Import Compression and Export Performance in Developing Countries

Mohsin Khan and Malcolm D Knight

The Review of Economics and Statistics, 1988, vol. 70, issue 2, 315-21

Abstract: In recent years, many developing countries have had to compress imports to generate trade surpluses to service foreign debt. However, since imports of intermed iate and capital goods are critical inputs in export production, impo rt compression can adversely affect export performance. In turn, slow er export growth limits foreign exchange availability, inducing furth er import compressions. This paper develops a model that incorporates feedbacks between imports and exports arising from the effects of im port compression on exports, and of the availability of foreign excha nge on imports. Estimates of the model for a sample of thirty-four de veloping countries confirm both hypotheses. Copyright 1988 by MIT Press.

Date: 1988
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