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Export Development, Diversification, and Competitiveness: How Some Developing Countries Got It Right

Salomon Samen's picture

A Paper for Discussion

In recent decades, export competitiveness in a changed and increasingly changing world has been at the heart of growth and development debates in almost all countries. Drawing upon the lessons of experience of the most successful exporters in the developing world1, this paper provides an overview of institutions and policy practices successfully experienced for the expansion and diversification of exports, and the strengthening of industrial competitiveness in some developing countries.

Although exports are important for growth and development, developing countries have been struggling with the challenge of expanding and diversifying their export baskets beyond their primary product bases for a long time. Based on research in recent two decades, it is now well established that, openness to trade and integration into global markets is a central element of successful growth strategies; and higher and sustained economic growth is associated with export growth (Dollar and Kraay (2001).

Against the background of growing disparity in income between the developed and the developing world due in large part to divergence in industrial competitiveness, the central question has always been: what can and should be done in developing countries to boost their export growth, accelerate their export diversification and enhance their competitiveness in international markets? While there is considerable agreement on some of the policy lessons learned from successful exporters of the developing world (need for sound macroeconomic management, appropriate exchange rate and general encouragement to exporters), there is more controversy on the role and usefulness of some other policies and particularly on selective policies targeted to specific activities. However, a look at the experience of the most successful exporters of the developing world that were able to reverse more than a hundred years of sluggish development and achieve unprecedented manufacturing performance, suggests that they may have done something right.

After clarification on the importance of exports and related basic concepts - export development, export diversification, and export competitiveness - (see Section 1 of the paper), this paper examines the rationale, role, and usefulness of export oriented trade policy measures and selective industrial interventions policies in the context of developing countries (see Section 2). Because the past can be the best guide for the future, the paper also reviews policy practices and institutions that have played a critical role in export development and industrialization of the most successful exporters of the developing world (see Section 3).

The paper concludes with a brief highlight of challenges to be faced by late industrializers in an increasingly globalized world.
 

We are opening the topic for discussion! Please view the full copy here, and feel free post any thoughts or comments you might have.

 

1. The most successful exporters of the developing world include: the “original Asian tigers” (Hong-Kong, South Korea, Singapore and Taiwan), the “New Asian tigers” (Indonesia, Malaysia, and Thailand), as well as China, India, Argentina, Brazil, Chile, Mexico, and Turkey. Since Alice H. Amsden, (2001), some authors refer to these countries as the “ Rest” in contrast to the “ West” in relation to their late industrialization. High Performing Asian Economies (HPAE including original tigers, new tigers and Japan) were particularly able to achieve highest sustained growth (25 times faster than Sub-Saharan Africa since 1960) combined with equitable income distribution.

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