The Ambiguous Effects of Targeting Trade Surpluses

Nina Eichacker

No xhg3w_v1, SocArXiv from Center for Open Science

Abstract: Ceteris Paribus, current account surpluses may be preferable to current account deficits. Export surpluses should increase domestic GDP, and they may lend economic and political power to industries and states in domestic and international systems. However, the frame of analysis matters when considering the net benefits or costs of pursuing current account surpluses: benefits of pursuing export-led strategies may change over time, they may be unevenly distributed within a given economy, and they may create problems for trade partners, depending on the trade-boosting strategies deployed. This chapter considers potential downsides of pursuing current account surpluses over time, across economic sectors, and at the international level. It surveys work on export-led growth, neomercantilism, and import-substitution strategies in work by a range of economists in Post-Keynesian, structural development, and world-systems theories. Every economy cannot run a trade surplus all of the time: the costs of avoiding this inevitability may be greater at the global level or over time than the benefits of accruing current account surplus in the moment.

Date: 2021-05-01
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:xhg3w_v1

DOI: 10.31219/osf.io/xhg3w_v1

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