Trade Strategy, Investment and Exports: Another Look at East Asia

In: Pacific economic review, Band 2, Heft 1, S. 1-24

Abstract

The export booms in South Korea and Taiwan starting in the early 1960s are anomalous when compared with later export booms in non‐East Asian countries such as Chile and Turkey. First, these booms have taken place in the context of comparatively small changes in relative prices in favor of exportables. Second, they have been associated from the start with booms in investment. This paper offers evidence and a formal model to suggest that exports in East Asia may have been driven by an increase in the profitability of investment, with outward orientation a consequence of the investment boom rather than its instigator.