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A Model of Take‐Off and Fast Growth in Open Economies

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  • Luciano Boggio

Abstract

This paper proposes a stylized (hence very partial) explanation of the experience of those economies which, like the East Asian newly industrializing economies, managed to create an economic take‐off, characterized by a rapid expansion of manufactured exports, and to maintain for many years a high and relatively stable rate of growth of the economy. The model is based on the hypothesis that growth rate differences across open economies depend on differences in international competitiveness. During the take‐off of an open competitive economy, its competitiveness is amplified over time by a Kaldorian process of cumulative causation. To prevent a boundless increase in the growth rate and interpret also a phase of high but approximately constant growth rate the paper introduces what may be called ‘dynamic decreasing returns’, which capture the obstacles to the acceleration of the growth rate. The higher the growth rate of the economy, the more important they become, and eventually they make the growth rate settle on a constant positive path.

Suggested Citation

  • Luciano Boggio, 2003. "A Model of Take‐Off and Fast Growth in Open Economies," Metroeconomica, Wiley Blackwell, vol. 54(2‐3), pages 301-325, May.
    • Handle: RePEc:bla:metroe:v:54:y:2003:i:2-3:p:301-325
    DOI: 10.1111/1467-999X.00168
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    References listed on IDEAS

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    1. Nelson, Richard R & Pack, Howard, 1999. "The Asian Miracle and Modern Growth Theory," Economic Journal, Royal Economic Society, vol. 109(457), pages 416-436, July.
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    11. Harcourt,G. C. With contributions by-Name:Cohen,Avi J. With contributions by-Name:Mata,Tiago, 2022. "Some Cambridge Controversies in the Theory of Capital," Cambridge Books, Cambridge University Press, number 9781009158152, November.
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    Cited by:

    1. Marwil J Dávila-Fernández & Jose Luis Oreiro, 2023. "Competitiveness and dynamic cumulative causation in an export-led growing economy," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 32(2), pages 522-550.
    2. Guarini, Giulio, 2009. "Innovation and growth in the Grossman-Helpman’s model with increasing returns: a note," MPRA Paper 19612, University Library of Munich, Germany.
    3. Dávila-Fernández, Marwil & Oreiro, José, 2021. "A song of ice and fire: Competitiveness in an export-led growing economy," MPRA Paper 109821, University Library of Munich, Germany.

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