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A new interpretation of Kaldor's first growth law for open developing economies

Author

Listed:
  • Penélope Pacheco-López

    (University of Kent, UK)

  • A. P. Thirlwall

    (University of Kent, UK)

Abstract

Kaldor's first law of growth posits a positive causal relation between the growth of manufacturing output and the growth of GDP due to static and dynamic returns to scale in manufacturing and rising productivity outside the manufacturing sector as resources are transferred from diminishing returns activities. In an open economy, however, the Kaldor first law of growth is open to another interpretation because it is apparent across countries that there is a close association between manufacturing output growth and export growth, and between export growth and GDP growth. Results are presented for 89 developing countries over the period 1990–2011, also distinguishing between low income, lower-middle income and upper-middle income countries, and between the continents of Africa, Asia and Latin America.

Suggested Citation

  • Penélope Pacheco-López & A. P. Thirlwall, 2014. "A new interpretation of Kaldor's first growth law for open developing economies," Review of Keynesian Economics, Edward Elgar Publishing, vol. 2(3), pages 384-398, July.
    • Handle: RePEc:elg:rokejn:v:2:y:2014:i:3:p384-398
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    Citations

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    Cited by:

    1. Szirmai, Adam & Verspagen, Bart, 2015. "Manufacturing and economic growth in developing countries, 1950–2005," Structural Change and Economic Dynamics, Elsevier, vol. 34(C), pages 46-59.
    2. Andre Lorentz & Tommaso Ciarli & Maria Savona & Marco Valente, 2019. "Structural Transformations and Cumulative Causation: Towards an Evolutionary Micro-foundation of the Kaldorian Growth Model," Working Papers of BETA 2019-15, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    3. Di Meglio, Gisela & Gallego, Jorge, 2022. "Disentangling services in developing regions: A test of Kaldor's first and second laws," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 221-229.

    More about this item

    Keywords

    Kaldor's growth laws; manufacturing growth; export growth; GDP growth;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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