Aveneu Park, Starling, Australia

It’s in Canada because various policies had

It’s a known and well proven fact that a country can’t grow solely on the basis of domestic production and consumption. It needs to import various inputs and technical progress as well at times. At the same time, it is necessary to be able to produce in surplus so that it can be exported to be sold in international market. There have been multiple research papers and journals that prove the above fact by taking into consideration the data obtained from various different countries across the globe. What we aim to prove is the same theory being applicable to India as well. We would like to list out some of the research papers and journals we came across and their finding.One of those papers is “The rise and fall of export led growth rate” by Thomas I. Palley published in July 2011(http://www.levyinstitute.org/pubs/wp_675.pdf). While this paper focuses on the declining rate of growth rate due to exports, we would only look into the growth due to exports. This concept comes into prominence during the late 1970s. The claims of export led growth rate are based on the success of the four East Asian Tiger economies (South Korea, Hong Kong, Singapore, and Taiwan) which falls under stage 2 of export led growth rate. The stage 1 can be termed to be the one initiated by Germany and Japan post the World War 2 i.e. from 1945 onwards. All benefit from the global application of comparative advantage while developing countries gain an additional advantage due to an external focus. There are subsidies provided by the exporters for higher sales abroad which encourage greater exports. These efforts led to international economic integration. Corporations therefore embraced these ideas as it helped them in their global economic agenda. This led to globalization. The paper believes that the case for trade openness and export led growth rate was always over simplified and oversold. Due to widespread turn to openness and export led growth the global economy confronts an extended period of asymmetric stagnation marked by slowed growth in emerging markets and stagnation economies. The paper emphasizes to prove this in the later half.The 2nd article which we considered was “Is export led growth hypothesis valid for Canada?” by Titus O. Awokuse written published in 1995. It was a widely debated topic then in Canada because various policies had to be made and they would have to be designed accordingly if the hypothesis turned to be true. Application of recent developments in time series modeling and the inclusion of relevant variables omitted in previous studies help clarify the contradictory results from prior studies on the Canadian economy. This model also includes capital, laborsand foreign output shocks as they are found out to be statistically significant in the models. It says that export expansion acts as a catalyst for output growth both directly as a component of aggregate output as well as indirectly through efficient resource allocation, greater capacity utilization, exploitation of economies of scale and stimulation of technological improvement due to foreign market competition. They also fund to increase the import of capital goods which again help in increase of output and leading to more export again. The paper believes that real exchange rates also have a part to play. So, they can’t be ignored while designing the model. Thus, the function isY=FF(K,L);X,TT,Y*Where L,L,X,TT,Y* represent real capital, labor, real exports, real terms of trade and a foreign output shock respectively. Since this model focused on long run, the fluctuations that pose a problem during short run analysis weren’t hindering. The model found a co-integration between Canadian real exports, real GDP, and real terms of trade. One limitation of this study is the absence of an explanation for the contemporaneous relationship between exports and productivity growth.


I'm Simon!

Would you like to get a custom essay? How about receiving a customized one?

Check it out