No. 23/2002
LEARNING BY EXPORTING AND PRODUCTIVITY-INVESTMENT
INTERACTION: AN INTERTEMPORAL GENERAL EQUILIBRIUM ANALYSIS OF THE GROWTH
PROCESS IN THAILAND
Xinshen Diao
Jørn Rattsø
Hildegunn Ekroll Stokke
Abstract:
While the discussion of Thailand and East Asian growth has been a controversy
between capital accumulation and productivity stories, we analyze the
general equilibrium interaction between productivity and investment in
an intertemporal model. The model builds in endogenous productivity spillover
effects influencing profitability and investment and produces long run
growth effects of economic policy. To understand the growth process in
Thailand, learning by exporting is assumed to be the main vehicle of international
spillover and brings further productivity effects to the domestic economy.
The dynamic simulations show how high economic growth is prolonged by
multisector productivity and investment dynamics and structural shift
from agriculture to exportables. The importance of trade liberalization
is shown in a counterfactual analysis where protection holds back growth
by serving as a barrier to productivity spillover.
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