Foreign trade strategies and economic performance: Nomothetic evidence and a single case

Foreign trade strategies and economic performance of twenty-eight middle-income countries are examined for the period 1973-85. Three perspectives are presented to explain their experiences: the export-led growth model, dependency theory, and rent-seeking theory. It was found that rapid economic growth and a higher physical quality of life are associated with outward-oriented strategies. Outward-oriented countries consistently perform better than inward-oriented ones, whether they have weak or strong rent-seeking groups. However, the NICs that achieved the highest growth rates by following a strongly outward-oriented trade policy, such as South Korea, Hong Kong and Singapore, have benefited from the unusual convergence of a variety of forces and circumstances such as political stability; long-term commitment to the strategy; holistic implementation of the strategy; requisite labor skills; an industrial base; adequate infrastructure; manageable labor costs; right market size, etc. Countries that adopt the export-led growth strategy without meeting these conditions (e.g. Brazil, Turkey) may be faced with problems of distributional inequality even if they may achieve high growth rates.