The author's 1982 article on the fallacyof composition questioned the feasibility of generalizingthe "G4" (Hong Kong (China), the Republic ofKorea, Singapore, and Taiwan (China)) growth model based onrapid growth of exports, on grounds that if all developingeconomies pursued it, their combined manufactured exportswould eventually trigger protection in industrial countries.The1984 book of author identified a safe speed limit ofabout 10-15 percent annually for growth of developingcountry exports of manufactures, well below the 25-35percent rate of Korea and Taiwan, China in the 1960s and1970s. This study revisits this question in the light of aquarter-century of experience. It finds that developingcountries' aggregate manufactured exports grew at about10 percent annually, a robust pace but within the speedlimits he had envisioned. Even so, in key sectors such asapparel, import penetration levels have exceeded thresholdsthat his earlier estimates would have suggested wouldprovoke protection, suggesting the importance of increasedWorld Trade Organization (WTO) discipline. The base ofmanufactured exports from poor countries remains smallrelative to that of China and the original G4, so thereshould be considerable room for export growth from thesenewcomers. However, a new macroeconomic version of thefallacy of composition problem could arise: the growingtendency of China and some other major emerging marketeconomies to pursue rapidly rising trade surpluses that havetheir counterpart in an increasingly unsustainable U.S.current account deficit.
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