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Trade-led Growth

A Sound Strategy for Asia

image of Trade-led Growth
The global economic crisis triggered changes in real economies and trade in all countries, including those in Asia, which adopted the so-called export-led growth model. With these drastic changes in trade flows, and the need to counteract potential adverse effects, the old debate on the advantages and flaws of the export-led model has re-opened. It aims to provide some theoretical and empirical reasons towards an argument that for developing Asian economies, export-led growth is still a valid model of stable, equitable and sustainable growth. It also combines local research with that of established ones. While there is extensive literature focusing on the role of openness and trade in a country’s development, much of it dates to before the most recent global crisis. Volumes that were recently published argue against an export-led growth strategy, while this volume argues in defence of trade-led growth for the Asian region.

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Resiliency of production networks in Asia: Evidence from the Asian crisis

Despite the financial origins of the recent economic downturn in the United States and Europe, the impact on Asian countries has been felt primarily through trade channels. The export-oriented manufacturing industries and countries dependent on them have been hit the hardest in Asia (Asian Development Bank, 2009a and 2009b). Due to a drastic drop in external final demand for manufactured goods produced in Asian countries, concern is greatest regarding the adverse effects of the global financial crisis and economic downturn on the real economies of the region. According to the latest Asian Development Bank (2009b) data in the second quarter of 2009 industrial production and exports in newly-industrialized economies (i.e., the Republic of Korea, Singapore, Taiwan Province of China and Hong Kong, China) were already showing the beginning of what might be a V-shaped recovery Nevertheless, there is concern about the overdependence on external final demand and that, through international production networks stretched across the region, Asian countries will continue to suffer from the deteriorating economic conditions outside the region that are centred on the United States.

English

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