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The Renminbi and Poor‐country Growth

Author

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  • Christopher Garroway
  • Burcu Hacibedel
  • Helmut Reisen
  • Edouard Turkisch

Abstract

Discussions on how best to exit from global imbalances to create a more balanced world economy have ignored the impact on poor countries of proposals to redress these imbalances. This paper aims at filling that gap. It gauges the degree of renminbi (RMB) undervaluation; presents evidence on RMB undervaluation and China’s GDP growth rate; surveys the role of the real effective exchange rate – both its level and its stability over time – for underpinning growth in developing countries, especially in large dual economies such as China and India; finally, the paper presents new evidence on growth linkages between China and poor countries for the last two decades and surveys literature on potential displacement effects of RMB appreciation. The analysis allows broad conclusions to be drawn about the potential developing-country beneficiaries and losers from various renminbi adjustment scenarios in the forthcoming years. Les discussions sur la meilleure façon de sortir des déséquilibres mondiaux afin de créer une économie mondiale plus équilibrée ont ignoré l'impact sur les pays pauvres des propositions visant à corriger ces déséquilibres. Le présent document vise à combler ce manque. Il évalue d’abord le degré de sous-évaluation du renminbi (RMB) ; il décrit ensuite les évolutions simultanées du degré de sous-évaluation du RMB et du taux de croissance du PIB chinois ; puis, il passe en revue le rôle du taux de change effectif réel - à la fois son niveau et sa stabilité au cours du temps – dans la croissance des pays en développement, surtout dans les grandes économies duales comme la Chine et l'Inde ; enfin, le document présente de nouvelles analyses sur les liens, au cours des deux dernières décennies, entre la croissance chinoise et celle des pays pauvres et passe en revue la littérature traitant des effets potentiels de l'appréciation du RMB sur la croissance. L'analyse permet d’identifier parmi les pays en développement, les bénéficiaires et perdants potentiels, en fo
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  • Christopher Garroway & Burcu Hacibedel & Helmut Reisen & Edouard Turkisch, 2012. "The Renminbi and Poor‐country Growth," The World Economy, Wiley Blackwell, vol. 35(3), pages 273-294, March.
    • Handle: RePEc:bla:worlde:v:35:y:2012:i:3:p:273-294
    DOI: j.1467-9701.2011.01408.x
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Euphoric End-of-Poverty Declarations May Be Based on Wrong Premises
      by Guest author in OECD Insights on 2014-02-03 12:53:54
    2. PBoC sets the RMB free and it ... falls
      by Shifting Wealth in ShiftingWealth on 2012-04-16 14:14:00
    3. MGG Public Lecture (30 July 2012, at GDI/DIE)
      by Shifting Wealth in ShiftingWealth on 2012-07-29 17:43:00
    4. Toward Shifting Wealth Phase II
      by Shifting Wealth in ShiftingWealth on 2012-08-10 19:06:00
    5. Is the Asian Market Slump Due to China´s Monetary Policy?
      by Shifting Wealth in ShiftingWealth on 2013-08-21 20:25:00
    6. Euphoric End-of-Poverty Declarations May Be Based on Wrong Premises
      by Shifting Wealth in ShiftingWealth on 2014-01-19 00:22:00
    7. Covid-19: Does rich-country lockdown raise poor-country child mortality?
      by ReibReisen in ShiftingWealth on 2020-05-29 15:55:00
    8. The world now grows in Fosbury style
      by Shifting Wealth in ShiftingWealth on 2011-04-05 14:59:00
    9. Global Rebalancing: A Modest Role for the RMB
      by Shifting Wealth in ShiftingWealth on 2011-05-18 17:42:00

    Citations

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    Cited by:

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    2. Jinzhao Chen, 2015. "Interprovincial Competitiveness and Economic Growth: Evidence from Chinese Provincial Data (1992–2008)," Pacific Economic Review, Wiley Blackwell, vol. 20(3), pages 388-414, August.
    3. Yin-Wong Cheung & Sven Steinkamp & Frank Westermann, 2020. "A Tale of Two Surplus Countries: China and Germany," Open Economies Review, Springer, vol. 31(1), pages 131-158, February.
    4. Kappler, Marcus & Reisen, Helmut & Schularick, Moritz & Turkisch, Edouard, 2013. "The Macroeconomic Effects of Large Exchange Rate Appreciations," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 24(3), pages 471-494.
    5. Hu, May & Li, Yunfeng & Yang, Jingjing & Chao, Chi-Chur, 2016. "Actual intervention and verbal intervention in the Chinese RMB exchange rate," International Review of Economics & Finance, Elsevier, vol. 43(C), pages 499-508.
    6. Bräutigam, Deborah & Tang, Xiaoyang, 2014. "“Going Global in Groups”: Structural Transformation and China’s Special Economic Zones Overseas," World Development, Elsevier, vol. 63(C), pages 78-91.
    7. Zhibai Zhang & Langnan Chen & Xinyue Zou, 2015. "RMB Undervaluation and Appreciation," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(12), pages 1267-1281, December.
    8. Jinzhao Chen, 2012. "Real Exchange Rate and Economic Growth: Evidence from Chinese Provincial Data (1992 - 2008)," PSE Working Papers halshs-00667467, HAL.
    9. Bonatti, Luigi & Fracasso, Andrea, 2013. "Regime switches in the Sino-American co-dependency: Growth and structural change in China," Structural Change and Economic Dynamics, Elsevier, vol. 25(C), pages 1-32.
    10. Zhang, Zhibai, 2012. "A simple model and its application in currency valuation," MPRA Paper 40650, University Library of Munich, Germany.
    11. Rashmi Banga, 2014. "Has South Asia Benefited from the Growth of Asian Emerging Economies?," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 6(3), pages 205-232, September.
    12. Zhibai Zhang & Xinyue Zou, 2013. "The Ratio Model and its Application: A Revisit," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 3(6), pages 1-4.
    13. Zhang, Zhibai & Chen, Langnan, 2014. "A new assessment of the Chinese RMB exchange rate," China Economic Review, Elsevier, vol. 30(C), pages 113-122.

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    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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