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Technological intensity of the export structure and the real exchange rate

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  • Mario Cimoli
  • Sebastian Fleitas
  • Gabriel Porcile

Abstract

This paper discusses the effects of the real exchange rate (RER, defined as the price of the foreign currency in units of the domestic currency, adjusted by price levels) on the diversification and technological intensity of the export structure. Based on a North-South Ricardian model of trade with a continuum of goods, in which comparative advantage depends on the RER and leads and lags in innovation and diffusion of technology, two hypotheses are suggested and tested. The first one is that a higher RER allows for a higher diversification of exports. The second hypothesis is that this diversification implies an upgrading in the technological intensity of exports. We find favorable evidence for the two hypotheses from a panel data study, including 111 counties in the period 1962--2008. These results suggest that a competitive RER should be considered a relevant variable in the process of economic development as it encourages the transformation of the pattern of specialization.

Suggested Citation

  • Mario Cimoli & Sebastian Fleitas & Gabriel Porcile, 2013. "Technological intensity of the export structure and the real exchange rate," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 22(4), pages 353-372, June.
    • Handle: RePEc:taf:ecinnt:v:22:y:2013:i:4:p:353-372
    DOI: 10.1080/10438599.2012.748504
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    6. Porcile, Gabriel & Sartorello Spinola, Danilo & Yajima, Giuliano, 2020. "Patterns of growth in structuralist models: The role of the real exchange rate and industrial policy," MERIT Working Papers 2020-027, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
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    8. Frenkel, Roberto & Rapetti, Martin, 2014. "The real exchange rate as a target of macroeconomic policy," MPRA Paper 59335, University Library of Munich, Germany.
    9. Missio, Fabricio & Araujo, Ricardo Azevedo & Jayme, Frederico G., 2017. "Endogenous elasticities and the impact of the real exchange rate on structural economic dynamics," Structural Change and Economic Dynamics, Elsevier, vol. 42(C), pages 67-75.
    10. Robert A. Blecker, 2022. "New advances and controversies in the framework of balance‐of‐payments‐constrained growth," Journal of Economic Surveys, Wiley Blackwell, vol. 36(2), pages 429-467, April.
    11. Gabriel, Luciano Ferreira & Jayme, Frederico G. & Oreiro, José Luis, 2016. "A North-South Model of Economic Growth, Technological Gap, Structural Change and Real Exchange Rate," Structural Change and Economic Dynamics, Elsevier, vol. 38(C), pages 83-94.
    12. Firat Demir & Arslan Razmi, 2022. "The Real Exchange Rate And Development Theory, Evidence, Issues And Challenges," Journal of Economic Surveys, Wiley Blackwell, vol. 36(2), pages 386-428, April.
    13. -, 2014. "Latin American Economic Outlook 2015: Education, skills and innovation for development," Coediciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 37446 edited by Ocde, July.
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    15. André Roncaglia De Carvalho & - André M. Marques, 2018. "Economic Development And Inflation: A Theoretical And Empirical Analysis," Anais do XLIV Encontro Nacional de Economia [Proceedings of the 44th Brazilian Economics Meeting] 41, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].

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