Export competitiveness: Reversing the logic

Even if one accepts the notion that export-led growth strategies can work, policymakers face the question as to whether it is a feasible approach for all countries at all times.

One body of literature, emerging already when Asian economies focused on exports to regain growth after the Asian crisis (Felipe, 2003), questions whether the export-orientation is still feasible if it is being pursued by a large number of countries in parallel.

It might have negative terms-of-trade effects if all exports focus on the same industries...

This is a possibility that has become very real over the last few years.
    
Export-oriented countries might get trapped in beggarthy-neighbour policies to capture share in the global market for exports instead of adding to global trade.

There is some evidence of this tension emerging in recent years, for example in Europe as German wage restraint improved its relative cost position on export markets.

In importing countries there might be a significant political economy backlash from sectors exposed to increasing foreign competition.

Here, too, pressure has been rising but so far there is “no significant intensification of trade or investment restrictions”.

Another set of contributions focuses more on the question whether export- orientation is feasible in the current economic climate.

On the demand side, the sluggish growth in advanced economy markets and the excess capacity globally might leave insufficient room for countries to achieve export growth strategies.