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INTERNATIONAL ECONOMICS Difference between export biased growth and import biased growth.

INTERNATIONAL ECONOMICS Difference between export   biased growth and import biased growth. #Economics # International Economics # Export and Import Growth # Distinguish between the two # Entrance Exam # Competitive Exam # Masters # Bachelors # Growth

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Growth does not necessarily determine how trade effects things one way or another, what matters is the bias of that growth. Even knowing that, the intuitive "exports good, imports bad" thinking might lead one to think that export-biased growth is good and import-biased growth is bad. But the opposite is actually true, let me explain. If growth is biased toward a particular good, more of that good will be made relative to other goods, and the relative supply curve of that good shifts to the right. (I'd recommend you read my other international trade effortposts if you don't know what these words mean) But if you shift a supply curve to the right prices go down, and as such the terms of trade are lessened if the growth is export-biased and go up if they are import-biased. As a result, import-biased growth is actually better than export-biased growth.

growth.

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