Seminar paper from the year 2006 in the subject Business economics – Miscellaneous, University of Hamburg, language: English, abstract: If the need for a „Big Push“ survives in an economy that is open to international trade
and capital movements, or if openness to trade and capital movements is sufficient to
overcome all poverty traps, these questions have daunted development economics
since its inception (Jaime et al. 1997).
In the last two hundred years, every country with high development and productivity
rates has industrialised. While in the eighteens century Britain, and in the twenties
century Korea and Japan grew rich, other countries remained poor. One of the
discussed causes for this underdevelopment might be the small domestic market.
While the idea started with Rosenstein-Rodan (1943)1, who thought the solution would
be aid and investment programs, since the 1960s advocates tend to the Idea that
openness of the economy resolve the problem of a small domestic market. The theory
is that openness would induce an export-led „Big Push“ in terms of simultaneous
growth over different sectors (Murphy et al.1989, p.1003).
In the current discussion the „Big Push“ induced by aid has its comeback in the
Millennium Development Goals from the UN (Easterly 2005, p.3). The focus of this
paper is on the East Asian countries, where the export-promotion-policy had had an
important role. But Trindade (2005, p.41) was the first author who interpreted the
coordination-problem as solvable with solely export-promotion, because of the naturally
coordination effect of exports (Asche, 2005, p.24 gloss 28). So the question is not if
exports are good for an economy, but if exports can induce a „Big Push“ and thus
making aid superfluously.
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