Real Exchange Rate Policies for Economic Development: A Heterodox Interpretation

Abstract

Korea and Taiwan, to mention only two among the ‘fish-scale countries’ that are known as the industrialising little dragons, have been success stories in the recent experience of economic development. They have relied upon managed trade and targeted industrial policies to an extent that is not readily reconcilable with conventional views of development economics. Meanwhile, in developed countries latent tendencies for intervention and protectionism are coming to the surface in an attempt to deal with ‘economic management’ as practised by their trading partners.

This paper reports research in progress from a manuscript on ‘Trade and Development in the Real World’. It was written while I held a Visiting Research Professorship at the Institute of Economic Research, Kyoto University, for which I am grateful. I would also like to thank Nicholas Stern, Marcel Fafchamps and Gregor Binkert for helpful comments, as well as members of the seminar at the Korean Development Institute and the Economic Research Institute, Chung-Ang University, Seoul.