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Structural change, balance-of-payments constraint, and economic growth: evidence from the multisectoral Thirlwall's law

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  • Raphael Rocha Gouvea
  • Gilberto Tadeu Lima

Abstract

This paper contributes to the literature on balance-of-paymentsconstrained growth by investigating how structural change, identified with changes in the sectoral composition of exports and imports, affects the external constraint. We test both the original and a multisectoral version of Thirlwall's law for a sample of Latin American and Asian countries. The original Thirlwall's law is found to hold for all sample countries except South Korea, whereas the multisectoral analogue holds for all of them. As the sectoral composition of exports and imports is found to matter for growth, we analyze the evolution of each country's weighted trade income elasticities.

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Article provided by M.E. Sharpe, Inc. in its journal Journal of Post Keynesian Economics.

Volume (Year): 33 (2010)
Issue (Month): 1 (October)
Pages: 169-204

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Handle: RePEc:mes:postke:v:33:y:2010:i:1:p:169-204
Contact details of provider: Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=109348

Keywords: external constraint; multisectoral Thirlwall's law; structural change;

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  1. Setterfield, Mark, 1997. "'History versus Equilibrium' and the Theory of Economic Growth," Cambridge Journal of Economics, Oxford University Press, vol. 21(3), pages 365-78, May.
  2. Ricardo Azevedo Araujo & Gilberto Tadeu Lima, 2007. "A structural economic dynamics approach to balance-of-payments-constrained growth," Cambridge Journal of Economics, Oxford University Press, vol. 31(5), pages 755-774, September.
  3. Luis Bértola & Hermes Higachi & Gabriel Porcile, 2002. "Balance-of-payments-constrained growth in Brazil: a test of Thirlwall's Law, 1890-1973," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 25(1), pages 123-140, January.
  4. Juan Carlos Moreno-Brid, 1999. "On Capital Flows and the Balance-of-Payments-Constrained Growth Model," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 21(2), pages 283-298, January.
  5. Jonathan Perraton, 2003. "Balance of Payments Constrained Growth and Developing Countries: An examination of Thirlwall's hypothesis," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(1), pages 1-22.
  6. Anthony P. Thirlwall, 2011. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," PSL Quarterly Review, Economia civile, vol. 64(259), pages 429-438.
  7. M. Ansari & N. Hashemzadeh & Y. Xi, 2000. "The Chronicle of Economic Growth in Southeast Asian Countries: Does Thirlwall's Law Provide an Adequate Explanation?," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 22(4), pages 573-588, July.
  8. Thirlwall, Anthony P & Hussain, Mohammed Nureldin, 1982. "The Balance of Payments Constraint, Capital Flows and Growth Rate Differences between Developing Countries," Oxford Economic Papers, Oxford University Press, vol. 34(3), pages 498-510, November.
  9. Nelson H. Barbosa Filho, 2002. "The Balance-of-payments Constraint: From Balanced Trade to Sustainable Debt," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 2001-06, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
  10. A. P. Thirlwall, 1997. "Reflections on the Concept of Balance-of-Payments-Constrained Growth," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 19(3), pages 377-385, April.
  11. Mario Cimoli & Gabriel Porcile & Sebastián Rovira, 2010. "Structural change and the BOP-constraint: why did Latin America fail to converge?," Cambridge Journal of Economics, Oxford University Press, vol. 34(2), pages 389-411, March.
  12. Lima, Gilberto Tadeu & Carvalho, Veridiana Ramos da Silva, 2009. "Estrutura produtiva, restrição externa e crescimento econômico: a experiência brasileira," Revista Economia e Sociedade, Instituto de Economia, Universidade Estadual de Campinas (UNICAMP), vol. 36, pages 30, April.
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Cited by:

  1. Cimoli, Mario & Porcile, Gabriel, 2011. "Technology, structural change and BOP constrained growth: A structuralist toolbox," MPRA Paper 33800, University Library of Munich, Germany.
  2. A. P. Thirlwall, 2011. "Balance of Payments Constrained Growth Models: History and Overview," Studies in Economics 1111, School of Economics, University of Kent.
  3. Cimoli, Mario & Porcile, Gabriel, 2013. "Tecnología, heterogeneidad y crecimiento: una caja de herramientas estructuralistas," Desarrollo Productivo 194, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  4. Peter Leško & Elias Soukiazis & Eva Muchova, 2016. "Are the transition economies balance-of-payments constrained? An aggregate and multi-sector approach applied to Central and Eastern Europe," GEMF Working Papers 2016-04, GEMF - Faculdade de Economia, Universidade de Coimbra.
  5. Halicioglu, Ferda, 2012. "Balance-of-Payments Constrained Growth: the Case of Turkey," MPRA Paper 41791, University Library of Munich, Germany.
  6. João Romero & Gustavo Britto & Frederico Jayme Jr., 2013. "A model of development with structural and technological change," Textos para Discussão Cedeplar-UFMG 479, Cedeplar, Universidade Federal de Minas Gerais.
  7. -, 2012. "Structural change for equality: an integrated approach to development. Thirty-four session of ECLAC. Summary," Documentos de posición del período de sesiones de la Comisión 13535, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  8. João Prates Romero & Fabrício Silveira & Gustavo Britto, 2011. "Structural change, National Innovation System and balance-of-payments contraint: a theoretical and empirical analysis of the Brazilian case," Textos para Discussão Cedeplar-UFMG 440, Cedeplar, Universidade Federal de Minas Gerais.
  9. Araujo, Ricardo Azevedo, 2011. "New insights from a structural economic dynamic approach to balance of payments constrained growth," MPRA Paper 30332, University Library of Munich, Germany.
  10. Cimoli, Mario & Fleitas, Sebastian & Porcile, Gabriel, 2011. "Real Exchange Rate and the Structure of Exports," MPRA Paper 37846, University Library of Munich, Germany.
  11. Robert A. Blecker & Carlos A. Ibarra, 2013. "Trade liberalization and the balance of payments constraint with intermediate imports: the case of Mexico revisited," Working Papers 2013-02, American University, Department of Economics.
  12. Guilherme R. Magacho & John Mccombie, 2016. "Impacts Of Developing Countries Growth On Natural Resource Exporters: A Bop Constrained Growth Model," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 097, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  13. Ricardo Azevedo Araujo & Gilberto Tadeu Lima, 2012. "Capital-Specific Technological Change and Human Capital Accumulation in a Model of Export-Led Growth," PSL Quarterly Review, Economia civile, vol. 65(262), pages 275-311.
  14. Jeanete Dias & Micaela Antunes, 2015. "Applying Thirlwall’s Law to the Portuguese economy: a sectoral analysis," GEMF Working Papers 2015-20, GEMF - Faculdade de Economia, Universidade de Coimbra.
  15. Robert Blecker, 2014. "Structural Change, the Real Exchange Rate, and the Balance of Payments in Mexico, 1960-2012," Working Papers 2014-01, American University, Department of Economics.
  16. -, 2012. "Structural change for equality: an integrated approach to development. Thirty-four session of ECLAC. Summary," Libros y Documentos Institucionales, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 13535 edited by Eclac, April.
  17. Hiroshi Nishi, 2014. "A Multi-Sectoral Balance-of-Payments-Constrained Growth Model with Sectoral Heterogeneity:International Competition, Productivity Dynamics, and Economic Growth," Discussion papers e-13-005, Graduate School of Economics Project Center, Kyoto University.
  18. Lavopa, Alejandro & Szirmai, Adam, 2012. "Industrialization, employment and poverty," MERIT Working Papers 081, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  19. Gustavo Britto & João Prates Romero, 2011. "Modelos kaldorianos de crescimento e suas extensões contemporâneas," Textos para Discussão Cedeplar-UFMG 449, Cedeplar, Universidade Federal de Minas Gerais, revised Jul 2013.

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