Fueled by the adverse conditions in the current international economic environment, the debate concerning the relative merits of development strategies based on import-substitution or export-oriented policies, is starting anew. This paper re-estimates Feder’s (1982) model using data from fourteen Asian LDCs during 1965·1982 and finds that, although the social marginal factor productivities in the export sector declined significantly in the post-1973 period providing some support for the elasticity pessimism argument, they were, nevertheless, higher than in the non·export sector. This suggests that despite the deterioration of the international economy, reallocation of fa c to~ to the export sector from the non·export sector could have increased growth rates.
