ASSESSING EXPORT OPTIMISM VERSUS EXPORT PESSIMISM IN TROPICAL COUNTRIES

This paper attempts to reconcile two major conflicting viewpoints rega rding the effects of export expansion on economic growth. The first, e xport optimism, looks to supply factors such as international competit iveness with the view that a favourable export performance results in significant economic growth for a country. The second, export pessimis m, argues that exports only contribute significantly to a country's ec onomic growth when the external demand is favourable. Using the Expans ion Methodology, the paper shows that the effects of demand and supply factors on the relationship between export growth and economic growth are about the same. The results suggest that while unfavourable deman d weakens the aforementioned relationship, tropical countries can offs et this by being competitive in their exports. They also caution again st excessive weight being given to export-promotion by export optimist s as the exports-growth relationship weakens considerably when the ext ernal demand falls.