Question

The World Bank has studied the so-called East Asian miracle economies (China, Malaysia, Singapore, South Korea, etc.), concluding that the export-oriented and trade-oriented policies of these countries explain the remarkable economic growth these economies have sustained over time. But Harvard economist Dani Rodrik disagrees. He believes that international trade and the growth of exports were NOT the key factors causing these economies to grow fast. He points out that there were other forces that lie behind the economic success of these countries. What are those forces and do you agree with Rodrik or with the World Bank about the role of international trade and exports in the economic growth of the East Asian miracle economies? Please provide any research or evidence on these issues.

Answer 1

Export oriented and trade oriented policies of East Asian countries contribute significantly to their economic growth. Trade oriented policies make the countries earn foreign revenue and thus improving their financial condition and contributing towards economic development.

China can be taken as an example. The low cost labor available in China, technological growth and its trade relations with other countries and especiall United States lead to the growth of Chinese economy. US is the largest consumer of Chinese goods and China exports low cost products to several countries including India and thus earns foreign revenue leading to economic growth. Indian market is flooded with low cost China made products and thus much of job opportunities are available in China being export oriented and thus improving the economic growth of China.70% of Chinese products manufactured are directed towards the exports and thus country earns foreign revenue and leading to economic growth.