The views expressed herein are those of the authors and do not necessarily reflect those of the Organisation for Economic Cooperation and Development.
Article first published online: 11 NOV 2011
© 2011 Blackwell Publishing Ltd
The World Economy
Volume 35, Issue 3, pages 273–294, March 2012
How to Cite
Garroway, C., Hacibedel, B., Reisen, H. and Turkisch, E. (2012), The Renminbi and Poor-country Growth. World Economy, 35: 273–294. doi: 10.1111/j.1467-9701.2011.01408.x
The authors graciously acknowledge the helpful comments and criticism from an anonymous referee.
- Issue published online: 7 MAR 2012
- Article first published online: 11 NOV 2011
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.