A Multi-Sectoral Balance-of-Payments-Constrained Growth Model with Sectoral Heterogeneity:International Competition, Productivity Dynamics, and Economic Growth
AbstractThis study builds a multi-sectoral balance-of-payments constrained growth model that incorporates some structural heterogeneity between sectors and countries, such as differences in labor productivity, price competition, share of exports and imports, and the quality of commodities. The model in the current paper generates more comprehensive results than Thirlwall (1979), Blecker (1998), and Araujo and Lima (2007), even though it contains their properties and reproduces their implications. Furthermore, as compared with these existing works, the current model sheds more light on the relationship between trade structure, international competition, productivity dynamics, and economic growth. It also shows an example of the fallacy of composition that there are differences between microeconomic and macroeconomic phenomena, by illustrating how changes in nominal wage, the Kaldor– Verdoorn effect, and the degree of market competition in both countries affect the economic growth of the home country.
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Bibliographic InfoPaper provided by Graduate School of Economics Project Center, Kyoto University in its series Discussion papers with number e-13-005.
Length: 28 pages
Date of creation: Mar 2014
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More information through EDIRC
Multi-sectoral Thirlwall’s law; International competition; Structural heterogeneity;
Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
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