentiated export market," Journal of International Economics, Elsevier, vol. 33(3-4), pages 327-344, November.
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