The Renminbi and Poor-country Growth

The Renminbi and Poor-country Growth

Discussions on how best to exit from global imbalances to create a more balanced world economy have ignored the impact on poor countries of proposals to redress these imbalances. This paper aims at filling that gap. It gauges the degree of renminbi (RMB) undervaluation; presents evidence on RMB unde...

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Bibliographic Details
Published in:World economy Vol. 35; no. 3; pp. 273 - 294
Main Authors: Garroway, Christopher, Hacibedel, Burcu, Reisen, Helmut, Turkisch, Edouard
Format: Journal Article
Language:English
Published: Oxford, UK Blackwell Publishing Ltd 01-03-2012
Subjects:
Balance of payments
China
China (People's Republic)
Comparative economics
Currencies
Developing Countries
Dual Economy
Economic growth
Exchange Rate
Exchange rates
Foreign exchange rates
Gross Domestic Product
India
LDCs
Monetary policy
Peoples Republic of China
Real exchange rates
Renminbi
Stability
Studies
World Economy
China
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Summary:Discussions on how best to exit from global imbalances to create a more balanced world economy have ignored the impact on poor countries of proposals to redress these imbalances. This paper aims at filling that gap. It gauges the degree of renminbi (RMB) undervaluation; presents evidence on RMB undervaluation and China’s GDP growth rate; surveys the role of the real effective exchange rate – both its level and its stability over time – for underpinning growth in developing countries, especially in large dual economies such as China and India; and finally, presents new evidence on growth linkages between China and poor countries for the last two decades and surveys literature on potential displacement effects of RMB appreciation. The analysis allows broad conclusions to be drawn about the potential developing‐country beneficiaries and losers from various renminbi adjustment scenarios in the forthcoming years.
Bibliography:istex:1C253BD4DB52939B444977BD2FC02513D6694A80
ArticleID:TWEC1408
ark:/67375/WNG-5XWM5ZR9-V
The authors graciously acknowledge the helpful comments and criticism from an anonymous referee.
The views expressed herein are those of the authors and do not necessarily reflect those of the Organisation for Economic Cooperation and Development.
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ISSN:0378-5920
1467-9701
DOI:10.1111/j.1467-9701.2011.01408.x