نرخ واقعی ارز و توسعه اقتصادی

Recent empirical studies have found a robust correlation between competitive exchange rates and economic growth in developing economies. This paper presents (i) a formal model to help explain these findings and (ii) econometric evidence on the relation between investment and the real exchange rate. The model emphasizes the existence of (hidden) unemployment as a source of endogenous growth, even under constant returns to scale. Growth promoting policies, however, affect the external balance, and two instruments are needed in order to achieve targets for both the growth rate and the trade balance. The real exchange rate can serve as one of those instruments. The implications of the model for the relation between real exchange rates and the rate of capital accumulation find support in our econometric analysis.

Recent studies have found a robust correlation between competitive exchange rates and economic growth. An interesting example is the study by Hausmann et al. (2005) which identified and analyzed determinants of ‘growth episodes’ in the latter half of the twentieth century and found that real exchange depreciations tend to precede sustained growth spurts. Other work includes Razin and Collins, 1997, Polterovich and Popov, 2002, Levy-Yeyati and Sturzenegger, 2007, Gala, 2008 and Rodrik, 2008, and Berg et al. (2008). This emerging body of empirical evidence – along with East Asia's rapid accumulation of reserves in the pursuit of what is widely seen as ‘export-led growth’ – has stimulated interest in the theoretical linkages between the real exchange rate and growth. The growth enhancing effects of competitive exchange rates are found primarily in developing countries,1 and this finding motivates our approach in this paper. Unlike developed economies, LDCs typically have large amounts of (hidden) unemployment and the development process involves the mobilization of these unemployed resources. An obvious example is China where record growth rates over the last three decades have involved moving millions of workers from the rural hinterland to the industrialized urban areas, mainly in the coastal provinces in the south and south east. The rural areas have low productivity and significant under- and informal employment, and the goods produced in these informal sectors tend to be relatively non-traded in nature.

The theoretical part of this paper analyzed an economy with significant amounts of open and/or hidden unemployment. In this economy, non-tradable output and employment are demand-led, and an investment stimulus can affect both the level of output and the growth rate. But growth is not export-led in the sense of net exports acting as a necessary driver of demand. Instead, there is a close affinity with the argument presented by Rodrik (1997) who saw investment promotion rather than exports as key to growth in Taiwan and Korea. Investment promotion, however, has implications for the balance of payments and requires a suitable real exchange rate policy in order to be sustainable. Thus, the real exchange rate becomes a critical element of successful development.