Publication: Exports of Manufactures and Economic Growth: The Fallacy of Composition Revisited
Date
2008
ISSN
Published
2008
Author(s)
Cline, William R.
Abstract
The author's 1982 article on the fallacy
of composition questioned the feasibility of generalizing
the "G4" (Hong Kong (China), the Republic of
Korea, Singapore, and Taiwan (China)) growth model based on
rapid growth of exports, on grounds that if all developing
economies pursued it, their combined manufactured exports
would eventually trigger protection in industrial countries.
The1984 book of author identified a safe speed limit of
about 10-15 percent annually for growth of developing
country exports of manufactures, well below the 25-35
percent rate of Korea and Taiwan, China in the 1960s and
1970s. This study revisits this question in the light of a
quarter-century of experience. It finds that developing
countries' aggregate manufactured exports grew at about
10 percent annually, a robust pace but within the speed
limits he had envisioned. Even so, in key sectors such as
apparel, import penetration levels have exceeded thresholds
that his earlier estimates would have suggested would
provoke protection, suggesting the importance of increased
World Trade Organization (WTO) discipline. The base of
manufactured exports from poor countries remains small
relative to that of China and the original G4, so there
should be considerable room for export growth from these
newcomers. However, a new macroeconomic version of the
fallacy of composition problem could arise: the growing
tendency of China and some other major emerging market
economies to pursue rapidly rising trade surpluses that have
their counterpart in an increasingly unsustainable U.S.
current account deficit.
Link to Data Set
Citation
“Cline, William R.. 2008. Exports of Manufactures and Economic Growth: The Fallacy of Composition Revisited. Commission on Growth and Development Working Paper;No. 36. © World Bank, Washington, DC. http://hdl.handle.net/10986/28031 License: CC BY 3.0 IGO.”