Exports, Outward-Oriented Development, and Economic Growth

Abstract

The World Bank has urged poor nations to adopt development strate gies which emphasize export expansion, dismissing the caution against excessive trade dependence voiced by political economists. In reexamin ing the Bank's much-cited analyses which suggest that "outward-oriented" nations have experienced more rapid growth, this study uncovers three findings which challenge its apparent implications. First, nations charac terized as following outward-oriented development do not trade notably more than those regarded as inward-oriented. Second, outward-oriented nations do not expand their trade at a rate strikingly different from other countries. Third, it is not apparent that export expansion is the principal source of the superior macro-economic performance of so-called "out ward-oriented" nations. These findings raise questions about what is meant by "outward-oriented development." Moreover, because the structural claims of political economists concerning the dangers of trade depen dence cannot be easily refuted, the counsel that nations should focus development efforts on expanding exports needs to be very carefully circumscribed.