| Title | Export-led growth |
|---|---|
| Contributor | Ricardo Hausmann (author) |
| DOI | https://doi.org/10.31389/lsepress.tlc.e |
| Landing page | https://doi.org/10.31389/lsepress.tlc.e |
| License | https://creativecommons.org/licenses/by-nc/4.0/ |
| Copyright | Author(s) |
| Publisher | LSE Press |
| Published on | 2025-10-16 |
| Short abstract | The Washington Consensus dismissed exports as an important focus of economic growth strategies. According to its principles, if countries unified exchange rates, reduced barriers to trade, and brought inflation under control, exports would adjust to their efficient level. Today, many countries have followed these precepts, and yet, the median country has not narrowed its income gap with the United States. Export performance matters for growth, with countries that grow exhibiting more than proportional export growth. In many developing and emerging economies, growth is highly correlated with exogenous movements in their export prices and on fluctuations in international capital flows. Moreover, sustained fast-growing economies change the composition of their export basket substantially towards new, more complex products. This chapter argues that a focus on exports, both at the intensive margin, but especially at the extensive margin, can help countries figure out what policies to adopt in order to achieve sustained growth. It highlights the critical role that technology adoption plays for long-term growth, but also the market failures that make the proverbial invisible hand of the market inefficient. The implication of this analysis is not a new list of fixed policies that all countries should adopt, as the way Washington Consensus intended. Instead, it is an organised and costly search process for growth opportunities, both at the intensive and extensive margins of production. This chapter includes responses to Ricardo Hausmann by Isabela Manelici and Danny Quah. |
| Long abstract | The Washington Consensus dismissed exports as an important focus of economic growth strategies. According to its principles, if countries unified exchange rates, reduced barriers to trade, and brought inflation under control, exports would adjust to their efficient level. Today, many countries have followed these precepts, and yet, the median country has not narrowed its income gap with the United States. Export performance matters for growth, with countries that grow exhibiting more than proportional export growth. In many developing and emerging economies, growth is highly correlated with exogenous movements in their export prices and on fluctuations in international capital flows. Moreover, sustained fast-growing economies change the composition of their export basket substantially towards new, more complex products. This chapter argues that a focus on exports, both at the intensive margin, but especially at the extensive margin, can help countries figure out what policies to adopt in order to achieve sustained growth. It highlights the critical role that technology adoption plays for long-term growth, but also the market failures that make the proverbial invisible hand of the market inefficient. The implication of this analysis is not a new list of fixed policies that all countries should adopt, as the way Washington Consensus intended. Instead, it is an organised and costly search process for growth opportunities, both at the intensive and extensive margins of production. This chapter includes responses to Ricardo Hausmann by Isabela Manelici and Danny Quah. |
| Language | English (Original) |
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Ricardo Hausmann is the founder and Director of Harvard’s Growth Lab and the Rafik Hariri Professor of the Practice of International Political Economy at HKS. His scholarly contributions have had a significant impact on the study and practice of economic growth policies. These include the development of the Growth Diagnostics and Economic Complexity methodologies, as well as several widely used economic concepts, such as Dark Matter, Original Sin, and Self-discovery and have been cited over 53,000 times. Since launching the Growth Lab in 2006, Hausmann has served as principal investigator for more than 50 research initiatives in over 30 countries, including the US, informing development policy, macroeconomic stabilisation, growth strategies and diversification agendas at the national, regional, and city levels. Before joining Harvard University, he served as the first Chief Economist of the Inter-American Development Bank (1994–2000), where he founded the Research Department. He has served as Minister of Planning of Venezuela (1992–93) and as a member of the Board of the Central Bank of Venezuela. He also served as Chair of the IMF-World Bank Development Committee. He was Professor of Economics at the Instituto de Estudios Superiores de Administración (1985–91) in Caracas, where he founded the Center for Public Policy. He holds a PhD in Economics from Cornell University.
Isabela Manelici joined the Department of Economics at LSE in the autumn of 2021 as an Assistant Professor. Isabela’s current research lies at the intersection of International Trade and Development Economics. A citizen of Romania, Isabela received her BA in Civil Engineering from École Nationale des Ponts et Chaussées (Paris), her MA in Economics and Finance from Centro de Estudios Monetarios y Financieros Madrid, and her PhD in Economics from UC, Berkeley in 2020. For the 2020–2021 academic year, Isabela Manelici was an International Economics Section Postdoctoral Research Associate in the Department of Economics at Princeton University. Prior to her graduate studies in Economics, she has worked as a Junior Professional Associate at the World Bank in Washington, DC.
Danny Quah is Li Ka Shing Professor in Economics, National University of Singapore. He works on world order, economic growth and development, and inequality and income mobility. In his research on world order, Quah analyses the supply and demand of international systems, contrasting the goals of the Great Powers and the needs of the global community. Quah’s work on income mobility challenges conventional narratives on inequality, highlighting the broad diversity of economic experiences across nations. Through academic research, public commentary, and as a member of World Bank President’s Economic Advisory Panel and other public commissions, as well as in advisory roles at WEF, United Nations Development Programme, government agencies and ministries, and elsewhere, Quah seeks to help shape global economic and geopolitical discourse. He is the author of ‘The Global Economy’s Shifting Centre of Gravity’ (2011) in the journal Global Policy.