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 tradeand capital movements or if openness to trade and capital movements is sufficient toovercome all poverty traps these questions have daunted development economicssince its inception (Jaime et al. 1997).In the last two hundred years every country with high development and productivityrates has industrialised. While in the eighteens century Britain and in the twentiescentury Korea and Japan grew rich other countries remained poor. One of thediscussed causes for this underdevelopment might be the small domestic market.While the idea started with Rosenstein-Rodan (1943)1 who thought the solution wouldbe aid and investment programs since the 1960s advocates tend to the Idea thatopenness of the economy resolve the problem of a small domestic market. The theoryis that openness would induce an export-led „Big Push in terms of simultaneousgrowth over different sectors (Murphy et al.1989 p.1003).In the current discussion the „Big Push induced by aid has its comeback in theMillennium Development Goals from the UN (Easterly 2005 p.3). The focus of thispaper is on the East Asian countries where the export-promotion-policy had had animportant role. But Trindade (2005 p.41) was the first author who interpreted thecoordination-problem as solvable with solely export-promotion because of the naturallycoordination effect of exports (Asche 2005 p.24 gloss 28). So the question is not ifexports are good for an economy but if exports can induce a „Big Push and thusmaking aid superfluously.