IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v104y2014i5p272-77.html

Demand and Defective Growth Patterns: The Role of the Tradable and Non-tradable Sectors in an Open Economy

Author

Listed:
  • Sandile Hlatshwayo
  • Michael Spence

Abstract

This paper examines the underlying structural elements of US growth patterns, pre- and post-crisis. Prior to the recession, the US economy exhibited a defective growth pattern driven by outsized domestic demand. As domestic aggregate demand retreats to more sustainable levels relative to total income, the tradable side of the economy is a catalyst for restoring strong growth. A structural rebalancing is already underway; although it is only a third of the economy, the tradable sector generated more than half of gross gains in value-added since the start of the recovery. However, distributional issues loom on the horizon.

Suggested Citation

  • Sandile Hlatshwayo & Michael Spence, 2014. "Demand and Defective Growth Patterns: The Role of the Tradable and Non-tradable Sectors in an Open Economy," American Economic Review, American Economic Association, vol. 104(5), pages 272-277, May.
    • Handle: RePEc:aea:aecrev:v:104:y:2014:i:5:p:272-77
    Note: DOI: 10.1257/aer.104.5.272
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.104.5.272
    Download Restriction: no
    File URL: http://www.aeaweb.org/aer/app/10405/P2014_1103_app.pdf
    Download Restriction: no
    File URL: http://www.aeaweb.org/aer/ds/10405/P2014_1103_ds.zip
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    References listed on IDEAS

    as
    1. Castro, Vítor, 2010. "The duration of economic expansions and recessions: More than duration dependence," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 347-365, March.
    2. J. Bradford Jensen & Lori G. Kletzer, 2005. "Tradable Services: Understanding the Scope and Impact of Services Outsourcing," Working Paper Series WP05-9, Peterson Institute for International Economics.
    3. Michael Spence & Sandile Hlatshwayo, 2012. "The Evolving Structure of the American Economy and the Employment Challenge," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 54(4), pages 703-738, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Joerg Mayer, 2017. "How Could the South Respond to Secular Stagnation in the North?," The World Economy, Wiley Blackwell, vol. 40(2), pages 314-335, February.
    2. Sophie Piton, 2018. "Do Unit Labor Costs Matter? A Decomposition Exercise on European Data," Working Papers 2018-07, CEPII research center.
    3. Cherif Reda & Hasanov Fuad, 2019. "Principles of True Industrial Policy," Journal of Globalization and Development, De Gruyter, vol. 10(1), pages 1-22, June.
    4. Cardi, Olivier & Restout, Romain, 2025. "Why hours worked decline less after technology shocks?," Journal of International Economics, Elsevier, vol. 157(C).
    5. Danie F. Toerien, 2021. "A Small-Town Economic Revitalisation Conundrum: Focus on Tourism, Manufacturing, or Both?," Energies, MDPI, vol. 14(22), pages 1-18, November.
    6. Chunying Cui & Ziwei Yan, 2023. "Does the Digital Economy Promote Domestic Non-Tradable Sectors?: Evidence from China," Sustainability, MDPI, vol. 15(3), pages 1-23, February.
    7. Gianluca Benigno & Luca Fornaro & Martin Wolf, 2019. "The global financial resource curse," Economics Working Papers 1803, Department of Economics and Business, Universitat Pompeu Fabra, revised Aug 2024.
    8. Sophie Piton, 2017. "Economic Integration and the Non-tradable Sector: The European Experience," 2017 Papers ppi361, Job Market Papers.
    9. Dissanayake, Ruchith, 2021. "Geographic distribution of firms and expected stock returns," Journal of Economic Dynamics and Control, Elsevier, vol. 133(C).
    10. Philippe Frocrain & Pierre-Noël Giraud, 2019. "The Evolution of Tradable and Non Tradable Employment: Evidence from France," Post-Print hal-01981428, HAL.
    11. Cardi, Olivier & Restout, Romain, 2023. "Sectoral fiscal multipliers and technology in open economy," Journal of International Economics, Elsevier, vol. 144(C).
    12. Chama CHIPETA & Daniel Francois MEYER, 2018. "Trade Openness, FDI and Exchange Rate Effects on Job Creation in South Africa's Tradable Sectors," Journal of Economics and Behavioral Studies, AMH International, vol. 10(4), pages 197-212.
    13. Ron Jarmin & CJ Krizan & Adela Luque, 2016. "Small Business Growth and Failure during the Great Recession: The Role of House Prices, Race & Gender," CARRA Working Papers 2016-08, Center for Economic Studies, U.S. Census Bureau.
    14. Philippe Frocrain & Pierre-Noël Giraud, 2017. "The evolution of tradable and non-tradable employment: evidence from France," Working Papers hal-01695159, HAL.
    15. Chama Chipeta, 2022. "Analysing The Employment Effects Of The Exchange Rate, Foreign Direct Investment And Trade Openness On South Africa’S Non-Tradable Sectors," JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, Babes-Bolyai University, Faculty of Business.
    16. Philippe Frocrain & Pierre-Noël Giraud, 2018. "The Evolution of Tradable and Non Tradable Employment: Evidence from France," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 503-504, pages 97-107.
    17. Reda Cherif & Fuad Hasanov, 2019. "The Return of the Policy That Shall Not Be Named: Principles of Industrial Policy," IMF Working Papers 2019/074, International Monetary Fund.
    18. Bertinelli, Luisito & Cardi, Olivier & Restout, Romain, 2022. "Labor market effects of technology shocks biased toward the traded sector," Journal of International Economics, Elsevier, vol. 138(C).

    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. Chen, Liming & Felipe, Jesus & Kam, Andrew J.Y. & Mehta, Aashish, 2021. "Is employment globalizing?," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 74-92.
    2. Isidro Soloaga & Mariana Pereira, 2013. "Local Multipliers and the Informal Sector in Mexico 2000-2010," Working Papers 0513, Universidad Iberoamericana, Department of Economics.
    3. Haifang Huang & Yao Tang, 2016. "How Did Exchange Rates Affect Employment In U.S. Cities?," Contemporary Economic Policy, Western Economic Association International, vol. 34(4), pages 678-697, October.
    4. Timothy J. Bartik & Nathan Sotherland, 2019. "Local Job Multipliers in the United States: Variation with Local Characteristics and with High-Tech Shocks," Upjohn Working Papers 19-301, W.E. Upjohn Institute for Employment Research.
    5. Reis, Anabela & Heitor, Manuel & Amaral, Miguel & Mendonça, Joana, 2016. "Revisiting industrial policy: Lessons learned from the establishment of an automotive OEM in Portugal," Technological Forecasting and Social Change, Elsevier, vol. 113(PB), pages 195-205.
    6. Choi, Kyungsoo, 2022. "Job creation during Korea's transition to a knowledge economy," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 44(3), pages 75-99.
    7. Sena Kimm GNANGNON, 2012. "An analysis of duration dependence of government revenue expansions and contractions in Developing Countries," Working Papers 201229, CERDI.
    8. Peter D. Ørberg Jensen & Jacob Funk Kirkegaard & Nicolai Søndergaard Laugesen, 2006. "Offshoring in Europe—Evidence of a Two-Way Street from Denmark," Working Paper Series WP06-3, Peterson Institute for International Economics.
    9. Bardhan Ashok & Tang John, 2010. "What Kind of Job is Safer? A Note on Occupational Vulnerability," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-17, January.
    10. Massimiliano Pisani & Filippo Vergara Caffarelli, 2018. "What will Brexit mean for the British and euro-area economies? A model-based assessment of trade regimes," Temi di discussione (Economic working papers) 1163, Bank of Italy, Economic Research and International Relations Area.
    11. repec:spo:wpmain:info:hdl:2441/2lpvf5mlr48dkah5qda4hh4e9g is not listed on IDEAS
    12. Vitor Castro, 2015. "The Portuguese business cycle: chronology and duration dependence," Empirical Economics, Springer, vol. 49(1), pages 325-342, August.
    13. Suzanne Kok & Bas ter Weel, 2014. "Cities, Tasks, And Skills," Journal of Regional Science, Wiley Blackwell, vol. 54(5), pages 856-892, November.
    14. Philipp Engler & Michael Fidora & Christian Thimann, 2009. "External Imbalances and the US Current Account: How Supply‐Side Changes Affect an Exchange Rate Adjustment," Review of International Economics, Wiley Blackwell, vol. 17(5), pages 927-941, November.
    15. Andrea Ariu & Katariina Nilsson Hakkala & J. Bradford Jensen & Saara Tamminen, 2019. "Service Imports, Workforce Composition, and Firm Performance: Evidence from Finnish Microdata," NBER Working Papers 26355, National Bureau of Economic Research, Inc.
    16. Edouard Ribes, 2021. "Scoping the transformation of the professional services industry," Working Papers hal-01889350, HAL.
    17. Francesco Vona & Giovanni Marin & Davide Consoli, 2019. "Measures, drivers and effects of green employment: evidence from US local labor markets, 2006–2014," Journal of Economic Geography, Oxford University Press, vol. 19(5), pages 1021-1048.
    18. Roy, Martin, 2019. "Elevating services: Services trade policy, WTO commitments, and their role in economic development and trade integration," WTO Staff Working Papers ERSD-2019-01, World Trade Organization (WTO), Economic Research and Statistics Division.
    19. Luca Agnello & Vitor Castro & Ricardo Sousa, 2019. "The Benevolence of Time, Sound Macroeconomic Environment and Governance Quality on the Duration of Sovereign Ratings Phases," Working Papers 34, European Stability Mechanism.
    20. Eppinger, Peter S., 2019. "Service offshoring and firm employment," Journal of International Economics, Elsevier, vol. 117(C), pages 209-228.
    21. Alexander Vogel & Joachim Wagner, 2016. "Exports and Profitability — First Evidence for German Business Services Enterprises," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 8, pages 279-310, World Scientific Publishing Co. Pte. Ltd..

    More about this item

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • G01 - Financial Economics - - General - - - Financial Crises

    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:aea:aecrev:v:104:y:2014:i:5:p:272-77. 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: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    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.