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.



National and supranational institutions and trade

There should be very few people, if any, in this day and age who doubt that there have been major gains from trade. Since the 1960s, the world has seen momentous progress in trade volumes, consistently outpacing worldwide growth in gross domestic product (GDP). Such advances have been explained repeatedly in the international trade literature both theoretically and empirically (e.g.: Helpman and Krugman, 1985; Feenstra, 2004; and Lejour and Nahuis, 2005). Efficiency gains from trade to its participants have been quantified for numerous countries. Hufbauer and Grieco (2005) stated that an average American household enjoys annual benefits worth about US$ 10,000 from ‘shrinking distances’ and increasingly relaxed policy barriers to trade and investment in recent decades. Badinger (2005) estimated that the European Union countries would have had 20 per cent lower income per capita, on average, in the absence of international economic integration.


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