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Structural change, National Innovation System and balance-of-payments contraint: a theoretical and empirical analysis of the Brazilian case

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Author Info

  • João Prates Romero

    (Cedeplar/UFMG)

  • Fabrício Silveira

    (Cedeplar/UFMG)

  • Gustavo Britto

    (Cedeplar/UFMG T)

Abstract

The paper explores the relationship between the income elasticities of demand for exports and for imports, economic growth, the technological content of local production, and the level of development of the National Innovation System (NIS). According to the literature, differences in long-run growth rates are associated with differences in the income elasticities of demand, which would in turn be determined by the maturity of the NIS. Mature NIS imply higher degrees of product diversification, leading to trade patterns which favour exports of goods with higher technological content (high income elasticity of demand), and imports of basic goods (low income elasticity). Hence, we test the relationship between the exports and imports of Brazilian high-tech products and the number of Brazilian patents registered in the USPTO, as a proxy for the level of development of the Brazilian NIS. The results of the analysis are corroborated by the investigation of innovations of the variables, through impulse response functions and forecast error decomposition, which confirm the theoretical hypothesis discussed.

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Bibliographic Info

Paper provided by Cedeplar, Universidade Federal de Minas Gerais in its series Textos para Discussão Cedeplar-UFMG with number 440.

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Length: 32 pages
Date of creation: Aug 2011
Date of revision:
Handle: RePEc:cdp:texdis:td440

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Keywords: Balance-of-Payments Constraint; Income Elasticities; Growth; Structural Change; National Innovation System.;

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References

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  1. Juan Carlos Moreno-Brid, 2003. "Capital Flows, Interest Payments and the Balance-of-Payments Constrained Growth Model: A Theoretical and Empirical Analysis," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 54(2-3), pages 346-365, 05.
  2. Raphael Rocha Gouvêa & Gilberto Tadeu Lima, 2011. "Structural Change,Balance-of-Payments Constraint and Economic Growth: Evidence from the Multi-Sectoral Thirlwall’s Law," Anais do XXXVII Encontro Nacional de Economia [Proceedings of the 37th Brazilian Economics Meeting], ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of 74, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  3. Wells, Louis T, Jr, 1969. "Test of a Product Cycle Model of International Trade: U.S. Exports of Consumer Durables," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 83(1), pages 152-62, February.
  4. Nelson H. Barbosa Filho, 2002. "The Balance-of-payments Constraint: From Balanced Trade to Sustainable Debt," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization., Schwartz Center for Economic Policy Analysis (SCEPA), The New School 2001-06, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
  5. Anthony Philip Thirlwall, 1979. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, Banca Nazionale del Lavoro, vol. 32(128), pages 45-53.
  6. Gustavo Britto & John S. L. McCombie, 2009. "Thirlwall's law and the long-term equilibrium growth rate: an application to Brazil," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 32(1), pages 115-136, September.
  7. Barker, Terry S, 1977. "International Trade and Economic Growth: An Alternative to the Neoclassical Approach," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 1(2), pages 153-72, June.
  8. Lima, Gilberto Tadeu & Carvalho, Veridiana Ramos da Silva, 2009. "Estrutura produtiva, restrição externa e crescimento econômico: a experiência brasileira," Revista Economia e Sociedade, Instituto de Economia, Universidade Estadual de Campinas (UNICAMP), Instituto de Economia, Universidade Estadual de Campinas (UNICAMP), vol. 36, pages 30, April.
  9. Thirlwall, Anthony P & Hussain, Mohammed Nureldin, 1982. "The Balance of Payments Constraint, Capital Flows and Growth Rate Differences between Developing Countries," Oxford Economic Papers, Oxford University Press, Oxford University Press, vol. 34(3), pages 498-510, November.
  10. Irving B. Kravis & Robert E. Lipsey, 1971. "Price Competitiveness in World Trade," NBER Books, National Bureau of Economic Research, Inc, National Bureau of Economic Research, Inc, number krav71-1.
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