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Endogenizing non-price competitiveness in a BoPC growth model with capital accumulation

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  • Dávila-Fernández, Marwil J.
  • Oreiro, José L.
  • Dávila Dávila, Mario W.

Abstract

On a theoretical level this article revisits Thirlwall's rule (or law) proposing a new channel through which it is possible to endogenize non-price competitiveness in the BoPC framework. We develop a model that formalizes the inverted-U relationship hypothesis that non-price competitiveness rises as countries move from a primary productive structure to light manufacturers and then decreases as richer countries get locked into antiquated industrial structures. We name it the stratification mechanism. Finally we incorporate the supply side of the economy into the structure of the model in order to avoid the so called inconsistency problem.

Suggested Citation

  • Dávila-Fernández, Marwil J. & Oreiro, José L. & Dávila Dávila, Mario W., 2018. "Endogenizing non-price competitiveness in a BoPC growth model with capital accumulation," Structural Change and Economic Dynamics, Elsevier, vol. 44(C), pages 77-87.
  • Handle: RePEc:eee:streco:v:44:y:2018:i:c:p:77-87
    DOI: 10.1016/j.strueco.2017.10.006
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    More about this item

    Keywords

    Growth; Balance-of-Payments Constraint; Thirlwall's law;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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