The Global Economy in Turbulent Times

CHAPTER 115 Export-Led Growth Model: Quo Vadis?¹

I leave very soon for Harvard in Cambridge (H1N1 flu notwithstanding) for my biannual Graduate School of Arts and Sciences Alumni Council meeting at the University, and to join the 358th commencement exercises (marking my 40th year since joining the university). Also, I have accepted the invitation to attend the Yale CEO Leadership Summit at the Stock Exchange in New York City. My hope is to gain a fresh perspective from the epicenter of our current problems.

Asia

For now, I want to discuss what it takes for Asia to change the parameters of each nation’s comfort zone—away from the export-led model that has brought such great prosperity to the world; and yet in recent times, so much misery. Indeed, the current state of play in the global economy bears testimony that this model has broken down. After all, what can you expect: Emerging countries in Asia are twice as dependent on exports as the rest of the world; and, as much as up to two-thirds of their gross exports eventually lands in the United States, eurozone, and Japan. The International Monetary Fund’s (IMF) regional forecast earlier this April expects even relatively resilient countries like South Korea, Taiwan, Singapore, Malaysia, and Thailand to be in recession this year.² Some are in a similar dire situation as Singapore, which recorded its 12th consecutive monthly export decline—falling as much as 19 percent by April 2009.

Even sophisticated exporters like Germany ...