Can Real Exchange Rate Undervaluation Boost Exports and Growth in Developing Countries? Yes, But Not for Long

Mona Haddad () and Cosimo Pancaro
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Mona Haddad: World Bank

World Bank - Economic Premise, 2010, issue 20, 1-5

Abstract: A policy of managed real undervaluation may have been an important factor behind the success of East Asia’s export-led growth model. But current discussions over the value of China’s currency demonstrate the controversy this kind of policy can generate. Although a managed real undervaluation can enhance domestic competitiveness, it is difficult to sustain—both economically and politically—in the post-crisis environment. We show that a real undervaluation works only for low-income countries, and only in the medium term.

Keywords: exchangte rates; undervaluation; exports; growth; developing countries; China; currency; East Asia; competitiveness; renminbi (search for similar items in EconPapers)
JEL-codes: E5 E58 F3 F31 F44 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (55)

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Working Paper: Can Real Exchange Rate Undervaluation Boost Exports and Growth in Developing Countries? Yes, But Not for Long (2010)
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