Economic Growth and Development in China

Seminar paper from the year 2006 in the subject Business economics - Miscellaneous, University of Hamburg, language: English, abstract: If the need for a ¿Big Push¿ survives in an economy that is open to international trade

and capital movements, or if openness to trade and capital movements is sufficient to

overcome all poverty traps, these questions have daunted development economics

since its inception (Jaime et al. 1997).

In the last two hundred years, every country with high development and productivity

rates has industrialised. While in the eighteens century Britain, and in the twenties

century Korea and Japan grew rich, other countries remained poor. One of the

discussed causes for this underdevelopment might be the small domestic market.

While the idea started with Rosenstein-Rodan (1943)1, who thought the solution would

be aid and investment programs, since the 1960s advocates tend to the Idea that

openness of the economy resolve the problem of a small domestic market. The theory

is that openness would induce an export-led ¿Big Push¿ in terms of simultaneous

growth over different sectors (Murphy et al.1989, p.1003).

In the current discussion the ¿Big Push¿ induced by aid has its comeback in the

Millennium Development Goals from the UN (Easterly 2005, p.3). The focus of this

paper is on the East Asian countries, where the export-promotion-policy had had an

important role. But Trindade (2005, p.41) was the first author who interpreted the

coordination-problem as solvable with solely export-promotion, because of the naturally

coordination effect of exports (Asche, 2005, p.24 gloss 28). So the question is not if

exports are good for an economy, but if exports can induce a ¿Big Push¿ and thus

making aid superfluously.