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A formal assessment of new-developmentalist theory and policy

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  • Ariel Dvoskin
  • Germán David Feldman

Abstract

We develop a formal framework that endogeneizes the productive structure of a small open peripheral economy as the outcome of a problem of technical choices. We subsequently examine the main theoretical theses and policy prescriptions of the New-Developmentalist approach to economic growth. We argue that: a) not only does the pattern of specialization depend on technical conditions, but also on income distribution; b) in an economy without rents, the level of the money wage-nominal exchange rate ratio is univocally determined once the rate of profits is known, and shows an inverse relationship with it; c) if differential rents are considered, the level of the rate of profits can be set independently of the money wage-exchange rate ratio; d) the level of the exchange rate that ensures normal profitability of the primary sector need not coincide with the current-account equilibrium rate; e) the effective exchange rate need not gravitate around any of these two former levels, which must be rather seen as minimum thresholds of the effective rate; e) the unpleasant distributive consequences of exchange-rate depreciation can be partially avoided by means of export duties that do not raise primary-commodities production costs. JEL Classification: B22; E11; F43.

Suggested Citation

  • Ariel Dvoskin & Germán David Feldman, 2018. "A formal assessment of new-developmentalist theory and policy," Brazilian Journal of Political Economy, Center of Political Economy, vol. 38(3), pages 395-413.
    • Handle: RePEc:ekm:repojs:v:38:y:2018:i:3:p:395-413:id:79
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    References listed on IDEAS

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    1. Luiz Carlos Bresser-Pereira, 2016. "Reflecting on new developmentalism and classical developmentalism," Brazilian Journal of Political Economy, Center of Political Economy, vol. 36(2), pages 237-265.
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    3. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
    4. Roberto FRENKEL, 2004. "Real exchange rate and employment in Argentina, Brazil, Chile and Mexico," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 19(223), pages 29-52.
    5. Blecker, Robert A, 1989. "International Competition, Income Distribution and Economic Growth," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 13(3), pages 395-412, September.
    6. José Luis Oreiro & Fabricio Missio & Frederico G. Jayme Jr., 2015. "Capital Accumulation, Structural Change and Real Exchange Rate in a Keynesian-Structuralist Growth Model," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(2), pages 237-256, June.
    7. Ariel Dvoskin & Germán David Feldman, 2015. "Marcelo Diamand’s contributions to economic theory through the lens of the classical Keynesian approach: a formal representation of unbalanced productive structures," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 38(2), pages 218-250, October.
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    Cited by:

    1. Ariel Dvoskin & Gabriel Brondino, 2022. "An appraisal of alternative Ricardian trade models," BCRA Working Paper Series 2022104, Central Bank of Argentina, Economic Research Department.

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    More about this item

    Keywords

    distributive conflict; Dutch Disease; exchange rate policy; newdevelopmentalism; pattern of specialization;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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