Export promotion, learning by doing and growth

This paper explores the quantitative link between export-promoting commerci al policies and economic growth. We build and calibrate a dynamic general e quilibrium model of a small developing economy. The economy's equilibrium i s suboptimal due to monopolistic competition in the manufacturing sector an d a human capital accumulation externality. Second-best commercial policy t hat promotes exports in the sector with the externality can lead to an incr ease in both welfare and growth rates. We show that export-promoting polici es can lead to substantial quantitative increases in steady-state growth fo r a wide range of parameter values. (C) 1999 Published by Elsevier Science B.V. All rights reserved.