Growth Performance in Portugal since the 1960s: A Simultaneous Equation Approach with Cumulative Causation Characteristics
AbstractThe aim of this paper is to explain growth performance in Portugal in the last decades (1965-2006) through a multi-equation system with cumulative growth characteristics. The model uses a demand-orientated approach to determine the main relationships, which explain growth through a virtuous cycle. The idea is to identify the driving forces of growth with causal linkages and feedback tendencies that enable the process to be self-sustained. We estimate the multi-equation growth model by 3SLS to capture more efficiently the interrelations between the main growth forces and to control for the endogeneity of the regressors. Our evidence shows that the proposed model can successfully explain the Portuguese growth performance, highlighting the importance of export competitiveness as the key factor in this process. The cumulative growth process was interrupted at some points mainly due to the incapacity to transfer productivity gains into domestic prices and to make the economy more competitive. We also show that capital accumulation does not affect productivity growth, and domestic prices do not improve export competitiveness. These are the main drawbacks of the Portuguese economy that could explain the failure to achieve higher growth rates in the period 1965-2006.
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Bibliographic InfoArticle provided by M.E. Sharpe, Inc. in its journal Journal of Economic Issues.
Volume (Year): 47 (2013)
Issue (Month): 1 (March)
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cumulative growth; export competitiveness; multi-equation system; productivity gap; 3SLS regressions;
Other versions of this item:
- Elias Soukiazis & Micaela Antunes, 2011. "Growth Performance in Portugal Since the 1960’s: A Simultaneous Equation Approach with Cumulative Causation Characteristics," GEMF Working Papers 2011-06, GEMF - Faculdade de Economia, Universidade de Coimbra.
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
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