EFFECTS OF WORLD DEMAND AND COMPETITIVENESS ON EXPORTS AND ECONOMIC-GROWTH

There is little consensus in the development literature on whether it is supply explanations such as competitiveness levels, or, the externa l demand structure which drive the link between exports and economic g rowth. This paper attempts to reconcile the polarization of the aforem entioned viewpoints by examining the effects of both world demand and a country's competitiveness in exports on the relationship between exp ort growth and economic growth. The results indicate that only develop ing countries which are highly competitive and which also face relativ ely favorable external demand for their exports experience above-avera ge growth. Weak external demand reduces the positive effects of export s on growth substantially but may be offset by high levels of competit iveness in trade. The results imply that both regional and Third World growth studies on the link between exports and economic growth would profit more from integrating both supply as well as external demand ex planations rather than succumb to one of the two viewpoints.