Nontraditional Export Promotion in Costa Rica: Sustaining Export-Led Growth

Abstract

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.. Center for Latin American Studies at the University of Miami is collaborating with JSTOR to digitize, preserve and extend access to Journal of Interamerican Studies and World Affairs. INTRODUCTIONN many Latin American countries during the 1980s, domestic elites joined with international development institutions to advocate structural adjustment policies as the solution to the region's "lost decade." Proponents of such policies sought economic rejuvenation based on export-led growth (ELG) strategies. The new ELG programs were to replace importsubstituting industrialization (ISI) schemes and complement traditional primary commodity exports with new agricultural and industrial exports (nontraditionals). It was hoped that these Latin American nations would replicate the spectacular growth patterns of the East Asian "dragons" by exploiting comparative advantages to build nontraditional export industries.Whereas ELG strategies have proven to be sustainable over the long-term in East Asia,1 research on the evolution of such policies in Latin America is only beginning. The problem of sustainability bedevils all ELG programs, particularly in those countries which relied on external actors to design the ) is an outstanding example of this phenomenon. The US-AID regarded its export promotion effort in Costa Rica, in particular, as a model for similar programs in other countries.2 Nevertheless, the United States rapidly phased out foreign aid in the early 1990s, leaving observers to wonder how well-rooted the program was in Costa Rica.This article does double duty: (1) it identifies the variables most important in determining the evolution of ELG strategies in the current decade, and (2) it asks what the withdrawal of external assistance means for programs like the one in Costa Rica. To estimate the sustainability of any country's nontraditional export program, it is necessary to examine its political backing, macroeconomic and sectoral policies, institutional support, the impact of international trade agreements, and the outlook for the leading export industries themselves. It seems reasonable to hypothesize that countries like Costa Rica will have particular difficulty finding continued political and institutional support for nontraditional export programs, as that is where international development agencies had filled in for domestic actors in the preliminary stages.What follows is a Costa Rican case study which illustrates that a combination of political and economic factors, some outside the control of an individual country, determines the survival rate of export-based development strategies. The case study also shows that, however important external assistance may have been for launchi...

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Exchange Rate Policy and Export Performance in Efficiency-Driven Economies

“…The argument of weakening a currency to gain global export market share through price competitiveness is most relevant for developing countries which experience, or aim to achieve, substantial industrial growth that is fuelled by exports (Clark, 1996). The so called efficiency-driven economies, as defined by Porter (1998) and described in the World Economic Forum Global Competitiveness Report 2010-2011 (Schwab, 2010), are developing, industrialising nations for whom export sectors are a key contributor to economic advance.…”

“…Boltho (1996), however, also offers the view that a weakened currency may confer a semi-permanent competitive advantage. Under a floating exchange rate regime, currency depreciation may result in a temporary increase in sales (Boltho, 1996;Clark, 1996). However, such advantage may be sustained.…”

“…Certain developing economies, such as Brazil and Malaysia, which aim to achieve substantial industrial growth fuelled by exports (Clark, 1996) have developed a level of infrastructure and an open market economy to support this. Efficiency driven economies constitute such a set of economies.…”

“…Efficiency driven economies constitute such a set of economies. Efficiency-driven economies have an upper GDP limit of $9 000 per capita (Schwab, 2010) and thus fall into the broad classification of developing economies (Clark, 1996). This follows from the argument that GNI is regarded as GDP combined with income obtained from other countries, such as dividends and interest (Tregarthen & Rittenberg, 2000).…”