SOAS Research Online

Abstract

This thesis contributes to the debate surrounding the export-led development hypothesis by critically examining its theoretical and empirical validity. The first part of this thesis challenges different versions of comparative advantage theory and argues that the theoretical foundations of the theory are weak. The second chapter goes beyond the conventional critiques, which focus on the assumptions of Ricardian comparative advantage theory, and argues that the real weakness of the theory can be found in its static nature and its simplistic treatment of labour theory of value. The third chapter argues that the neoclassical version of the theory has fundamental problems in its interpretation of capital and labour as factor endowments. It also questions the relevance of empirical work by arguing that even if the theory could predict the trade pattern of a country correctly, this would not prove its accuracy. The first part of chapter four challenges the 'dynamic' versions of comparative advantage theory and argues that the theory is static in its nature and cannot be made dynamic. The second part of this chapter evaluates the debate over trade policies and attempts to clarify the confusion over the definitions of import-substitution and export-promotion. The third part summarises and critically evaluates the controversy over the so-called export pessimism and provides theoretical and empirical evidence in support of its validity. The second part of this thesis investigates the empirical support for the export-led development hypothesis. Chapter five questions the relevance of the empirical literature by examining the measures of openness and techniques that are used. It argues that the majority of the literature is irrelevant and does not provide meaningful evidence to support or reject the export-led development hypothesis. Chapter six offers an alternative measure of trade openness, which is based on a 'structurally adjusted trade intensity' index, and empirically tests whether openness accelerates economic growth. Chapter seven criticises the World Bank's 1993 report on Asia and shows its weaknesses in terms of the trade policies adopted by Asian countries. The final chapter concludes by suggesting an alternative interpretation of the recent popularity of export-led development policies.