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Growth slowdowns at middle income levels: Identifying mechanisms of external constraints

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  • Carlos Bianchi
  • Fernando Isabella
  • Santiago Picasso

Abstract

This paper provides evidence that external constraints determine growth slowdowns in middle‐income countries. Econometric models corroborate a positive and significant relation between export margin and the growth of GDPpc for those countries that have remained between middle‐income thresholds for at least 30 years, but not for others. While advanced economies have sustained their growth through permanent increases in productivity and the quality of products, many middle‐income countries, most of them from Latin America, remain dependent on external prices for growth. Our results shed new light on old development challenges for developing countries.

Suggested Citation

  • Carlos Bianchi & Fernando Isabella & Santiago Picasso, 2023. "Growth slowdowns at middle income levels: Identifying mechanisms of external constraints," Metroeconomica, Wiley Blackwell, vol. 74(2), pages 288-305, May.
    • Handle: RePEc:bla:metroe:v:74:y:2023:i:2:p:288-305
    DOI: 10.1111/meca.12414
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