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Foreign trade elasticities in centre-periphery models of growth and development

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  • Anthony Philip Thirlwall

Abstract

The Author looks at the difference in growth rates among countries and argues that they can be traced to the strength of the balance of payments position, determined largely by the propensity to export relative to the propensity to import. Relative growth performance, thus, can be understood by looking to income elasticities of demand for exports and imports. This insight into the process of income determination in open economies, found in Harrod as well as in the literature on economic development, is developed through so-called centre-periphery models of growth and development. However, their essential conclusions were already contained in the early classic papers. The author concentrates on three of them (prebisch, seers, kaldor) to argue that a country’s growth rate relative to another’s can be approximated by the ratio of its income elasticity of demand for exports to its income elasticity of demand for imports.

Suggested Citation

  • Anthony Philip Thirlwall, 1983. "Foreign trade elasticities in centre-periphery models of growth and development," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 36(146), pages 249-261.
    • Handle: RePEc:psl:bnlqrr:1983:33
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    References listed on IDEAS

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    1. 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.
    2. Spraos, John, 1980. "The Statistical Debate on the Net Barter Terms of Trade between Primary Commodities and Manufactures," Economic Journal, Royal Economic Society, vol. 90(357), pages 107-128, March.
    3. A. P. Thirlwall, 2015. "A Model of Regional Growth Rate Differences on Kaldorian Lines," Palgrave Studies in the History of Economic Thought, in: Essays on Keynesian and Kaldorian Economics, chapter 12, pages 286-301, Palgrave Macmillan.
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    Cited by:

    1. Thomas H. W. Ziesemer, 2023. "Semi-endogenous growth in a non-Walrasian DSEM for Brazil: estimation and simulation of changes in foreign income, human capital, R&D, and terms of trade," Economic Change and Restructuring, Springer, vol. 56(2), pages 1147-1183, April.
    2. Bineau, Yannick, 2008. "Équilibre extérieur et taux de change réel : apport du modèle de croissance contrainte par la balance des paiements," L'Actualité Economique, Société Canadienne de Science Economique, vol. 84(3), pages 263-285, septembre.
    3. Destefanis, Sergio, 2000. "Differenziali territoriali di produttività ed efficienza e sviluppo dualistico [Territorial differences in productivity and efficiency and Italian dualism]," MPRA Paper 62065, University Library of Munich, Germany.
    4. AfDB AfDB, 2002. "Working Paper 63 - Trade, Trade Liberalisation and Economic Growth: Theory and Evidence," Working Paper Series 2276, African Development Bank.
    5. Matteo Deleidi & Claudia Fontanari & Santiago José Gahn, 2023. "Autonomous demand and technical change: exploring the Kaldor–Verdoorn law on a global level," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(1), pages 57-80, April.
    6. Anthony Thirlwall, 2002. "Working Paper 63 - Trade, Trade Liberalisation and Economic Growth: Theory and Evidence," Working Paper Series 197, African Development Bank.
    7. Ziesemer, Thomas, 1996. "Dissent on convergence : the role of public factors, international trade and path dependence," Research Memorandum 004, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    8. Sascha Keil & Walter Paternesi Meloni, 2024. "Kaldorian cumulative causation in the Euro area: an empirical assessment of divergent export competitiveness," Chemnitz Economic Papers 063, Department of Economics, Chemnitz University of Technology.
    9. A. P. Thirlwall, 2013. "Economic Growth in an Open Developing Economy," Books, Edward Elgar Publishing, number 15208.
    10. Salvatore D'Acunto & Sergio Destefanis & Marco Musella, 2004. "Exports, Supply Constraints and Growth: An Investigation using Regional Data," International Review of Applied Economics, Taylor & Francis Journals, vol. 18(2), pages 167-189.
    11. Thomas, Ziesemer, 1998. "A History of Economic Theorizing on the Prebisch-Singer Thesis," MPRA Paper 60502, University Library of Munich, Germany.
    12. Giulio Guarini, 2015. "Complementarity between environmental efficiency and labour productivity in a cumulative growth process," PSL Quarterly Review, Economia civile, vol. 68(272), pages 41-56.
    13. Gilberto A. Libânio, 2003. "Trade, specialization and growth: a preliminary assessment of the Brazilian experience in the nineties," Textos para Discussão Cedeplar-UFMG td220, Cedeplar, Universidade Federal de Minas Gerais.
    14. AfDB AfDB, 2002. "Working Paper 63 - Trade, Trade Liberalisation and Economic Growth: Theory and Evidence," Working Paper Series 2196, African Development Bank.
    15. Ricardo Azevedo Araujo & Gilberto Tadeu Lima, 2007. "A structural economic dynamics approach to balance-of-payments-constrained growth," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 31(5), pages 755-774, September.
    16. Ziesemer, Thomas, 2022. "Linking the BOPC growth model with foreign debt dynamics to the goods and labour markets," MERIT Working Papers 2022-029, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    More about this item

    Keywords

    growth rates; balance of payments; exports; centre-periphery models imports; Harrod;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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