IDEAS home Printed from https://ideas.repec.org/p/bwu/eiiwdp/disbei139.html
   My bibliography  Save this paper

Interdependency of Real Exchange Rate, Trade, Innovation, Structural Change and Growth

Author

Listed:
  • Paul J.J. Welfens

    (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW))

Abstract

This paper analyzes the impact of the real exchange rate on trade, structural change and growth. We point out a new approach to monetary growth policy in an open economy with trade and foreign direct investment. Moreover, the analysis presents a paradox effect with respect to the link between process innovations and the price level: The latter can rise if there are process innovations provided that the income elasticity of the demand for money is between zero and unity. We also look into the more traditional Balassa-Samuelson effects and consider the major impact of real exchange rate changes on structural change and on economic growth, the latter including a modified neoclassical model with endogenous growth. In addition, we consider aspects of optimum growth. Main policy conclusions are that one should avoid massive overshooting. Poor countries willing to catch up with partner countries in an integration area would be well advised to promote foreign direct investment inflows and to stimulate upgrading of human capital. Supporting R&D is also crucial for economic catching up.

Suggested Citation

  • Paul J.J. Welfens, 2005. "Interdependency of Real Exchange Rate, Trade, Innovation, Structural Change and Growth," EIIW Discussion paper disbei139, Universitätsbibliothek Wuppertal, University Library.
    • Handle: RePEc:bwu:eiiwdp:disbei139
    as

    Download full text from publisher

    File URL: https://eiiw.wiwi.uni-wuppertal.de/fileadmin/eiiw/Daten/Publikationen/Gelbe_Reihe/disbei_139.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. World Bank, 2004. "World Development Indicators 2004," World Bank Publications - Books, The World Bank Group, number 13890, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jakob Skoet & Kostas Stamoulis & Annelies Deuss, 2004. "Investing in Agriculture for Growth and Food Security in the ACP countries," Working Papers 04-22, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
    2. Justin Lin & Peilin Liu, 2006. "Economic Development Strategy, Openness and Rural Poverty: A Framework and China's Experiences," WIDER Working Paper Series RP2006-43, World Institute for Development Economic Research (UNU-WIDER).
    3. Dean Yang, 2008. "International Migration, Remittances and Household Investment: Evidence from Philippine Migrants' Exchange Rate Shocks," Economic Journal, Royal Economic Society, vol. 118(528), pages 591-630, April.
    4. Amanda Ellis & Claire Manuel & C. Mark Blackden, 2005. "Gender and Economic Growth in Uganda : Unleashing the Power of Women," World Bank Publications - Books, The World Bank Group, number 7388, December.
    5. Ehmke, Mariah & Lusk, Jayson & Tyner, Wallace, 2010. "Multidimensional tests for economic behavior differences across cultures," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(1), pages 37-45, January.
    6. Faria, Andr & Mauro, Paolo, 2009. "Institutions and the external capital structure of countries," Journal of International Money and Finance, Elsevier, vol. 28(3), pages 367-391, April.
    7. Akay, Alpaslan & Martinsson, Peter, 2011. "Does relative income matter for the very poor? Evidence from rural Ethiopia," Economics Letters, Elsevier, vol. 110(3), pages 213-215, March.
    8. Carré, Sylvain & Cohen, Daniel & Villemot, Sébastien, 2019. "The sources of sovereign risk: a calibration based on Lévy stochastic processes," Journal of International Economics, Elsevier, vol. 118(C), pages 31-43.
    9. Sadhana Srivastava, 2006. "The Role Of Foreign Direct Investment In India'S Services Exports: An Empirical Investigation," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 51(02), pages 175-194.
    10. Frölich, Markus & Michaelowa, Katharina, 2004. "Peer effects and textbooks in primary education: Evidence from francophone sub-Saharan Africa," HWWA Discussion Papers 311, Hamburg Institute of International Economics (HWWA).
    11. Costantini, Valeria & Monni, Salvatore, 2008. "Environment, human development and economic growth," Ecological Economics, Elsevier, vol. 64(4), pages 867-880, February.
    12. Dollar, David & Levin, Victoria, 2006. "The Increasing Selectivity of Foreign Aid, 1984-2003," World Development, Elsevier, vol. 34(12), pages 2034-2046, December.
    13. Christopher Ksoll, 2007. "Family Networks and Orphan Caretaking in Tanzania," Economics Series Working Papers 361, University of Oxford, Department of Economics.
    14. Sabina Alkire & Maria Emma Santos, 2010. "Acute Multidimensional Poverty: A New Index for Developing Countries," Human Development Research Papers (2009 to present) HDRP-2010-11, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
    15. Alkire, Sabina & Santos, Maria Emma, 2014. "Measuring Acute Poverty in the Developing World: Robustness and Scope of the Multidimensional Poverty Index," World Development, Elsevier, vol. 59(C), pages 251-274.
    16. Kuo, Hsiao-I. & Chen, Chi-Chung & McAleer, Michael, 2012. "Estimating the impact of whaling on global whale-watching," Tourism Management, Elsevier, vol. 33(6), pages 1321-1328.
    17. Cohen, Daniel & Villemot, Sébastien, 2012. "The Sovereign Default Puzzle: Modelling Issues and Lessons for Europe," CEPR Discussion Papers 8971, C.E.P.R. Discussion Papers.
    18. Christopher Kilby, 2006. "Donor influence in multilateral development banks: The case of the Asian Development Bank," The Review of International Organizations, Springer, vol. 1(2), pages 173-195, June.
    19. Mounir Belloumi & Mohamed Salah Matoussi, 2008. "Measuring Agricultural Productivity Growth in MENA Countries," Working Papers 416, Economic Research Forum, revised 06 Jan 2008.
    20. John M. Piotrowski & Mr. Rabah Arezki & Reda Cherif, 2009. "Tourism Specialization and Economic Development: Evidence from the UNESCO World Heritage List," IMF Working Papers 2009/176, International Monetary Fund.

    More about this item

    Keywords

    real exchange rate; monetary growth policy; economic growth; innovation;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bwu:eiiwdp:disbei139. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Frank Hoffmann (email available below). General contact details of provider: http://elpub.bib.uni-wuppertal.de .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.