The export market test


Tyler Cowen on exports and development:

Have you ever wondered why so many developing economies—the successful ones, I mean—rise to prosperity through exports and tradable goods? There are a few reasons for this, but one is that the external world market provides a real measure of value. If you are exporting successfully, it’s not based on privilege, connections, corruption, or fakery. Someone who has no stake in your country and no concern for your welfare is spending his or her own money to buy your product. Trying to export is putting your economy to the test with measurable results. If you can pass this test, it is a sign of better things to come.

There’s a massive debate about whether exports are a cause or symptom of good growth, but I think both sides agree with this point about the export market test.