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Exports, Foreign Technology Imports, and Long-run Growth

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  • Heng-fu Zou

Abstract

A possible reason for the success of the export-oriented economies such as the East Asian "Tigers" is that exports enabled those countries to finance the accumulation of foreign technology and capital. This paper examines the theoretical foundations of this hypothesis. In an intertemporal optimization framework we divide a developing country's capital accumulation into two parts: traditional home-produced capital and imported foreign capital and technology. Exports are the means of financing the purchase of the latter. We show that an increase in exports leads to more home capital more foreign capital and more output in the long run. In addition export subsidies raise the long-run balanced growth rate while a terms-of-trade deterioration lowers the growth rate.

Suggested Citation

  • Heng-fu Zou, 1996. "Exports, Foreign Technology Imports, and Long-run Growth," CEMA Working Papers 477, China Economics and Management Academy, Central University of Finance and Economics.
    • Handle: RePEc:cuf:wpaper:477
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    Cited by:

    1. Klaus Wälde & Christina Wood, 2004. "The empirics of trade and growth: where are the policy recommendations?," International Economics and Economic Policy, Springer, vol. 1(2), pages 275-292, January.
    2. Nancy Benjamín & Peter Pogany, 1998. "Modeling Competitiveness in Hemispheric Trade Liberalization: An Application to Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 35(104), pages 127-138.
    3. Xiaoming Zhang & Heng-fu Zou, 1995. "Foreign technology imports and economic growth in developing countries," Policy Research Working Paper Series 1412, The World Bank.

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