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External Contradictions Of The Chinese Development Model: Export-Led Growth And The Dangers Of Global Economic Contraction, Thomas I. Palley
External Contradictions Of The Chinese Development Model: Export-Led Growth And The Dangers Of Global Economic Contraction, Thomas I. Palley
PERI Working Papers
China’s development model faces an external constraint that could cause an economic hard landing. China has become a global manufacturing powerhouse, and its size now renders its export-led growth strategy unsustainable. China relies on the U.S. market, but the scale of its exports is contributing to the massive U.S. trade deficit, creating financial fragility and undermining the U.S. manufacturing sector. These developments could stall the U.S. economy’s expansion, in turn triggering a global recession that will embrace China. This is the external constraint. These considerations suggest China should transition from export-led growth to domestic demand-led growth. This requires growing the …
The Fallacy Of The Revised Bretton Woods Hypothesis: Why Today’S System Is Unsustainable And Suggestions For A Replacement, Thomas I. Palley
The Fallacy Of The Revised Bretton Woods Hypothesis: Why Today’S System Is Unsustainable And Suggestions For A Replacement, Thomas I. Palley
PERI Working Papers
Dooley et al. (2003) have argued that today’s international financial system has structural similarities with the earlier Bretton Woods (1946 – 71) arrangements and is stable. This paper argues that the comparison is misplaced and ignores fundamental microeconomic differences, and that today’s system is also vulnerable to a crash. Eichengreen (2004) and Goldstein and Lardy (2005) have also argued that the system is unsustainable. However, their focus is the sustainability of financing to cover the U.S. trade deficit, whereas the current paper focuses on inadequacies on the system’s demand side. The paper concludes with suggestions for a global system of …