Trade : engine or handmaiden of growth? With reference to South Korea and Taiwan

Corcoran, Angela Jane. (1988). Trade : engine or handmaiden of growth? With reference to South Korea and Taiwan Honours Thesis, School of Economics, University of Queensland.

       
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Author Corcoran, Angela Jane.
Thesis Title Trade : engine or handmaiden of growth? With reference to South Korea and Taiwan
School, Centre or Institute School of Economics
Institution University of Queensland
Publication date 1988
Thesis type Honours Thesis
Total pages 97
Language eng
Subjects 14 Economics
Formatted abstract The relationship between exports and economic development has been examined comprehensively in the literature, under the rubric of 'economic development'. Trade obviously has an important role to play in the development process. In the literature the potential effect of trade on development is assumed to be exogenous, in that external demand factors rather than internal conditions are necessary to promote the beneficial effects of trade. Given these external factors exist, trade has been assumed to be an "engine of growth" if LDCs allow export sectors to develop according to static comparative advantage. This thesis suggests that trade in fact is a "handmaiden of growth", and that internal factors allow an economy to exploit any gains that trade opportunities may offer. However the internal characteristics of each LDC are far from identical. Thus it is argued that it is hard to justify an a priori approach to economic development, and rather, an ad hoc approach is needed.

Examination of South Korea and Taiwan illustrate the crucial rloe of internal factors on economic development. In particular, the role of government can not be ignored. As government intervention in the economic sphere can not be accomodated within the neoclassical paradigm, it may be necessary, given the success of countries such as Korea and Taiwan, to extend the theory of trade and development to include internal factors as important contributors to development. It is also argued that the static theory of comparative advantage cannot adequately explain the composition and direction of trade in the current environment. Rather, dynamic forces are at work, and have led to the emergence of created comparative advantage, revealed comparative advantage, and intra-industry trade.

 
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