School of Economics | Exchange Rate Undervaluation for Export-Led Growth Promotion
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Vladimir Popov and Jomo Kwame Sundaram One mercantilist view is that exchange rate undervaluation – e.g., via accumulation of foreign exchange reserves in China’s case – is ‘industrial policy’ to promote export-led growth, benefiting producers of exports while discouraging imports. Taxes and subsidies are tools of selective industrial policy...