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Financial flows and the New Developmentalism

Author

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  • Fernando J. Cardim de Carvalho

Abstract

New Developmentalism has focused its attention on trade problems created, to a large measure, by the divergences between the exchange rate that keeps the current account of the balance of payments balanced and what it calls industrial equilibrium exchange rate, the rate that would preserve the competitiveness of manufacturing firms operating at the state-or-art frontier. ND acknowledges that these rates may be disturbed by financial flows, but the role of capital account movements may be underestimated. The paper argues that financial flows have indeed been underestimated, which may make more difficult to devise efficacious policies to correct the problem of currency overvaluation. JEL Classification: F31; O11; O14.

Suggested Citation

  • Fernando J. Cardim de Carvalho, 2018. "Financial flows and the New Developmentalism," Brazilian Journal of Political Economy, Center of Political Economy, vol. 38(1), pages 115-124.
    • Handle: RePEc:ekm:repojs:v:38:y:2018:i:1:p:115-124:id:57
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    More about this item

    Keywords

    New Developmentalism; Exchange Rates; Interest Rate Parity Theory;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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