Export-led growth and development as diversification

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There are few exceptions to the essential initiating role of a successful export sector in the early stages of accelerated growth of market economies. The reason is that the domestic market has been small and scattered… An expanding external market has provided the means for an increase in the size of the domestic market, growth in money income, and the spread of specialization and division of labor…

Why does one area remain tied to a single export staple while another diversifies its productions and becomes an urbanized, industrialized economy? Regions or nations which remain tied to a single export commodity almost inevitably fail to achieve sustained expansion. Not only will there be a slowing down in the rate of growth of the export good or service which adversely affects development, but the fact that the ecnomy remains tied to a single industry will mean that specialization and division of labor outside that industry are limited.

A new essay synthesizing the ideas of Johnson, Ostry, and Subramanian with Carrère, Strauss-Kahn, and Cadot? Not exactly. That passage comes the opening pages of Douglass C. North’s The Economic Growth of the United States, 1790-1860, written in 1961.

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