Economic Growth and Development in China

International Trade and the “Big Push"

Hausarbeit , 2006 , 18 Seiten

BWL - Sonstiges

If the need for a „Big Push“ survives in an economy that is open to international trade
and capital movements, or if openness to trade and capital movements is sufficient to
overcome all poverty traps, these questions have daunted development economics
since its inception (Jaime et al. 1997).
In the last two hundred years, every country with high development and productivity
rates has industrialised. While in the eighteens century Britain, and in the twenties
century Korea and Japan grew rich, other countries remained poor. One of the
discussed causes for this underdevelopment might be the small domestic market.
While the idea started with Rosenstein-Rodan (1943)1, who thought the solution would
be aid and investment programs, since the 1960s advocates tend to the Idea that
openness of the economy resolve the problem of a small domestic market. The theory
is that openness would induce an export-led „Big Push“ in terms of simultaneous
growth over different sectors (Murphy et al.1989, p.1003).
In the current discussion the „Big Push“ induced by aid has its comeback in the
Millennium Development Goals from the UN (Easterly 2005, p.3). The focus of this
paper is on the East Asian countries, where the export-promotion-policy had had an
important role. But Trindade (2005, p.41) was the first author who interpreted the
coordination-problem as solvable with solely export-promotion, because of the naturally
coordination effect of exports (Asche, 2005, p.24 gloss 28). So the question is not if
exports are good for an economy, but if exports can induce a „Big Push“ and thus
making aid superfluously.

Inhaltsverzeichnis (Table of Contents)

• Introduction
• The "Big Push" and International Trade
  • The "Big Push"
  • The "Big Push" and International Trade
  • Evidence from East-Asia
• Conclusion

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This paper examines the relationship between international trade and the "Big Push" theory, particularly focusing on whether an open economy can overcome development traps or simply foster economic growth without inducing a "Big Push".

• The "Big Push" theory and its assumptions, including multiple equilibria, coordination failure, and the small market trap.
• The role of international trade in facilitating the "Big Push", particularly the model of Trindade (2005).
• Empirical evidence from East Asian countries showcasing the impact of export promotion policies.
• The question of whether exports can induce a "Big Push" and render aid superfluous.
• The importance of understanding the conditions under which international trade can effectively promote development.

Zusammenfassung der Kapitel (Chapter Summaries)

The first chapter introduces the concept of the "Big Push" and its relevance in the context of international trade. It discusses the historical context and the potential of open economies to overcome development traps. The second chapter delves into the "Big Push" theory, outlining its assumptions and exploring the role of international trade in inducing a "Big Push" based on Trindade's model. The chapter also critically examines the possibilities and limitations of international trade in facilitating development. The final chapter presents empirical evidence from East Asian countries, highlighting the impact of export-promotion policies on economic growth and development.

Schlüsselwörter (Keywords)

This paper focuses on the relationship between international trade, economic development, and the "Big Push" theory. Key concepts include development traps, multiple equilibria, coordination failure, small market trap, export-led growth, and the role of international trade in promoting industrialization and overcoming poverty traps. The paper also draws upon empirical evidence from East Asian countries, specifically focusing on the impact of export-promotion policies.

• Hochschule: Universität Hamburg
• Autor: Vivien Gröning (Autor:in)
• Erscheinungsjahr: 2006
• Seiten: 18
• Katalognummer: V142142
• ISBN (eBook): 9783640510757
• ISBN (Buch): 9783640510856
• Sprache: Englisch
• Schlagworte: Economic, Growth, Development, China, International, Trade, Push