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According to the export-led growth hypothesis (ELGH), it is not only through increased application of labour and capital that overall growth of the national economies is possible but this can also be done through raising the levels of exports. According to the proponents of ELGH, exports can serve as an “engine of growth.” (Smith, 2001, p. 1) This theory of export-led growth has ample practical support from various countries, especially the developing countries. In recent times, trade policies of many developing nations have indeed become similar as the common believe has been that liberalization aimed at promoting exports is the panacea for all growth ills. Many unsuccessful cases of import substitution, led to trade policy shift to export promotion. The success stories of East Asian nations such as Singapore, Taiwan, Hong Kong and South Korea with respect to manufacturing exports have inspired others to emulate the policy of export promotion even for themselves. However, in recent times the strategy of export-led growth has received a severe drubbing as the Japanese and South Korean manufacturing export-led growth have cooled down. A major global recession would certainly cause difficulties for unhindered growth of these export-led nations. This crisis-driven slump in exports have in many countries has accentuated the significance of generating more domestic demand.
The theoretical link between economic growth and trade is centuries old. The earliest proponent of the positive relationship between trade and economic growth is the classical economist Adam Smith. Subsequently, other classical economists such as James Mills, John Stuart Mill, Ricardo and Torrens improved upon the theory of Smith. Since then, the positive impact of trade on the economy has been well established through indisputable benefits of international specialization and productivity gain. In this context, Ibrahim (2002)
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Economic growth is one of the major macroeconomic objectives. Economic growth is regarded as a necessary and desirable feature of modern economies . Economic growth is widely defined as ‘the sustained increase in real per capita incomes’ .
The fact that the United States is still the leading economy notwithstanding; this country has managed to capture markets both in the developing and developed nations, especially due to the reduced prices on their products facilitated by cheap labor in the home country.
This is primarily achieved through the exportation of products for which the country has substantive comparative advantages. Export-led growth theory provides for the opening of domestic markets and allowing for foreign competition in exchange for access to the markets of foreign nations.
However, the real GDP per person in the country more than doubled between 1963 and 2003 (Parkin 425). In the rest of the world, specifically Asia, the growth in real GDP was even greater.
Specifically, a look at the world's seven biggest economies (United States, Japan, Canada, France, Germany, Italy and United Kingdom) shows that real GDP per person has grown steadily from 1963 to 2003.
GDP refers to the value of goods and services produced within the domestic boundary of a country within a given time period. Whenever the GDP rises over time we can say that the concerned country has experienced economic growth. (Branson 1989)
In this context, one thing should be remembered that the GDP is a money value of the goods and services.
The East and South-East Asian countries from the Asia-Pacific region have recently had a excellent record of surging economic and financial performance. These countries include Thailand, Malaysia, Indonesia and Philippines. The significant economic growth in this region outclassed the performance of any other region in the last decade.
In a sense, economic development is the creation of wealth for all people so that citizens can have access to increased standard of leaving. It can be measured by job creation, increase in taxable basis and economic
No country can develop properly if they rely entirely on other parameters of economic growth. According to The Economist article, A special report on Americas economy: Export or die, “a country’s relative trade
Negative growth is when the economy is in recession and depression and vice versa and that is, the reason and features the article covers effectively. I suggest that an increase in economic growth is associated with improvement in the living standards of people.
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