Export Performance and Economic Growth

Abstract

All five economies have experienced spectacular development of foreign trade in the course of their rapid growth. Nevertheless, there are some differences in the pattern of foreign trade development. In Japan, rapid expansion of foreign trade began in the early twentieth century. Owing to the lack of natural resources, Japan’s industrialisation process relies heavily on imports which have to be financed by expanded exports. Ever since the early stage of modern economic growth, it seems that Japan has never doubted its export capabilities and in consequence it has always adopted an outward-looking policy in its process of growth in the modern era. Both Korea and Taiwan, on the other hand, had reservations about their export capabilities at the beginning of their industrialisation. As a result, it was not until the late fifties in the case of Taiwan and the early sixties in the case of Korea that they turned their attention from import substitution to export orientation. The cases of Hong Kong and Singapore are rather special. Before industrialisation took place, they were entrepôt trade economies taking advantage of their geographical location and fine harbours. It was largely historical factors (Communist takeover in China, Korean War, etc.) that caused Hong Kong to switch from entrepôt trade to manufacturing industries.¹ Owing to the small home market, Hong Kong’s manufactured products are mostly for exporting. In Singapore, on the other hand, both industrialisation and outward-looking policies are to a large extent the result of deliberate government action. Moreover, while the importance of entrepôt trade declines very rapidly after the beginning of industrialisation in Hong Kong, it has retained considerable importance in the Singapore economy.